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Is Mastercard (MA) a Smart Long-term Buy?

Alex Smith
·4 min read

Qualivian Investment Partners recently released its Q3 2020 Investor Letter. In Q3 2020, the fund was up 9.3% and 9.1% on a gross and net basis versus the S&P’s 8.93% increase, outperforming by 0.3% and 0.2%. In October, we published an article revealing our exclusive interview with Qualivian Investment Partners' co-founder Aamer Khan. You should check out Qualivian Investment Partners' top 3 stock picks for investors to buy right now, which could be the biggest winners in 2021.

In the Q3 2020 Investor Letter, Qualivian Investment Partners highlighted a few stocks and Mastercard Inc (NYSE:MA) is one of them. Mastercard Inc (NYSE:MA) is a financial services company. Year-to-date, Mastercard Inc (NYSE:MA) stock gained 12.7% and on November 30th it had a closing price of $336.51. Here is what Qualivian Investment Partners said:

"Mastercard: MA continued to see significant headwinds in its higher margin cross-border transaction volumes/revenues because of the drastic drop in cross-border travel (both personal and corporate) due to COVIDrelated lockdowns. We do not see this portion of MA’s business recuperating before the wide-scale global distribution and adoption of a COVID vaccine in the back half of 2021 going into 2022. The flipside to this is that COVID has accelerated the digitization of cash payments, especially as card not present eCommerce transactions continue to accelerate in the COVID era, and likely permanently shifting consumer shopping and payments behavior in favor of digitized transactions. The other offset to the weakness in cross-border volumes we saw is better expense control on the part of the management team, which will likely continue in the coming quarters. While MA’s cross-border revenues and earnings will continue to be impacted in the next 9-12 months, we expect the continued share gain of digital cash payments at the expense of paper transactions to accelerate. Furthermore, MA continues to invest in value-added services (marketing, fraud detection, etc…) as well as supporting more digital payment modalities on their payment rails, supporting our long-term thesis on this digital payment stalwart."

Paypal PYPL Mastercard MA Visa
Paypal PYPL Mastercard MA Visa

www.BillionPhotos.com / Shutterstock.com

In October, we published an article revealing that Mastercard Inc (NYSE:MA) stock is one of the financial stocks that matter to Dev Kantesaria’s Valley Forge Capital. Valley Forge made its biggest Q2 move in Mastercard, increasing its share ownership by more than 150%. There’s been a 50% surge in hedge fund ownership of Mastercard Inc (NYSE:MA) over the last year following several years of relatively little movement on that front.

In Q3 2020, the number of bullish hedge fund positions on Mastercard Inc (NYSE:MA) stock decreased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in Mastercard's growth potential. Our calculations showed that Mastercard Inc (NYSE:MA) is ranked #10 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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:

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