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Blue Hawk Investment Group Has Mixed View on Intuit and Visa

Blue Hawk Investment Group, LLC is the management company of the Blue Hawk Fundamental Growth Fund, LP. Insider Monkey has recently published a copy of Blue Hawk Investment Group’s Q1 2020 investor letter. A copy of the letter can be downloaded here. Jake DuBois is the fund’s founder and managing member. The fund was founded in 2016. For Q1 2020, the fund reported a net return of -10.01%, while the S&P 500 returned -20.00%.

In the said letter, Jake DuBois highlighted a few stocks and Intuit Inc (NASDAQ:INTU) is one of them. Intuit is a financial software company based in California. Year-to-date, Intuit stock lost 2.5% and on April 21st it had a closing price of $249.15. Its market cap is of $66.5 billion, and INTU is trading at a price-to-earnings ratio of 41.32x. Here is what Jake DuBois said:

“Intuit has a couple moving parts but overall should experience a tailwind. Their Small Business (QuickBooks) segment could experience some attrition if the stimulus is not effective enough, although our surveying has indicated that QuickBooks is the last expense a small or medium-sized business (SMB) would cut prior to shutting down. We believe that potential weakness in SMB will be outweighed by tailwinds in the Consumer (TurboTax) segment. Shutdown of retail will (unfairly) hurt rival H&R Block and will accelerate the shift to online tax preparation software. Once a filer’s information and filing are saved in the software, users are much more likely to reuse the software the next year as the friction is removed.”

In Q4 2019, the number of bullish hedge fund positions on INTU stock declined by about 2% from the previous quarter (see the chart here).

Blue Hawk Investment Group’s comments on Visa

In the said letter, Jake DuBois also highlighted Visa Inc. (NYSE:V) stock. Visa is an American multinational financial services corporation based in California. Here is what Jake DuBois said:

“Visa will face some near-term choppiness as discretionary spending continues to slow. On March 30th, the company revised current quarter guidance to “high end of mid-single digits” for currency neutral revenue growth and EPS growth, from “low double-digit” and “mid-teens” respectively two months ago. They also provided March (through March 30th) results via a press release: payments volumes of -4%, processed transactions of -2% and cross-border volume of -19%. For reference, these numbers were 8%, 11%, and 9% the previous quarter. Weakness in cross- border volumes is not surprising due to the travel bans. In addition, we think the March numbers understate the impact of the COVID-19 shutdowns as the more extreme government measures have been a more recent event – even if it does not feel that way. The silver lining for Visa is that the mix between cash and online/card spending should shift significantly towards online/card, which should mitigate some of the overall spending weakness, although the magnitude of this shift should be somewhat temporary. Our long-term view of Visa has not changed, but we think the near-term outlook is clouded and near-term upside limited, and thus we have written calls against about half our position.”

In Q4 2019, the number of bullish hedge fund positions on V stock declined by about 3% from the previous quarter (see the chart here).

Disclosure: None. This article is originally published at Insider Monkey.

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