In this article, we discuss the 10 best stocks to buy according to Brennan Diaz’s Fernbridge Capital Management. If you want to skip our detailed analysis of Diaz’s history, investment philosophy, and hedge fund performance, go directly to the 5 Best Stocks To Invest In According To Brennan Diaz’s Fernbridge Capital Management.
Specializing in investments and equities across a number of different industries, hedge fund manager Brennan Diaz is the founder of Fernbridge Capital Management, an alternatives hedge fund based in Los Angeles, California. Having started his career at The Goldman Sachs Group in 2006, he served as an investment banking analyst for two years, before leaving the firm to join Silver Point Capital as an analyst, focusing on distressed debt investing, particularly in the Consumer Retail sector. In March of 2010, he joined Viking Global Investors, serving as portfolio manager till 2015, moving on to later work for Junto Capital. In September 2019, he founded Fernbridge Capital Management, his very own hedge fund.
Managing more than $819.45 million in its investment portfolio by the end of the second quarter of 2021, up from $748.25 million in the previous quarter, Fernbridge Capital Management invests heavily in Telecommunications and IT sectors, with the Technology industry making up a total of 41.6% of the fund’s investment portfolio.
Among the biggest positions in the investment portfolio of Fernbridge Capital Management at the end of the June quarter of 2021 include multinational companies like Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX).
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Our Methodology
Let us now examine the 10 best stocks to invest in according to Brennan Diaz’s Fernbridge Capital Management. For this article, we analyzed the top stocks from Ferbridge Capital Management’s 13F portfolio as of the end of the second quarter.
10 Best Stocks To Invest In According To Brennan Diaz’s Fernbridge Capital Management
10. Activision Blizzard, Inc. (NASDAQ:ATVI)
Fernbridge Capital Management’s Stake Value: $36.39 million
Percentage of Fernbridge Capital Management’s 13F Portfolio: 4.44%
Number of Hedge Fund Holders: 78
Starting of our list of the 10 best stocks to invest in according to Brennan Diaz’s Fernbridge Capital Management, Activision Blizzard, Inc. (NASDAQ:ATVI) is an industry-leading developer and publisher of interactive entertainment content. Some of the company’s most famous products include the Call of Duty series, Overwatch and the Diablo series, among others.
According to the 13F Filings for the second quarter of 2021, Fernbridge Capital Management holds 381,363 shares in the company, worth more than $36.39 million, accounting for 4.44% of the fund’s portfolio value. Overall, 78 of the 873 elite funds tracked by Insider Monkey reported owning stakes in Activision Blizzard, Inc. (NASDAQ:AVTI) by the end of Q2.
On September 29, Jefferies analyst Andrew Uerkwitz kept a Buy rating on the stock, alongside a $120 price target.
Similar to Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX), Activision Blizzard, Inc. (NASDAQ:AVTI) is a notable stock to invest in.
Cooper Investors Global Equities Fund (Hedged), in their Q1 2021 investor letter, mentioned how their stakes in Activision Blizzard, Inc. (NASDAQ:AVTI) could lead to significant value latency. Here is what the fund had to say:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates…” (Click here to see the full text)
9. Global Payments Inc. (NYSE:GPN)
Fernbridge Capital Management’s Stake Value: $42.75 million
Percentage of Fernbridge Capital Management’s 13F Portfolio: 5.21%
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a Georgia-based payments technology and software solutions provider. It is placed ninth on our list of 10 best stocks to invest in according to Brennan Diaz’s Fernbridge Capital Management.
On September 9, BMO Capital analyst James Fotheringham kept an Outperform rating on Global Payments Inc. (NYSE:GPN) stock and raised the price target to $217 from $206.
As of the end of the second quarter, 66 hedge funds tracked by Insider Monkey reported owning stakes in Global Payments Inc. (NYSE:GPN). The total worth of these stakes is $4.85 billion. This shows the hedge fund sentiment is positive for the financial technology company, as 62 funds had stakes in the company in the previous quarter, with a total worth of $4.5 billion.
