10 Best Growth Stocks to Buy According to Marc Majzner’s Clearline Capital

In this article, we discuss the 10 best growth stocks to buy according to Marc Majzner’s Clearline Capital.

Marc G. Majzner launched Clearline Capital in February 2013 with a seed capital of $70 million from Talpion Fund Management. He is currently the fund’s portfolio manager.

Majzner earned his Master’s of Computer Science degree from Brown University. He later worked as an investment banking analyst at Credit Suisse. Additionally, he was employed at Talpion Fund Management as a senior portfolio manager.

Clearline Capital, based in New York, is a catalyst-driven long/short equity hedge fund. It specializes in mid-cap stocks. The goal of the fund is to generate high absolute rates of return while lowering the risk of capital loss.

At the end of Q2 2022, Clearline Capital’s 13F portfolio was valued at over $773.9 million, down from $869.8 million a quarter earlier. The hedge fund invests in several sectors, including information technology, industrials, consumer discretionary, healthcare, finance, and communications.

Some of the top growth stocks in Majzner’s fund portfolio at the end of the second quarter of 2022 included Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Array Technologies, Inc. (NASDAQ:ARRY).

Our Methodology:

For this article, we went through Clearline Capital’s latest 13F filing for the quarter ending June 30 and selected the 10 best growth stocks that were part of the fund’s portfolio.

Growth Stocks to Buy According to Marc Majzner’s Clearline Capital

10. Magnachip Semiconductor Corporation (NYSE:MX)

Stake Value in Clearline Capital’s 13F Portfolio: $17.34 million

Percentage of Clearline Capital portfolio: 2.24%

Number of Hedge Funds: 27

Magnachip Semiconductor Corporation (NYSE:MX) designs and produces semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The company was previously featured in our list of the best software stocks to buy this quarter.

In September, Magnachip Semiconductor Corporation announced an expansion of its stock repurchase program to $87.5 million.

At the end of Q2, 27 hedge funds in our database had a position in Magnachip Semiconductor Corporation.

Here is what Altron Capital Management has to say about Magnachip Semiconductor Corporation in its Q4 2021 investor letter:

MagnaChip Semiconductor Corp.. While the previous buyout offer from Wise Road Capital did not go through as many expected, the company is still in talks with other potential buyers. Furthermore, the company announced a USD 75 million share buyback, which represents a significant percentage of the company’s shares. While we do not generally enter positions with the anticipation of a buyout, it is the case that a MagnaChip acquisition will be the most likely outcome.

9. New Relic, Inc. (NYSE:NEWR)

Stake Value in Clearline Capital’s 13F Portfolio: $18.89 million

Percentage of Clearline Capital portfolio: 2.44%

Number of Hedge Funds: 41

Headquartered in San Francisco, California, New Relic, Inc. (NYSE:NEWR) provides a software platform that allows website and application owners to track the performance of their services.

New Relic, Inc. announced the Q2 2022 results in August, reporting $216.46 million in revenue. The normalized EPS reported was -$0.26. Clearline Capital increased stakes in the company by 93% in the second quarter of 2022. The hedge fund held 377,509 shares in New Relic, Inc. worth $18.89 million at the end of Q2 2022.

New Relic, Inc. strategic partnerships with companies like Microsoft Azure are also gaining investors’ attention. In September, Credit Suisse analyst Fred Lee initiated coverage of New Relic with an Outperform rating and a $78 price target.

41 hedge funds in Insider Monkey’s database had stakes in New Relic, Inc.. These hedge funds held shares in the firm worth about $1.20 billion. Eminence Capital, with a position worth $279.24 million, stood as the most significant shareholder of New Relic, Inc..

8. Zendesk, Inc. (NYSE:ZEN)

Stake Value in Clearline Capital’s 13F Portfolio: $19.10 million

Percentage of Clearline Capital portfolio: 2.46%

Number of Hedge Funds: 63

Zendesk, Inc. (NYSE:ZEN) is a software development company based in California that provides service solutions in the US, as well as internationally. In September 2022, Zendesk stockholders approved the software company’s merger with a consortium led by Hellman & Friedman and Permira to provide superior value.

Clearline Capital increased stakes in Zendesk, Inc. by a staggering 540% in the second quarter of 2022, bringing the value of the stakes to a total of $19.10 million.

Our data shows that Light Street Capital is one of the biggest stakeholders of Zendesk, Inc., with 7.29 million shares worth $540.14 million.

At the end of the second quarter of 2022, 63 hedge funds in the database of Insider Monkey held stakes worth $1.89 billion in Zendesk, Inc..

