Hedge Funds Are Selling Mastercard Incorporated (MA)
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 Mastercard Incorporated (NYSE:MA).
Mastercard Incorporated (NYSE:MA) has seen a decrease in enthusiasm from smart money of late. Mastercard Incorporated (NYSE:MA) was in 151 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 154. Our calculations also showed that MA ranked 7th among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to view the new hedge fund action surrounding Mastercard Incorporated (NYSE:MA).
Robert Pohly of Samlyn Capital
Do Hedge Funds Think MA Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 151 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MA over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Akre Capital Management held the most valuable stake in Mastercard Incorporated (NYSE:MA), which was worth $2090.8 million at the end of the fourth quarter. On the second spot was Berkshire Hathaway which amassed $1625.3 million worth of shares. Fisher Asset Management, Gardner Russo & Gardner, and Lone Pine 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 Lunia Capital allocated the biggest weight to Mastercard Incorporated (NYSE:MA), around 51.08% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, earmarking 22.61 percent of its 13F equity portfolio to MA.
Seeing as Mastercard Incorporated (NYSE:MA) has experienced a decline in interest from the smart money, we can see that there was a specific group of funds who were dropping their positions entirely in the first quarter. Interestingly, Rajiv Jain's GQG Partners said goodbye to the largest stake of all the hedgies watched by Insider Monkey, totaling about $726.5 million in stock, and James Parsons's Junto Capital Management was right behind this move, as the fund dumped about $95.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Mastercard Incorporated (NYSE:MA) but similarly valued. We will take a look at UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), Bank of America Corporation (NYSE:BAC), The Procter & Gamble Company (NYSE:PG), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), and Paypal Holdings Inc (NASDAQ:PYPL). This group of stocks' market valuations are similar to MA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UNH,89,12091302,-2 DIS,134,12552763,-10 BAC,97,45321286,-2 PG,70,8539030,-13 NVDA,80,6204940,-8 HD,68,4359872,-11 PYPL,143,14717163,-4 Average,97.3,14826622,-7.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 97.3 hedge funds with bullish positions and the average amount invested in these stocks was $14827 million. That figure was $17097 million in MA's case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand The Home Depot, Inc. (NYSE:HD) is the least popular one with only 68 bullish hedge fund positions. Compared to these stocks Mastercard Incorporated (NYSE:MA) is more popular among hedge funds. Our overall hedge fund sentiment score for MA is 96.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately MA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MA were disappointed as the stock returned 2.8% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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