Greg Abel became the CEO of Berkshire Hathaway at the start of this year. He didn't wait long to start making adjustments to the portfolio. During the first quarter, the conglomerate exited its multibillion-dollar positions in Visa (NYSE: V) and Mastercard (NYSE: MA).
These businesses, which were longtime holdings, were first purchased over a decade ago, when Warren Buffett was still CEO. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » One man's trash is another man's treasure. Billionaire Bill Ackman's hedge fund, Pershing Square Capital Management, bought these financial stocks during the three-month period that ended June 30.
These two companies are part of a portfolio that owns 15 positions in total. When it comes to Visa and Mastercard, here's what history says investors should do. When two of the most-followed professional capital allocators have different views on two stocks, amateur investors can find it challenging to figure out who's right.
Ignore these opinions for now. The cold, hard facts matter most. And Ackman's firm lays out a clear thesis for why Visa and Mastercard are two of the world's highest-quality companies.
Visa and Mastercard operate tollbooth business models that enable commerce to happen globally, earning tiny fees for processing transactions. They are capital-light operations that avoid taking on credit risk, while also benefiting from ongoing inflation. Consequently, profitability is incredible, with Visa (59%) and Mastercard (60%) posting stellar operating margins in their latest fiscal quarters that led to robust free cash flows.
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