At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Mastercard Incorporated (NYSE:MA).
Is Mastercard Incorporated (NYSE:MA) a buy here? The best stock pickers are in an optimistic mood. The number of bullish hedge fund positions advanced by 14 in recent months. Our calculations also showed that MA is among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MA was in 139 hedge funds’ portfolios at the end of March. There were 125 hedge funds in our database with MA positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the fresh hedge fund action surrounding Mastercard Incorporated (NYSE:MA).
Hedge fund activity in Mastercard Incorporated (NYSE:MA)
Heading into the second quarter of 2020, a total of 139 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 94 hedge funds with a bullish position in MA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Gardner Russo & Gardner, managed by Tom Russo, holds the largest position in Mastercard Incorporated (NYSE:MA). Gardner Russo & Gardner has a $1.4439 billion position in the stock, comprising 14.6% of its 13F portfolio. The second largest stake is held by Akre Capital Management, managed by Charles Akre, which holds a $1.3977 billion position; the fund has 13.6% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Warren Buffett’s Berkshire Hathaway, Ken Fisher’s Fisher Asset Management and Rajiv Jain’s GQG Partners. In terms of the portfolio weights assigned to each position KG Funds Management allocated the biggest weight to Mastercard Incorporated (NYSE:MA), around 21.27% of its 13F portfolio. VGI Partners is also relatively very bullish on the stock, dishing out 16.34 percent of its 13F equity portfolio to MA.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Rivulet Capital, managed by Barry Lebovits and Joshua Kuntz, established the biggest position in Mastercard Incorporated (NYSE:MA). Rivulet Capital had $145.6 million invested in the company at the end of the quarter. Anthony Bozza’s Lakewood Capital Management also initiated a $84.6 million position during the quarter. The other funds with brand new MA positions are Benjamin A. Smith’s Laurion Capital Management, James Crichton’s Hitchwood Capital Management, and Alexander Mitchell’s Scopus Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Mastercard Incorporated (NYSE:MA) but similarly valued. We will take a look at UnitedHealth Group Inc. (NYSE:UNH), Intel Corporation (NASDAQ:INTC), Verizon Communications Inc. (NYSE:VZ), and AT&T Inc. (NYSE:T). This group of stocks’ market caps are similar to MA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 75.5 hedge funds with bullish positions and the average amount invested in these stocks was $4236 million. That figure was $11897 million in MA’s case. UnitedHealth Group Inc. (NYSE:UNH) is the most popular stock in this table. On the other hand AT&T Inc. (NYSE:T) is the least popular one with only 57 bullish hedge fund positions. Compared to these stocks Mastercard Incorporated (NYSE:MA) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on MA as the stock returned 24.8% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey. This article is updated to include an image of Rajiv Jain.