RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its “RiverPark Large Growth Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, markets performed well, and the S&P 500 index (“S&P”) and the Russell 1000 Growth Index returned 8.7% and 12.8%, respectively. The RiverPark Large Growth Fund Institutional and Retail shares also performed well in the quarter returning, 13.2% and 13.2%, respectively. The macroeconomic environment continued to support the portfolio beyond the company-specific news. In addition, please check the fund’s top five holdings to know its best picks in 2023.
RiverPark Large Growth Fund highlighted stocks like PayPal Holdings, Inc. (NASDAQ:PYPL) in the second quarter 2023 investor letter. Headquartered in San Jose, California, PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform that enables digital payments. On September 5, 2023, PayPal Holdings, Inc. (NASDAQ:PYPL) stock closed at $63.74 per share. One-month return of PayPal Holdings, Inc. (NASDAQ:PYPL) was 2.77%, and its shares lost 32.88% of their value over the last 52 weeks. PayPal Holdings, Inc. (NASDAQ:PYPL) has a market capitalization of $71.115 billion.
RiverPark Large Growth Fund made the following comment about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2023 investor letter:
“PayPal Holdings, Inc. (NASDAQ:PYPL): PayPal shares were a top detractor in the quarter despite reporting better than anticipated 1Q earnings and raising guidance for the remainder of 2023. Revenue of $7 billion grew 9% year over year, an acceleration from the prior year and quarter. EPS of 1.17 grew 33% year over year on better cost discipline leading to better operating margins. The disappointment was centered around weaker gross margins, as unbranded checkout, which has lower gross margins, accelerated faster than branded checkout. Management anticipates this trend to continue and therefore guided to lower gross margins for the remainder of the year. Despite the gross margin headwind, operating margins continue to expand due to expense discipline.
PayPal is the most accepted digital wallet – with almost triple the acceptance of Apple Pay, the number two digital wallet – providing the purest exposure to the secular growth in ecommerce-driven digital payments. PayPal is also a key beneficiary of consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 1Q non-GAAP operating margin of 23%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel at least a high teens earnings growth rate over the next five years. This, to us, presents an excellent risk/reward given that PYPL trades at a below market multiple.”
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PayPal Holdings, Inc. (NASDAQ:PYPL) is in 13th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of second quarter which was 103 in the previous quarter.
We discussed PayPal Holdings, Inc. (NASDAQ:PYPL) in another article and shared the list of biggest technology companies. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
