Weitz Investment Management warned investors to prepare for an “adventure” in 2022, due to the long list of “crosscurrents and transitions that we’ll face.” The fund also spotlighted the opportunity in credit card giants Visa (NYSE:V) and Mastercard (NYSE:MA), saying they can fend off the challenge from fintechs.
Writing in a fund letter issued this week, Wally Weitz and Brad Hinton, co-CIOs and portfolio managers for the fund, advised investors to focus on fundamentals to overcome what’s likely to be a volatile year.
“We know that very little in economics, politics and investor psychology is predictable. We do believe, though, that business value is (roughly) measurable and that it (eventually) exerts a gravitational pull on a company’s stock price,” Weitz and Hinton wrote.
“When confidence is shaken and markets are volatile, active managers have the raw material they need to add value for investors,” they added.
In terms of individual recommendations, Weitz and Hinton pointed to Visa (V) and Mastercard (MA), arguing that “investors have overestimated the negative competitive impact of new fintech companies.”
“Many of these ‘disrupters’ depend on the Visa and Mastercard ‘rails’ over which electronic payments travel, and these wily incumbents have a way of acquiring, copying or otherwise competing with upstarts,” they noted.
Weitz and Hinton also contended that V and MA have had their earnings suppressed by COVID-related headwinds, as the pandemic has tamped down lucrative cross-border payments. This has contributed to the stocks falling out of favor with investors lately.
V reported earnings last week that beat expectations. The company also issued strong guidance, contributing to a rally in its shares. MA had a similar story, jumping in the wake of its quarterly report.
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