In its Q4 2021 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and Zendesk, Inc. was one of them. Here is what the fund said:

Zendesk, Inc. provides customer support software solutions. After successfully navigating the early stages of the pandemic in 2020, the firm has seen its stock cool off on the threat of increased competition from low-cost alternatives. We do not believe that the competitive dynamics have been altered. In fact, the company’s annual revenue growth rate has accelerated in 2021 from the second half of 2020. The shares also currently trade at a deep discount to other cloud-based software vendors.

7. The Brink’s Company (NYSE:BCO)

Stake Value in Clearline Capital’s 13F Portfolio: $19.54 million

Percentage of Clearline Capital portfolio: 2.52%

Number of Hedge Funds: 20

Based in Virginia, The Brink’s Company provides transportation, cash management, and other security-related services. The company is amongst the top growth stocks in Marc Majzner’s Clearline Capital.

Clearline Capital increased stakes in The Brink’s Company by 5% in the second quarter of 2022. The hedge fund held 321,942 shares in Brink’s Company, worth $19.54 million.

In line with The Brink’s Company strategy of expansion, it acquired NoteMachine in October 2022 which manages over 9K ATMs in the U.K.

The Brink’s Company reported revenue of $1.13 billion in the second quarter of 2022. The normalized EPS reported was $1.29. Both beat market estimates by $33.07 million and $0.10, respectively. Even though the company faces headwinds due to the macro-economic environment, analysts remain bullish on the company stock. Truist analyst Tobey Sommer kept a Buy rating on the company shares.

At the end of the second quarter, 20 hedge funds tracked by Insider Monkey owned stakes in The Brink’s Company. The total value of these stakes is $261.27 million. Ariel Investments is the largest stakeholder in The Brink’s Company (NYSE:BCO as of September, with a $132.89 million position in the company.

6. Momentive Global Inc. (NASDAQ:MNTV)

Stake Value in Clearline Capital’s 13F Portfolio: $20.31 million

Percentage of Clearline Capital portfolio: 2.62%

Number of Hedge Funds: 41

Headquartered in California, Momentive Global Inc. (NASDAQ:MNTV) provides software solutions to help businesses turn stakeholder feedback into action. The company announced Q2 2022 results in August, reporting $120.16 million in revenue.

Clearline Capital is amongst the top investors in Momentive Global Inc.. In the second quarter, Clearline Capital increased its stakes in Momentive Global Inc. by 81% bringing the total value of the stake to $20.31 million.

In August 2022, following the release of the company earnings, Wells Fargo analyst Brian Fitzgerald maintained an Overweight rating on the company shares with a price target of $15.

At the close of Q2 2022, 41 hedge funds were long Momentive Global Inc. with stakes worth $285.03 million. Sachem Head Capital is the largest stakeholder in Momentive Global Inc. as of August, with a $61.29 million position in the company.

Here is what ClearBridge Investments had to say about Momentive Global Inc. in its “Mid Cap Strategy” third-quarter 2021 investor letter:

During the quarter we also initiated a position in Momentive Global in the IT sector. Known for its online survey brand Survey Monkey, Momentive is capitalizing on the growing importance of customer feedback, market research and employee engagement. Momentive’s competitive positioning through low-cost pricing has helped it achieve strong brand recognition, with its business enterprise division generating high growth rates and attractive incremental margins.

5. Perrigo Company plc (NYSE:PRGO)

Stake Value in Clearline Capital’s 13F Portfolio: $22.61 million

Percentage of Clearline Capital portfolio: 2.92%

Number of Hedge Funds: 24

Based in Ireland, Perrigo Company plc (NYSE:PRGO) provides over-the-counter (OTC) health and wellness solutions. The company derives 70% of its net sales from the US healthcare system and is amongst the top growth stocks in Marc Majzner’s Clearline Capital portfolio.

Perrigo Company plc (NYSE:PRGO) was upgraded by Argus analyst Kristina Ruggeri from Hold to Buy with a $46 price target in September 2022.

Perrigo Company plc (NYSE:PRGO) is one of the largest holdings of Clearline Capital. The hedge fund started building its position in the company with shares worth over $22.61 million, which made up 2.92% of Marc Majzner’s portfolio.

In Q2 2022, Camber Capital Management was one of the leading shareholders of Perrigo Company plc (NYSE:PRGO), with shares worth over $111.56 million. Moreover, 24 hedge funds in Insider Monkey’s database held a $633.16 million worth of stake in the company in Q2 2022.

4. Meta Platforms, Inc. (NASDAQ:META)

Stake Value in Clearline Capital’s 13F Portfolio: $24.34 million

Percentage of Clearline Capital portfolio: 3.14%

Number of Hedge Funds: 184

Based in California, Meta Platforms, Inc. is a communication platform that enables connectivity through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide.

Clearline Capital increased its position in the company by 56% in the second quarter bringing the total value of the stakes to $24.34 million.

