It’s actually called sprite, dunno why I wrote stencil, sorry for the confusion. From the manual Sprite…
“This shader is designed to render a sprite or billboard on a grid. Transparency is infinite, because the shader ignores the Ray Depth settings in the render options. This means that you can have thousands of sprites at different depths and see all of them correctly without having to set extraordinarily high Ray Depth values.”
It’s pretty straightforward to use, check the attached picture. Basically settings as described in the image, Matte ticked to enabled, Mode set to intensity, plug whatever you want as the overall color into the Input and your transparency map goes into the Matte.