We recently published a list of 10 safe stocks to buy according to billionaire Chilton. In this article, we take a look at how Mastercard Incorporated (NYSE:MA) compares to the other safe-haven stocks recommended by billionaire Richard Chilton.

Founded in 1992 by Richard L. Chilton, Jr., Chilton Investment Company seeks to achieve attractive long-term returns with minimal volatility. Since its inception, the firm has consistently followed a fundamental, bottom-up investment approach driven by an ownership mentality. Its primary objective is to acquire partial ownership of outstanding companies rather than engaging in short-term stock trading.

Richard L. Chilton Jr. is chairman, CEO and chief investment officer of Chilton Investment Co. He has been a hedge fund manager for 18 years, a notable tenure in the demanding hedge fund industry. Chilton began his career in 1983 as an analyst at Alliance Capital Management, where he worked with small-cap equity managers Frank Burr and Paul Jenkel. In 1990, he founded an asset management firm for the private bank Allen & Co., but left after two years to start his own hedge fund firm.

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Chilton built his firm in a small one-room office in New York, leveraging the experience of Julian Robertson of Tiger Management Corp. in shorting stocks. He managed and founded a classic long/short equity hedge fund. Chilton’s decision to start his own hedge fund was influenced by Art Samberg, a board member of the mutual fund he co-managed. After he expressed his desire to leave Allen & Co., where he had founded an asset management firm, Samberg, recognizing his talent, encouraged him to start his own fund. In January 1992, Chilton left Allen & Co., turning down an offer from CEO Herbert Allen to buy a stake in his new company, and instead accepted a $1 million investment from Allen, which he combined with his family’s money to start his hedge fund with $5 million.

When Chilton founded his hedge fund in July 1992, he wanted to create a classic long/short equity hedge fund inspired by Alfred Winslow Jones’ first hedge fund model. His strategy was to always stay both long and short without trying to time the market. Chilton’s reputation grew by word of mouth, attracting prominent investors, foundations and funds. Pension funds later followed.

Chilton Investment’s appeal to institutional investors lies in its client-focused approach and strong performance. The firm is a leader in transparency and SEC registration. During the 2008 financial crisis, Chilton allowed clients to withdraw money that later flew back. Chilton’s background in managing pension funds at Alliance Capital gave him important experience in transparency and accountability, making his firm attractive to investors looking for long/short strategies. Chilton currently sees opportunities in blue-chip companies with strong financials, solid dividend yields and steady earnings growth. He expects these “dividend aristocrats” to outperform in a stagnant S&P environment and provide stability and consistent returns through rising dividends. Today, Chilton’s firm has grown significantly and has offices worldwide, a team of industry analysts and manages $7 billion in various strategies across global markets.

Richard L. Chilton Jr. graduated from Alfred University with a bachelor’s degree in finance and economics. Known for his business acumen, Forbes ranks Richard Chilton as the 773rd richest person in the world. His net worth is estimated at $1.3 billion. Chilton Investment Company serves 9 clients and has discretionary assets under management totaling $1,266,939,000, according to its March 2024 Form ADV. Its 13F filing for the first quarter of 2024 reported $3.6 billion worth of 13F securities under management.

Our methodology

This article highlights the 10 safe stocks to buy according to billionaire Chilton. It includes analyst ratings and key details about each company, as well as the number of hedge funds invested in them.

Why focus on the stocks hedge funds invest in? Our research shows that if you follow the top picks of leading hedge funds, you can generate returns that beat the market. We use this strategy in our quarterly newsletter, where we select 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has produced a return of 275%, beating the benchmark by 150 percentage points. (Further details can be found here)

A woman uses a payment terminal at the checkout of a store and shows payment products and solutions.

Mastercard Incorporated (NYSE:MA)

Chilton Investment Company share value: USD 153,061,727

Number of hedge fund owners: 148

Mastercard Incorporated (NYSE:MA) is a global payments technology leader that connects consumers, businesses and financial institutions to enable secure and efficient electronic transactions worldwide. Mastercard Incorporated (NYSE:MA)’s revenue continues to grow steadily, driven by increased consumer spending, expansion into new markets and the growth of digital payments. With solid profit margins and strong cash flow, Mastercard Incorporated (NYSE:MA) is well positioned to navigate economic challenges while remaining profitable. In addition, Mastercard Incorporated’s (NYSE:MA) continued focus on innovation – particularly in digital solutions, cybersecurity and new payment technologies – as well as its ventures in data analytics and AI further strengthen its future growth prospects.

Although Mastercard Incorporated’s (NYSE:MA) dividend yield is currently low at 0.6%, its impressive dividend increase history makes it an attractive investment. Mastercard Incorporated (NYSE:MA) has increased its dividend for 12 consecutive years, with a 500% increase over the past decade, representing a compound annual growth rate of about 20%. This consistent dividend growth suggests that Mastercard Incorporated (NYSE:MA) could offer a higher yield in the future if this trend continues. Moreover, despite the modest yield, Mastercard Incorporated (NYSE:MA) has produced exceptional returns, delivering a total return of 552% over the past 10 years, compared to 227% for the S&P 500.

Mastercard Incorporated (NYSE:MA) regularly receives buy recommendations from analysts as they see significant growth potential. Price targets range from $424 to $545 and average $493.47, suggesting a potential upside of up to 17.24%. Mastercard Incorporated (NYSE:MA) ranks 7th on our list of safe stocks to buy, according to billionaire Chilton. At the end of the first quarter of 2024, Chilton Investment Company owned 317,839 shares of Mastercard Incorporated (NYSE:MA) valued at $153,061,727. This investment represented 4.19% of Chilton’s total portfolio, according to regulatory filings.

L1 Capital International Fund stated the following about Mastercard Incorporated (NYSE:MA) in its second quarter 2024 investor letter:

“The share prices of Mastercard Incorporated (NYSE:MA) and Visa, both long-term fund investments, have declined in recent months. There were no dramatic developments, but there was a general slight slowdown in the pace of growth in consumer spending in the U.S. and globally, a court decision rejecting Mastercard and Visa’s proposed settlement in a long-running dispute with U.S. merchants, and other minor adverse regulatory developments. We continue to view Mastercard and Visa as two of the highest quality companies in the world, and both are well positioned to continue to deliver attractive, risk-adjusted returns to shareholders over time.”

Total MA 7th place on our list of safe stocks to buy according to billionaire Chilton. While we recognize MA’s potential as an investment, our conviction lies in the belief that under-the-radar AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that shows more promise than MA but trades at less than 5x earnings, read our report on the cheapest AI stock.

READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these 10 stocks in June.

Disclosure: None. This article was originally published on Insider Monkey.