The slump in the broader market at the beginning of 2016 provided investors with an opportunity to enter the stocks of their liking at a suitable valuation and increase their stakes in the company they were already bullish on. One of the hedge funds that seem to have capitalized well on this opportunity is Ferdinand Groos‘ Cryder Capital Partners LLP. The London-based fund has submitted its 13F filing with Securities and Exchange Commission (SEC) for the first quarter, revealing a US equity portfolio worth $130.66 million. According to the filing, Cryder Capital Partners LLP increased its stake in nine of the 11 stocks that it held at the end of 2015 and reduced its stake only marginally in its remaining two holdings. An interesting and important detail that emerged from the filing was that Cryder Capital Partners LLP boosted its stake in nearly all the companies in its portfolio that are engaged in payment processing. Taking that into account, in this article, we are going to focus on four such payment processing companies in which the fund increased its stakes and will also be discussing its top stock pick at the end of first quarter.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
Visa Inc (NYSE:V)
– Shares Owned by Cryder Capital Partners LLP (as of March 31): 103,305
– Value of Holding (as of March 31): $7.9 million
First up is Visa Inc (NYSE:V), in which Cryder Capital Partners LLP increased its stake by 7% during the first quarter. Shares of the payments technology giant saw a decent rally recently in anticipation of the company’s first quarter results, making their lifetime of $81.73 in the process. However, they have given up some of those gains after the company reported its quarterly results and currently are trading down by 1% year-to-date. Though the EPS of $0.68 on revenue of $3.60 billion Visa Inc (NYSE:V) reported for the quarter was slightly above analysts’ expectations, its forecast of revenue growth of 7% to 8% and profit growth in a low double-digit range for full fiscal 2016 came below the Street’s estimates. Following the earnings release, analysts seem to be divided about the future prospects of the company. While some analysts argue that the stock is expensive at current levels considering the sub-par growth of the company, others feel that the stock will continue its multi-year bull run owing to the numerous tailwinds the company enjoys. Among the hedge funds that trimmed their holdings in Visa Inc during the first quarter was Billionaire Ken Fisher‘s Fisher Asset Management, which reduced its stake by 1% to 14.78 million shares.