Running a business isn’t as simple as finding a marketable product or service to sell and a good location. Businesses need support to exist in the modern world – be it credit services, payment processing or uniforms. The companies that provide this type of support are called business service companies. hedge funds love them because these companies provide services that are essential to other companies, regardless whether those companies are “in the black” or not.
Here is a list of hedge fund managers’ favorite business services stocks:
MasterCard, Inc. (MA): Of the 300+ hedge funds we track, 46 had positions in MA at the end of the third quarter, up from 44 at the end of the second quarter. The total volume of hedge fund investment in the company also increased, moving from $2.25 billion at the end of June to $2.45 billion at the end of September. Chase Coleman’s Tiger Global Management Llc is a fan of the company. It increased its position by +29% in the third quarter to end September with a position in MA worth $244.59 million. Andreas Halvorsen’s Viking Global was a close second after initiating a new position in MA during the third quarter, worth roughly $241.77 million.
Visa, Inc. (V): Hedge fund investment in V didn’t really change in the third quarter. There are 45 hedge funds with positions in the company. The total volume of their investment did slip slightly in the third quarter, falling from $3.49 billion at the end of June to weigh in at $3.47 billion at the end of September. Warren Buffett’s Berkshire Hathaway initiated a new $196.45 million position in the company during the third quarter.
Global Payments, Inc. (GPN): At the end of the third quarter, there were 20 hedge funds invested in GPN, up from 18 at the end of the second quarter. However, total hedge fund investment in the company slipped in the third quarter, going down to $123.34 million at the end of September from $126.12 million at the end of June. Jim Simons’ Renaissance Technologies owns a $39.34 million stake in the company after upping its stake by +168% in the third quarter.
Fair Isaac Corp. (FICO): Hedge fund investment in FICO swelled from 13 hedge funds at the end of the second quarter to 18 at the end of the third quarter. At the same time, the volume of hedge fund investment in the company declined from $320.92 million at the end of June to just $166.99 million at the end of September. In spite of the decrease, several big name hedge fund managers are still on board with FICO. Chuck Royce’s Royce & Associates, John W. Rogers’ Ariel Investments, Ray Dalio’s Bridgewater and Jim Simons’ Renaissance Technologies are fans of the company.
Total System Services, Inc. (TSS): There were 18 hedge funds invested in TSS at the end of the third quarter. Total hedge fund investment weighed in at $277.95 million at the end of September. In comparison, there were just 13 hedge funds invested in TSS at the end of the second quarter, but the total collective holdings of those funds was greater at $328.68 million. The decrease may not be encouraging, but look at the prominent funds still invested in the company: TSS is still a favorite pick for Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Steve Cohen’s SAC Capital Advisors.
Cintas Corporation (CTAS): Although the total volume of hedge fund investment in CTAS dipped from $680.49 million at the end of the second quarter to $571.25 million at the end of the third quarter, the number of hedge funds invested in the company increased from just 11 at the end of June to 15 at the end of September. The small decline didn’t affect Jean-Marie Eveillard’s First Eagle Investment Management. The fund had $468.27 million invested in CTAS at the end of September after upping its position in the company by +2% in the third quarter.
Emdeon, Inc. (EM): The volume of hedge fund investment in EM more than doubled in the third quarter, moving from 7 hedge funds having a total $97.01 million invested in the company at the end of June to 12 hedge funds holding a total $199.82 million in the company at the end of September. George Soros’ Soros Fund Management and Cliff Asness’ AQR Capital Management have large positions in EM.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.