Singapore’s Wealth Fund Is Buying Affirm (AFRM) Stock. Here’s Why.

Affirm (NASDAQ:AFRM) is in the spotlight after Singapore’s sovereign wealth fund reported purchasing more shares of the buy now, pay later (BNPL) company. Shares of AFRM stock have declined by more than 60% year-to-date (YTD) in the face of a challenging economic environment threatened by rising interest rates. With rising interest rates, any future cash flows that Affirm makes will be reduced when discounted to the present value. In addition, higher interest rates will increase the company’s cost of funding, which can hurt its profitability. Moreover, rising inflation may reduce the average consumers’ spending habits, which in turn would affect Affirm.

Smartphone with website of US financial technology company Affirm Holdings Inc (AFRM) on screen with logo Focus on top-left of phone display
Source: Wirestock Creators / Shutterstock.com

Despite the threat of rising interest rates, the Government of Singapore Investment Corporation, or GIC Private, believes that now is the time to buy.

GIC Private Buys 209,092 Shares of AFRM Stock

According to a Form 4 filing received by the U.S. Securities and Exchange Commission (SEC), GIC purchased shares of Affirm on April 27 and 28. GIC is classified as an insider of the company because it owns more than 10% of all shares outstanding.

On April 27, the firm reported purchasing 181,864 shares at an average price of $29.60 per share. The next day, GIC purchased another 28,038 shares at an average price of $30.13. In total, the two transactions amounted to just over $6.2 million. That’s no small purchase.

After the transaction, GIC owns a total of 16.32 million shares. Of those shares, 11.82 million are owned indirectly through Jasmine Ventures. Jasmine Ventures is controlled and managed by GIC Special Investments, which is a wholly-owned subsidiary of GIC Private. Meanwhile, GIC Private is wholly owned by the government of Singapore.

GIC likely believes that Affirm’s losses this year are overstated. Furthermore, Affirm has an average price target of $62.12 among 16 firms with coverage of the stock. That target would imply upside of more than 100% from current prices.

Who Else Is Betting Big On Affirm?

Tracking institutional ownership is important, as these large funds provide liquidity and price support for stocks. During Q4, 423 funds reported owning the company, an increase from 329 funds in the prior quarter. Meanwhile, 13F filers own a total of 138.56 million shares, a 21% increase from Q3. With that in mind, let’s take a look at Affirm’s top shareholders:

  1. Max Levchin, co-founder and CEO: 29.09 million shares.
  2. Shopify (NYSE:SHOP): 20.29 million shares.
  3. GIC Private: 16.32 million shares.
  4. Baillie Gifford: 16.31 million shares.
  5. Vanguard: 14.61 million shares.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.


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