As of Q2, Brennan Diaz’s hedge fund holds 227,996 shares in Global Payments Inc. (NYSE:GPN), amounting to more than $42.75 million in worth and representing 5.21% of his fund’s portfolio value.
In the Q2 2021 investor letter of Carillon Tower Advisers, the fund mentioned Global Payments Inc. (NYSE:GPN). Here is what the fund said:
“Global Payments is a payments technology company delivering innovative payments and software solutions that allow customers to operate their businesses more efficiently. Investors have been disappointed at the pace of the revenue acceleration given the uneven nature of the reopening globally. The U.S. is doing well with issues, but Europe and Asia remain in various stages of reopening and lockdowns and thus, spending has been curtailed. However, we believe that the U.S. is leading the way and as vaccines are rolled out worldwide, Global Payments stands to benefit in the second half of this year and into 2022.”
8. Netflix, Inc. (NASDAQ:NFLX)
Fernbridge Capital Management’s Stake Value: $43.73 million
Percentage of Fernbridge Capital Management’s 13F Portfolio: 5.33%
Number of Hedge Fund Holders: 113
Netflix, Inc. (NASDAQ:NFLX) is a subscription-based entertainment services company that offers TV series, documentaries and feature films across a wide variety of genres and languages. The company has roughly 204 million paid members in over 190 countries.
As of the end of the second quarter, 113 hedge funds tracked by Insider Monkey reported owning stakes in Netflix, Inc. (NASDAQ:NFLX). The total worth of these stakes is $13.2 billion. This is compared to 110 hedge funds that had stakes in the company in the previous quarter, worth approximately $14 billion.
On October 13, Jefferies analyst Andrew Uerkwitz raised his price target on Netflix, Inc. (NASDAQ:NFLX) to $737 from $620, and kept a Buy rating on the shares of the company.
According to our database, Brennan Diaz’s Fernbridge Capital Management held 82,793 shares of Netflix, Inc. (NASDAQ:NFLX) at the end of the June quarter, worth roughly $43.73 million, and accounting for 5.33% of the investment firm’s portfolio.
In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Netflix, Inc. (NASDAQ:NFLX) was one of them. Here is what the fund said:
“We purchased Netflix in March, initiating a 3% position in the Portfolio. We believe Netflix is a highly competitively advantaged company. It has recently met all our investment guardrails, and we anticipate it will remain sustainably above our guardrails over the next five years and beyond. We know Netflix for its ubiquitous streaming service and deep library of owned content. The company has made investments in this content (currently running at nearly $20 billion/year), generally keeping subscribers highly engaged and loyal to their service. The company has number one market share in 99% of markets globally, but it is our view that video streaming on-demand is still an underpenetrated space with many years of attractive growth likely ahead. The service is also relatively affordable at roughly $11/month on average globally.
7. Autodesk, Inc. (NASDAQ:ADSK)
Fernbridge Capital Management’s Stake Value: $56.47 million
Percentage of Fernbridge Capital Management’s 13F Portfolio: 6.89%
Number of Hedge Fund Holders: 64
Autodesk, Inc. (NASDAQ:ADSK) is a California-based company that markets 3D design, engineering, and entertainment software and services. According to the database of Insider Monkey, Fernbridge Capital Management holds 193,461 shares in Autodesk, Inc. (NASDAQ:ADSK) worth more than $56.47 million.
On October 14, Piper Sandler analyst Weston Twigg initiated coverage of Autodesk, Inc. (NASDAQ:ADSK) with an Overweight rating and $338 price target.
At the end of the second quarter of 2021, 64 hedge funds in the database of Insider Monkey held stakes worth $3.2 billion in Autodesk, Inc. (NASDAQ:ADSK), down from 66 the preceding quarter worth $3 billion.
