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Hedge Funds Have Never Been This Bullish On Visa Inc (V)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Visa Inc (NYSE:V).

Is Visa Inc (NYSE:V) ready to rally soon? Prominent investors are betting on the stock. The number of long hedge fund bets improved by 14 recently. Our calculations also showed that V 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities 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. Keeping this in mind let’s review the latest hedge fund action encompassing Visa Inc (NYSE:V).

What does smart money think about Visa Inc (NYSE:V)?

At the end of the first quarter, a total of 157 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 124 hedge funds held shares or bullish call options in V a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of Visa Inc (NYSE:V), with a stake worth $3273.8 million reported as of the end of September. Trailing Fisher Asset Management was Berkshire Hathaway, which amassed a stake valued at $1701.8 million. Akre Capital Management, Lone Pine Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nokota Management allocated the biggest weight to Visa Inc (NYSE:V), around 100% of its 13F portfolio. Hengistbury Investment Partners is also relatively very bullish on the stock, dishing out 38.37 percent of its 13F equity portfolio to V.

As industrywide interest jumped, some big names have been driving this bullishness. Lone Pine Capital, assembled the most outsized position in Visa Inc (NYSE:V). Lone Pine Capital had $536.5 million invested in the company at the end of the quarter. Ric Dillon’s Diamond Hill Capital also made a $182.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Pausic’s Foxhaven Asset Management, Sharlyn C. Heslam’s Stockbridge Partners, and Eashwar Krishnan’s Tybourne Capital Management.

Let’s go over hedge fund activity in other stocks similar to Visa Inc (NYSE:V). These stocks are Johnson & Johnson (NYSE:JNJ), Walmart Inc. (NYSE:WMT), JPMorgan Chase & Co. (NYSE:JPM), and The Procter & Gamble Company (NYSE:PG). This group of stocks’ market values are closest to V’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JNJ 82 5454317 -3
WMT 55 4887227 3
JPM 112 9730557 14
PG 77 9519275 -2
Average 81.5 7397844 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 81.5 hedge funds with bullish positions and the average amount invested in these stocks was $7398 million. That figure was $14391 million in V’s case. JPMorgan Chase & Co. (NYSE:JPM) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 55 bullish hedge fund positions. Compared to these stocks Visa Inc (NYSE:V) 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 V as the stock returned 21.4% 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.

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