We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Visa Inc (NYSE:V).
Is Visa Inc (NYSE:V) going to take off soon? Investors who are in the know were taking a bullish view. The number of bullish hedge fund positions increased by 6 in recent months. Visa Inc (NYSE:V) was in 160 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics prior to this quarter was 157. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that V ranks 6th among the 30 most popular stocks among hedge funds (click for Q3 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.
At the moment there are a multitude of tools stock traders put to use to analyze stocks. Some of the less known tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace their index-focused peers by a superb amount (see the details here).
Charles Akre of Akre Capital Management
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. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a peek at the latest hedge fund action regarding Visa Inc (NYSE:V).
How are hedge funds trading Visa Inc (NYSE:V)?
At third quarter’s end, a total of 160 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards V over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Visa Inc (NYSE:V), with a stake worth $4306.9 million reported as of the end of September. Trailing Fisher Asset Management was Berkshire Hathaway, which amassed a stake valued at $1997.2 million. Akre Capital Management, GQG Partners, and Arrowstreet Capital 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 Odey Asset Management Group allocated the biggest weight to Visa Inc (NYSE:V), around 42.08% of its 13F portfolio. Truvvo Partners is also relatively very bullish on the stock, earmarking 30.84 percent of its 13F equity portfolio to V.
As one would reasonably expect, some big names were leading the bulls’ herd. Egerton Capital Limited, managed by John Armitage, initiated the most valuable position in Visa Inc (NYSE:V). Egerton Capital Limited had $422.8 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $89.3 million position during the quarter. The other funds with new positions in the stock are James Parsons’s Junto Capital Management, Steve Cohen’s Point72 Asset Management, and Brandon Haley’s Holocene Advisors.
Let’s also examine hedge fund activity in other stocks similar to Visa Inc (NYSE:V). We will take a look at Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), Berkshire Hathaway Inc. (NYSE:BRK-B), Tesla Inc. (NASDAQ:TSLA), Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and Mastercard Incorporated (NYSE:MA). All of these stocks’ market caps match V’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSM | 67 | 7971678 | 9 |
| BRK-B | 109 | 19555477 | 2 |
| TSLA | 67 | 8176828 | 4 |
| WMT | 69 | 5492521 | 9 |
| JNJ | 82 | 4882436 | -12 |
| PG | 75 | 10091350 | 2 |
| MA | 133 | 15645517 | -14 |
| Average | 86 | 10259401 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 86 hedge funds with bullish positions and the average amount invested in these stocks was $10259 million. That figure was $18651 million in V’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is the least popular one with only 67 bullish hedge fund positions. Compared to these stocks Visa Inc (NYSE:V) is more popular among hedge funds. Our overall hedge fund sentiment score for V is 97.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Unfortunately V wasn’t nearly as successful as these 20 stocks and hedge funds that were betting on V were disappointed as the stock returned 4.3% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Visa Inc. (NYSE:V)
Follow Visa Inc. (NYSE:V)
Disclosure: None. This article was originally published at Insider Monkey.
