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Is it Still Safe to Invest in PayPal (PYPL)?

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Fundsmith LLP, an investment management firm, published its "Fundsmith Equity Fund" fourth-quarter 2021 investor letter – a copy of which can be downloaded here. The T Class Accumulation shares, the most commonly held share class, rose by +22.1% in 2021 and compares with a rise of +22.9% for the MSCI World Index in sterling with dividends reinvested. The Fund marginally underperformed this comparator in 2021 but is still the best performer since its inception in November 2010 in the Investment Association Global sector with a return 357 percentage points above the sector average which has delivered just +213.9% over the same timeframe. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Fundsmith Equity Fund, in its Q4 2021 investor letter, mentioned PayPal Holdings, Inc. (NASDAQ: PYPL) and discussed its stance on the firm. PayPal Holdings, Inc. is a San Jose, California-based financial technology company with a $212.6 billion market capitalization. PYPL delivered a -4.01% return since the beginning of the year, while its 12-month returns are down by -25.22%. The stock closed at $181.01 per share on January 13, 2022.

Here is what Fundsmith Equity Fund has to say about PayPal Holdings, Inc. in its Q4 2021 investor letter:

"PayPal’s performance last year was a clear exception to the benefits of running winners. The shares performed poorly amid concerns that its ambitions to construct a ‘super app’ to drive users to its payment systems might involve some value destruction, brought home by its apparent interest in acquiring social media operator Pinterest. We may be wrong but we would prefer if PayPal stuck to its knitting."

Photo by DocuSign on Unsplash

Our calculations show that PayPal Holdings, Inc. (NASDAQ: PYPL) ranks 9th on our list of the 30 Most Popular Stocks Among Hedge Funds. PYPL was in 123 hedge fund portfolios at the end of the third quarter of 2021, compared to 143 funds in the previous quarter. PayPal Holdings, Inc. (NASDAQ: PYPL) delivered a -32.07% return in the past 3 months.

In December 2021, we also shared another hedge fund’s views on PYPL in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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