Andreas Halvorsen’s Viking Global released its quarterly 13F filing with the SEC on Thursday. I took a closer look at the firm’s $16.1 billion portfolio and found that it exited a huge position in Mastercard Inc (NYSE: MA). Investors should take a closer look at the company and make sure the fundamentals are still attractive.
Viking Global’s 7 Biggest Sells
On February 14th, Viking Global filed its quarterly Form 13F regulatory filing. It revealed that Viking Global’s stock portfolio totals $16.1 billion and that its list value of stock holdings is up 4.1% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.
You can get the latest data on the firm’s holdings at finbox.io’s Viking Global page. From this page I found the biggest position reductions determined by comparing the last two filings:
|Ticker||Name||Sold ($mil)||% Of Portfolio|
|DE||DEERE & CO||$385.7||2.5%|
|FOXA||TWENTY FIRST CENTY FOX INC||$270.2||1.7%|
|RICE||RICE ENERGY INC||$210.4||1.4%|
|BAC||BANK AMER CORP||$185.9||1.2%|
The largest stock sale for the quarter was Alphabet Inc (Nasdaq: GOOGL). Viking Global reduced its position in the company by $508.4 million. The next largest stock sale was Deere & Company (NYSE: DE) at $385.7 million.
The third largest stock sale for the quarter was Mastercard Inc (NYSE: MA). Halvorsen’s firm reduced its position by $303.6 million which caught my eye due to the stock’s premium valuation.
Why Did Viking Global Sell Its Stake In Mastercard?
Mastercard provides transaction processing and other payment-related products and services Globally. Analysts covering the stock often compare the company to Visa (NYSE: V), First Data(NYSE: FDC), Fidelity National Information Services (NYSE: FIS) and Global Payments (NYSE: GPN). Comparing Mastercard’s valuation metrics and ratios to its peers offers insight into why Andreas Halvorsen exited the position.
Mastercard’s EBITDA multiple is calculated by dividing its Enterprise Value by EBITDA. Its key benefit over the P/E multiple is that it’s capital structure-neutral, and, therefore, better at comparing companies with different levels of debt.
As illustrated in the chart below, Mastercard’s EBITDA multiples generally trade at a premium to its publicly traded comps.
Shares of the company are up 59.8% over the last year and 33.6% in the last six months. The stock last traded at $176.35 as of Friday, February 16th and eleven separate valuation analyses calculate a fair value of $133.72 per share. This implies that the stock currently has a negative -24.2% margin of safety.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$130.78||-25.8%|
|5-yr DCF Revenue Exit||$125.07||-29.1%|
|Peer Revenue Multiples||$87.57||-50.3%|
|10-yr DCF EBITDA Exit||$171.06||-3.0%|
|5-yr DCF EBITDA Exit||$176.40||0.0%|
|Peer EBITDA Multiples||$132.23||-25.0%|
|10-yr DCF Growth Exit||$148.54||-15.8%|
|5-yr DCF Growth Exit||$146.80||-16.8%|
|Peer P/E Multiples||$155.95||-11.6%|
|Dividend Discount Model||$88.16||-50.0%|
|Dividend Discount Model (multi-stage)||$108.36||-38.6%|
Mastercard’s stock has performed very well in the last twelve months but now trades at a healthy premium to its peers. The stock also appears overvalued on a future cash flow basis as well. This is likely a reason why Andreas Halvorsen’s Viking Global took their chips off the table.
Here are a few more metrics that investors should consider prior to making any investment decision:
Valuation: how much upside do shares of Mastercard have based on Wall Street’s consensus price target? Take a look at our analyst upside data explorer that compares the company’s upside relative to its peers.
Risk Metrics: how much interest coverage does Mastercard have? This is a ratio used to assess a firm’s ability to pay interest expenses based on operating profits (EBIT). View the company’s interest coverage here.
Efficiency Metrics: fixed asset turnover is calculated by dividing revenue by average fixed assets. View Mastercard’s fixed asset turnover here.
Author: Brian Dentino
Expertise: financial technology, analyzing market trends
Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors.
Brian can be reached at firstname.lastname@example.org.
As of this writing, Brian did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.