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Here’s Why Fiserv Inc. (FISV) was Purchased by Oakmark Equity and Income Fund

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Jose Karlo Mari Tottoc
·3 min read
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Oakmark Funds, an investment management firm, published its “Oakmark Equity and Income Fund” first quarter 2021 investor letter – a copy of which can be seen here. A return of 10.3% was reported by the fund for the Q1 of 2021, outperforming its Lipper Balanced Fund benchmark that delivered a 5.4% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Oakmark Equity and Income Fund, in their Q1 2021 investor letter, mentioned Fiserv, Inc. (NASDAQ: FISV) and shared their insights on the company. Fiserv, Inc. is a Brookfield, Wisconsin-based financial services provider that currently has an $82.7 billion market capitalization. Since the beginning of the year, FISV delivered a 9.02% return, extending its 12-month gains to 28.17%. As of April 12, 2021, the stock closed at $124.13 per share.

Here is what Oakmark Equity and Income Fund has to say about Fiserv, Inc. in their Q1 2021 investor letter:

"Our second new purchase was Fiserv. Following its transformative acquisition of First Data Corporation in 2019, Fiserv is now a top provider of digital banking solutions, core account processing software and merchant acquiring services in the U.S. The company’s mission-critical software and services generate recurring revenue and are tied to strong secular growth trends within both digital payments and banking. We expect Fiserv’s revenue to grow in the mid- to high-single-digits over the coming years and that the company will enjoy significant margin expansion as it realizes the cost synergies from the First Data acquisition. In our estimate, this would produce near-term earnings per share growth of over 20%. Furthermore, with its significant free cash flow generation and excess debt capacity, the company should be able to return something like 35% of its market capitalization through dividends and share repurchases over the next five years, in our view. We believe the risk-adjusted return potential is attractive for this well-managed, above-average business that’s trading for a market multiple on our estimate of normal earnings."

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Our calculations show that Fiserv, Inc. (NASDAQ: FISV) ranks 28th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Fiserv, Inc. was in 94 hedge fund portfolios, compared to 90 funds in the third quarter. FISV delivered an 11.63% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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