Ackman vs Abel: Visa and Mastercard Stocks See Contrasting Fortunes

Pershing Square's Bill Ackman and Warren Buffett's successor Greg Abel have drawn battle lines in the stock market, with Visa (V) and Mastercard (MA) at the center of attention. Abel sold a significant portion of his stake in both companies in the first quarter, exiting them completely. This move would have been worth $2.91 billion for Visa and $2.28 billion for Mastercard.

Ackman, on the other hand, has taken a contrarian view, buying stakes in both Visa and Mastercard in the second quarter. In his quarterly letter, Ackman highlighted the companies' dominance in global payments, with an increasing share of revenue growth coming from value-added services. He described them as 'two businesses we long admired.'

Ackman sees upside in the stocks, citing their 'capital light' business model and potential for double-digit revenue growth in the coming years. Visa trades at 23x forward earnings estimates, while Mastercard trades at 24x. Ackman believes both companies will generate attractive returns for years to come.

An early look at the two stocks shows that Ackman may already be winning this battle. Visa stock has risen by 14% from the end of the second quarter to the end of the first, while Mastercard is up 3.1% over the same period. Ackman's gains are already locked in, as he bought his stakes at lower prices.