Artisan Partners, an investment management company, released its “Artisan Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. US markets narrowed in Q2 after broad market activity that drove US stocks higher in late 2023 and early 2024, with a few mega-cap technology names lifting the S&P 500® Index to all-time highs on the AI FOMO. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned -2.41%, -2.36%, and -2.36% respectively, in the second quarter compared to -2.17% return for the Russell 1000 Value Index. The positive stock selection in the consumer discretionary and communication services sectors offset the underperformance in the industrials and consumer staples sectors in the second quarter. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2024.
Artisan Value Fund highlighted stocks like PayPal Holdings, Inc. (NASDAQ:PYPL), in the second quarter 2024 investor letter. PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform that enables digital payments. The one-month return of PayPal Holdings, Inc. (NASDAQ:PYPL) was 12.96%, and its shares gained 17.78% of their value over the last 52 weeks. On September 4, 2024, PayPal Holdings, Inc. (NASDAQ:PYPL) stock closed at $72.61 per share with a market capitalization of $74.231 billion.
Artisan Value Fund stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2024 investor letter:
“We made one new purchase in Q2, adding PayPal Holdings, Inc. (NASDAQ:PYPL), a financial technology company that enables digital and mobile payments between consumers and merchants. PayPal has world-class assets. It operates the largest two-sided payment network (ex-China); owns Venmo, the largest peer-to-peer payment network (ex-China); and owns Braintree, the third-largest modern payment service provider (PSP), which is growing at a similar pace to peers, such as Stripe and Adyen. Each of the PSPs are taking share from legacy competitors such as Worldpay, with significant runway left on remaining share gains. As the original e-commerce payment processor with years of history in the marketplace, PayPal has access to a large trove of customer data, a first-class risk engine and embedded consumer and merchant trust. This is difficult for newer peers to replicate without time and investment. Post-COVID, PayPal’s shares have been pressured by intensifying competition, the threat of which has seemingly been exacerbated by prior management missteps. Shares trade for under 14X next year’s expected earnings, which have been reset materially lower over the past year due to depressed expectations. This is an attractive entry point to purchase a stake in a business with above-average—and improving—unit economics and a strong balance sheet. Competent new management is already leaning on the company’s strong financial position to maximize the value of these assets. While we wait for tangible results, we should have plenty of free cash flow pointed back at us in the form of share repurchases.”
A consumer in a cafe paying for goods using a mobile payment app.
PayPal Holdings, Inc. (NASDAQ:PYPL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 87 hedge fund portfolios held PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of the second quarter which was 82 in the previous quarter. PayPal increased its full-year guidance and posted impressive second-quarter results (see the details here). While we acknowledge the potential of PayPal Holdings, Inc. (NASDAQ:PYPL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed PayPal Holdings, Inc. (NASDAQ:PYPL) and shared the list of best digital currency and payments stocks to buy. PayPal Holdings, Inc. (NASDAQ:PYPL) detracted from the performance of Wedgewood Partners during Q2 2024. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.