uploads/2016/05/514.png

MasterCard’s Performance since Berkshire Hathaway Initiated a Buy

By

Updated

Berkshire Hathaway has held MasterCard since 1Q11

According to its 1Q11 filings, Berkshire Hathaway (BRK) bought 216,000 shares of MasterCard (MA) worth $60.3 million. In its latest filings at the end of 1Q16, Berkshire reported total holdings of 4.9 million shares in MasterCard. We can see that BRK is optimistic about the company’s performance with this increase of 4.7 million shares over the last five years.

MasterCard generated investor returns of 2.7% in the trailing 12-month period and -2.1% in the trailing one-month period. In comparison, it generated returns of -1.8% year-to-date. The company’s share price fell 0.9% in the trailing five-day period. Since BRK disclosed its holdings in MasterCard, the company’s share price has risen a whopping 242%.

Verisign’s share price fell 4.5% in the trailing one-month period but rose 18.2%, 46.6%, and 48.9% in the three-month, six-month, and 12-month periods, respectively, after BRK’s disclosure of MA holdings.

Article continues below advertisement

Shareholder value

MasterCard’s dividend yield rose from 0.5% in fiscal 1Q13 to 0.6% in fiscal 1Q14 and 0.7% in fiscal 1Q15. At the end of 1Q16, MasterCard had a dividend yield of 0.8%, or $0.19. In comparison, peer companies Visa (V) and Fidelity National Information Services (FIS) have dividend yields of 0.7% and 1.8%, respectively.

MasterCard accounted for 0.36% of the BRK portfolio at the end of 1Q16 and 2.4% of the Technology Select Sector SPDR ETF (XLK).

Of the 39 analysts covering MasterCard, 31 have “buy” recommendations, one has a “sell” recommendation, and seven have “hold” recommendations on MasterCard stock.

Analysts’ stock price target for the company is $112, with a median target estimate of $110. MasterCard is trading at a discount of 15% to its median target.

In the final part of this series, we’ll see how Visa has performed since Berkshire Hathaway increased its holdings.

Advertisement

More From Market Realist