Giverny Capital Asset Management LLC recently published its second quarter investor letter 2022, which can be downloaded here. The fund’s model portfolio returns declined by 18.48% net of fees in the second quarter of 2022. The current events in the market influenced the stocks’ short-term prices. The fund generated an annualized return of 17.02% over the last nine quarters, net of fees. You can check the top 5 holdings of the fund to see its best picks for 2022.
In the second quarter 2022 letter, Giverny Capital Asset Management discussed the performance of its portfolios over the last few years. The letter mentioned that Mastercard Incorporated (NYSE:MA) grew its earnings per share by above 20% annually over the past five years. Mastercard Incorporated (NYSE:MA) is a payment-related technology company that operates internationally, and has a market capitalization of $341.894 billion. The shares of Mastercard Incorporated (NYSE:MA) closed at $353.79 per share on July 29, 2022. On a monthly time frame, the return of Mastercard Incorporated (NYSE:MA) rose to 11.17% whereas the shares lost -5.72% of their value over the last 52 weeks
Here is what Giverny Capital Asset Management specifically said about Mastercard Incorporated (NYSE:MA):
There is a lot to be worried about right now. Sadly, that is often the case. I try to listen to people who can help me understand our portfolio. At a conference in Chicago in June, an executive from our holding MasterCard said that, thanks to a strong job market and pandemic-relief payments, most US households have stronger balance sheets and spending capacity than three years ago; they are spending on experiences, restaurants, travel and shows. Said the executive: “Consumer spending is holding up, notwithstanding the war and social issues that are all around us.” In May, Mastercard Incorporated (NYSE:MA) saw 10% spending growth in every merchant category except airlines, and virtually every merchant category today is higher than pre-pandemic. And airline travel figures to rebound to pre-pandemic levels over the summer.
Over the past five years, current GCAM holdings Alphabet, Arista Networks, Credit Acceptance Corp., Ciena Corp., Eurofins Scientific, Five Below, Floor & Décor, Installed Building Products, Meta Platforms and SS&C all grew earnings per share by at least 25% annually, while MasterCard and Intercontinental Exchange grew above 20%”
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Mastercard Incorporated (NYSE:MA) is in the 8th position on our list of 30 Most Popular Stocks Among Hedge Funds as per our research. As per our database, 136 hedge fund portfolios held Mastercard Incorporated (NYSE:MA) at the end of the first quarter, down from 144 in the previous quarter.
We released another article on Mastercard Incorporated (NYSE:MA) and shared another hedge fund’s views about the company. If you want to read more investor letters from hedge funds and other leading investors, check out our hedge fund investor letters Q2 2022 page.
Disclosure: None. This article is originally published at Insider Monkey.
In this piece, we will take a look at ten recent IPOs in micro cap stocks.
There are a variety of benefits and drawbacks to listing a firm’s equity for trading on the stock market. The single biggest benefit of the process called an IPO, is that it allows management to raise large amounts of funds and investors to potentially profit by seeing their existing stakes multiply in value. At the same time, the IPO process also brings in a variety of constraints. Publicly listed companies are subject to corporate financial reporting requirements of the jurisdictions in which their shares trade. At the same time, share prices can be a volatile affair, and while investors stand to gain significantly if their companies are well received by the market, they also risk equally massive losses should the opposite occur.
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
You can enter your email below to get our FREE report. In the same report you can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12-24 months. We initially share this idea in October 2018 and the stock already returned more than 150%. We still like this investment.
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