184 hedge funds in Insider Monkey’s database held $18.19 billion worth of stakes in the company in Q2 2022.

Harding Loevner, an asset management company, mentioned Meta Platforms, Inc. in its second-quarter 2022 investor letter. Here’s what the firm said:

Any discussion of Q2 underperformance is incomplete without addressing two FAANG stocks. We do not share the market’s concerns about growth prospects at Facebook, Meta Platforms, Inc. (NASDAQ:META)’s core social media platform. Yes, growth is moderating as the business matures. There is also work to be done on technical workarounds to repair the damage to earnings growth from privacy changes implemented by Apple that impair Facebook’s ad targeting to iPhone users. But Meta’s digital advertising model still generates an extremely attractive rate of return on investment for the merchants it serves. Once its Apple workarounds are complete, we expect growth through market share gains and addressable market expansion to resume. Despite all the hyped new initiatives and skirmishes with rivals, Facebook remains an immensely free cash flow-generative business with huge advantages in putting its cash to work developing direct consumer relationships and monetizing them through targeted advertising. CEO Mark Zuckerberg has noted on multiple occasions how the company’s returns from its significant investments in AI have been even higher than it expected, in terms of driving higher revenue and lower costs. We view Meta shares as a bargain today, trading at 15 times earnings after over US$10 billion in annual expenditures on its Metaverse investments.

3. Amazon.com, Inc. (NASDAQ:AMZN)

Stake Value in Clearline Capital’s 13F Portfolio: $25.82 million

Percentage of Clearline Capital portfolio: 3.33%

Number of Hedge Funds: 252

Headquartered in Washington, Amazon.com, Inc. operates globally in the retail and Cloud markets. It is amongst the top growth stocks in Marc Majzner’s Clearline Capital portfolio, with a position worth $25.82 million.

Amazon.com, Inc. is all set to generate profits this holiday season. In October the company announced that it is employing 150,000 people nationwide in full-time, seasonal, and part-time positions to ensure smooth and quality operations during the holiday season. In October 2022, Morgan Stanley analyst Ravi Shanker kept an Underweight rating on the shares.

Diamond Hill Capital Management, an investment advisor, mentioned Amazon.com, Inc. in its second quarter 2022 investor letter. Here’s what the firm said:

Amazon.com, Inc. (NASDAQ:AMZN)’s shares underperformed as valuations of fast-growing companies continued to compress in Q2. Amazon’s growth investments over the past two years have pressured earnings as consumer demand has been weaker than anticipated. However, we believe the company will be able to grow into its infrastructure investments over time. These investments have obscured the magnitude of sustainable free cash flow as well as the attractive valuation of the business relative to peers.

2. Array Technologies, Inc. (NASDAQ:ARRY)

Stake Value in Clearline Capital’s 13F Portfolio: $27.02 million

Percentage of Clearline Capital portfolio: 3.49%

Number of Hedge Funds: 26

Array Technologies, Inc. is a leading supplier of utility-scale solar tracker technology in the world. Marc Majzner’s Clearline Capital owns 2.4 million shares of Array Technologies, Inc. worth about $27 million as of Q2 2022.

On September 19, Piper Sandler analyst Kashy Harrison upgraded Array Technologies, Inc. to Overweight from Neutral with a price target of $28, up from $20. The company’s “strong order book” suggests that its revenue and EBITDA outlook for 2023 could be attractive, the analyst told investors.

The stock is popular among hedge funds. At the end of the second quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes in Array Technologies, Inc., up from 20 in the preceding quarter.

1. NCR Corporation (NYSE:NCR)

Stake Value in Clearline Capital’s 13F Portfolio: $39.81 million

Percentage of Clearline Capital portfolio: 5.14%

Number of Hedge Funds: 47

NCR Corporation (NYSE:NCR) is a software, consulting, and technology corporation that offers a variety of expert services and electronic products. Its products include automated teller machines, point-of-sale terminals, check processing systems, and barcode scanners.

On September 15, NCR Corporation announced that the plan to divide the company into two distinct publicly traded businesses, one focused on the digital commerce industry and the other on ATM operations, has received full board approval. The separation is planned for the end of 2023. Following this announcement, the stock plunged 22%.

As of the second quarter, Clearline Capital owns more than 1 million shares worth $39.8 million in NCR Corporation. The hedge fund increased its holdings in the company by 100% in the second quarter of 2022. The stock has been a part of Marc Majzner’s fund since Q4 2014.

47 hedge funds in Insider Monkey’s database had stakes in NCR Corporation.

You can also take a look at 10 High-Yield Dividend Stocks for Stable Income and 10 Dividend Stocks to Buy According to Billionaire Cliff Asness.

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This article is originally published at Insider Monkey.