More and more consumers are using plastic for their purchases instead of cash, and that bodes well for MasterCard (MA), says Matt Glaser, portfolio manager for the Turner Spectrum Fund (TSPCX). Nevertheless, while he likes the credit card business, Glaser is not bullish on the entire financial sector, taking a short position in companies with heavy exposure to banks and brokerages.
"MasterCard is essentially an oligopoly. There are only a couple of companies in the world that have dominant share in this area," says Glaser.
The $623 million fund, which launched in May 2009, has returned 5.5% over the past year, better than 83% of its peers in Morningstar's long/short category.
On the long side, he also likes communications chipmaker Broadcom (BRCM) as a result of the company's broad exposure to wireless headsets, smartphones and tablets. Aside from Broadcom's expanding end markets, Glaser also likes the stock's valuation, which he says is cheap at around 12 times next year's earnings.On the short side, Glaser is betting against healthcare companies with large exposure to Europe, as well as firms supplying the struggling financial services industry. "Obviously the financial services industry is under stress. And we think earnings will decelerate at those companies that derive a significant portion of their revenues from banks and brokers, whether they are selling research services or data services," says Glaser.
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