Polen Capital, in its Q3 2021 investor letter, mentioned Autodesk, Inc. (NASDAQ:ADSK) and discussed its stance on the firm. Here is what the fund said:
“Shares of Autodesk have lagged recently due to expectations of short-term headwinds to free cash flow as the company transitions its billing structure to annual payments from multi-year up-front subscription payments. We view this as a transient issue and believe Autodesk’s attractive long-term growth profile remains in place.”
6. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Fernbridge Capital Management’s Stake Value: $62.3 million
Percentage of Fernbridge Capital Management’s 13F Portfolio: 7.6%
Number of Hedge Fund Holders: 45
Coming in at sixth on our list of the 10 best stocks to invest in according to Brennan Diaz’s Fernbridge Capital Management, Hilton Worldwide Holdings Inc. (NYSE:HLT) is a renowned multinational hospitality company. Best known for its Hilton hotels, the company offers franchises or directly owns its properties.
By the end of the second quarter of this year, Brennan Diaz held 516,610 shares of Hilton Worldwide Holdings Inc. (NYSE:HLT) with the stake equaling $62.3 million and representing 7.6% of the his investment portfolio. For the same quarter, 45 of the 873 funds tracked by Insider Monkey held a stake in the company.
On October 5, Loop Capital analyst Alton Stump initiated coverage of Hilton Worldwide Holdings Inc. (NYSE:HLT) with a Hold rating and $135 price target.
Besides Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX), Hilton Worldwide Holdings Inc. (NYSE:HLT) is a stock investors are paying attention to.
In the Q2 2021 investor letter of Pershing Square Holdings, the fund mentioned Hilton Worldwide Holdings Inc. (NYSE:HLT). Here is what the fund said:
“While the hotel industry has been extremely negatively impacted by the COVID-19 pandemic, Hilton has done an excellent job navigating industry volatility, a testament to the company’s high-quality, asset light, high-margin business model and superb management team. From the moment the pandemic began, Hilton’s management team took decisive actions to ensure the company not only managed through what it knew would be a challenging period, but also positioned the company to generate improved margins, cash fl ows and investment returns once the business recovers to pre-COVID-19 demand levels.
Industry RevPAR (the industry metric for same-store sales at a given hotel) bottomed in April 2020 and has shown sequential improvement every quarter as travel and mobility have recovered along with COVID-19 vaccine rollouts and a resumption in travel. In recent months, there is increasing evidence that a robust recovery scenario is underway, led by domestic leisure travel occasions which is currently trending above 2019 demand levels. For the fi rst three weeks of July, the most recent data the company provided, RevPAR has already recovered to 85% of 2019 levels – a signifi cant improvement over prior months driven by increased hotel occupancy and a rapid recovery in rate.
While management anticipates a moderation in leisure demand as we exit the summer, it expects the moderation in leisure travel to be off set by a more pronounced recovery in business transient travel occasions as offi ces reopen this fall. Although there remains near-term uncertainty in domestic travel given the increase in COVID-19 case numbers following the arrival of the Delta variant in the U.S., we believe that the medium-term outlook continues to point to a robust recovery scenario. Throughout the pandemic, Hilton took actions to reduce corporate expenses by about 20% compared to 2019 levels.
Simultaneously, the company provided resources and support to the Hilton owner community which further solidifi ed Hilton as the preferred franchise partner, thereby expanding Hilton’s pipeline of units around the world.In the most recent quarter Hilton affi rmed its near-to-medium term outlook of mid-single-digit net unit growth, and a resumption of its historical 6-7% net unit growth beginning in 2023-2024, higher growth than competitors, and further evidence of Hilton’s unique business model.
We believe that Hilton will continue to grow its market share over time given independent hotels’ increased interest in seeking an affi liation with global brands, particularly in the wake of the pandemic. While the recovery may continue to be uneven, Hilton has made tremendous progress which will help it become an even more profi table and stronger business going forward.”
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Disclosure: None. 10 Best Stocks To Invest In According To Brennan Diaz’s Fernbridge Capital Management is originally published on Insider Monkey.
