Visa Inc (NYSE:V) was the most popular services stock among hedge funds in the third quarter of the year (see the full rankings) as 69 hedge funds and other notable investors in our database of 13F filings owned the credit card issuer. Visa’s stock is up even more than Mastercard’s in the last year, recording a 53% increase that has brought its market cap close to $100 billion. The earnings growth has been very high as well. However, as with Mastercard Visa’s forward P/E (18 in this case) seems to have already priced in quite a bit of growth. We think other credit card stocks such as Discover, American Express, or Capital One might be better values.
The 13F showed that Robertson initiated a position of about 250,000 shares in Charter Communications, Inc. (NASDAQ:CHTR) between July and September. Charter provides cable, Internet, and other communication services. Revenue growth here has been limited as well, and the stock looks expensive relative to its earnings; in addition, the EV/EBITDA multiple is 7.6x. Again, the company doesn’t seem cheap enough to be a good value.
Robertson increased his holdings of Sirius XM Radio Inc (NASDAQ:SIRI) by 16% to a total of 5.9 million shares. Sirius is up 52% in the last year, and the stock currently trades at 27 times consensus earnings for 2013. The most recent data shows that 8% of the total shares outstanding are held short, which looks a bit high and suggests that a number of market players are bearish on the stock at these prices. We think that we’d avoid it.