What happened

Shares of point-of-sale credit card payments facilitator Square (SQ -1.45%) were soaring 5.4% at noon EST on Tuesday. The move higher may be in response to a raised price target on the stock at KeyBanc yesterday (the analyst says Square, currently less than $189 a share, is worth closer to $250). But the stock already inched up 1.1% yesterday on that news.

Today, I suspect there's a different catalyst at work.

Stock up glowing green arrow climbs on a stock screen

Image source: Getty Images.

So what

Last night, after close of trading, the Lone Pine Capital hedge fund revealed its stock sales and purchases made in the quarter ending Sept. 30. According to an analysis by TheFly.com, the hedge fund, founded and run by ace investor Stephen Mandel, ratcheted back his investments in traditional financial firms such as Mastercard and exited its stake in Visa entirely. And Lone Pine started a new investment in Square instead, investing $872.6 million in the fintech company.  

Now what

Does this expression of confidence by a "lone" hedge fund investor mean you should buy into Square stock?

That seems to be what a lot of people are doing today, and I can't disagree. While Square stock is certainly not cheap at a valuation of nearly 265 times trailing earnings, the company is growing like a weed, with sales up 140% in the most recent quarter alone, versus sales that are down 14% at Mastercard and 17% at Visa.

I'd rather see Square's profits growing at least as fast as sales (profits were up only 24% last quarter), rather than investing on sales growth alone. But with the stock up 170% over the past 52 weeks, it's hard to argue with success.