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How Badly Will COVID-19 Hit Global Payments (GPN) Stock?

Artisan Mid Cap Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -11.55% for the quarter (investor class), outperforming their benchmark, the Russell Midcap Index which returned -27.07% in the same quarter. You should check out Artisan Mid Cap Fund’s top 5 stock picks which helped them beat the market by nearly 16 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Artisan Mid Cap Fund highlighted a few stocks and Global Payments Inc (NYSE:GPN) is one of them. Global Payments providers financial technology services globally. Year-to-date, GPN stock lost 4.9% and on May 8th it had a closing price of $175.04. Its market cap is of $51.9 billion. Here is what Artisan Mid Cap Fund said:

“Shares of Global Payments have been pressured amid clear indications that COVID-19 restrictions are having a disruptive impact across many of their businesses. Throughout our long holding period, we have been impressed by management’s progress in building a fast-growing, diversified, more recurring business at the intersection of many strong trends in payments and software. We believe these characteristics position it quite well to weather almost any type of recession. But in the current (unprecedented) environment, many of its customers are closed or severely restricted, and its diversification across geographies such as the US, United Kingdom and Spain isn’t of much benefit either. While we believe short-term earnings will fall far short of initial expectations, we have confidence in management’s nimble response to challenges historically, its healthy balance sheet, and our thesis that once the economy begins to reopen, Global Payments’ positive profit cycle will resume. As such we have maintained our position.”

In Q4 2019, the number of bullish hedge fund positions on GPN stock decreased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with GPN’s growth potential.

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

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