Why Fiserv (FI) Is a Smart Investment Choice

Overview of Giverny Capital Asset Management's Q2 2025 Investor Letter

Giverny Capital Asset Management, LLC, an investment management company, recently released its second-quarter 2025 investor letter. The letter provides insights into the firm’s performance and key investment decisions during the first half of the year. While the market experienced volatility, the S&P 500 finished June 30 with a 6.20% gain. The portfolio underperformed initially but managed to achieve a 5.41% return over the six months. In the quarter ending in June, the portfolio returned 9.11%, slightly below the S&P 500’s 10.94% return. Investors can also review the fund’s top five holdings to understand its strategic picks for 2025.

Key Investment: Fiserv, Inc. (NYSE: FI)

One of the notable stocks highlighted in the investor letter is Fiserv, Inc. (NYSE: FI), a leading provider of payment and fintech services. Despite a one-month return of -21.45% and a 14.04% decline in value over the past 52 weeks, the stock closed at $134.28 per share on August 5, 2025, with a market capitalization of $72.994 billion.

In the letter, Giverny Capital explained that they increased their position in Fiserv during the quarter. This decision came after the company reported slower growth in its Clover payment processing business, which saw an 8% increase in the first quarter instead of the expected 10%. This led to a 30% drop in the stock price. However, the firm emphasized that Fiserv has a long history of strong performance, having grown earnings by at least 10% for 39 consecutive years.

Fiserv serves as a primary technology provider to thousands of regional banks, which in turn sell products like Clover to their customers. Clover enables businesses to process credit card payments directly into their bank accounts, offering a streamlined financial solution. Although Clover represents only about 15% of Fiserv’s total business, the company has a range of other products that are widely adopted by its bank partners.

Despite the temporary slowdown in Clover’s growth, Fiserv is expected to grow earnings by approximately 15% this year, reaching around $10 per share. Analysts predict EPS of nearly $12 in 2026. Giverny Capital added to its position at around $169 in May, and the stock closed the quarter slightly higher than that. Currently, the stock trades at just over 14x next year’s earnings estimate, which is significantly lower than the broader market’s valuation of more than 20x forward estimates.

Additional Insights and Market Considerations

While Fiserv remains a strong performer, Giverny Capital noted that some AI stocks may offer greater potential for higher returns within a shorter timeframe. The firm suggested exploring AI stocks with significant upside potential, such as the cheapest AI stock currently available.

It is worth noting that Fiserv, Inc. (NYSE: FI) is not listed among the 30 most popular stocks among hedge funds. According to the firm’s database, 72 hedge fund portfolios held Fiserv at the end of the first quarter, compared to 80 in the previous quarter. In the second quarter of 2025, Fiserv’s adjusted revenue grew by 8% to $5.2 billion.

For investors interested in further information, Giverny Capital encourages reviewing their hedge fund investor letters from Q2 2025. These documents provide additional insights into the strategies and performance of various hedge funds and leading investors.

Conclusion

Giverny Capital Asset Management’s Q2 2025 investor letter highlights both challenges and opportunities in the current market. While the firm acknowledges the risks associated with investing in Fiserv, it remains confident in the company’s long-term prospects. At the same time, the firm is exploring other investment avenues, particularly in the AI sector, which it believes holds greater promise for future returns. Investors are encouraged to review the detailed reports and consider a diversified approach to their portfolios.