In this piece, we will take a look at the ten best tech stocks to buy according to Anand Parekh’s Alyeska Investment. If you want to skip out the introduction to the hedge fund and want to jump ahead to the top five stocks in this list, then take a look at the 5 Best Tech Stocks to Buy According to Anand Parekh’s Alyeska Investment.
Alyeska Investment is a hedge fund based out of Chicago, Illinois, the United States. It is headed by Mr. Anand Parekh, who is the firm’s chief executive officer and founder.
Mr. Parekh set up his hedge fund in 2008 and its registration with the Securities and Exchange Commission was finalized in 2010. Alyeska Investments is one of the largest hedge funds in the world. By the end of this year’s second quarter, its portfolio was worth a whopping $8.7 billion – the reasons behind which become clearer once we take a brief look at Alyeska’s investment philosophy and customer base.
Mr. Parekh is one of the many hedge fund founders who previously worked at Citadel. He worked at Citadel as the fund’s global head of equities. Before joining Citadel, the executive also worked at the investment bank Deutsche Bank until 2002. At Deutsche, Mr. Parekh worked as the bank’s head of North American credit and interest rate product restructuring, and risk management at Deutsche’s London branch. The investor is a graduate of the University of Michigan, with degrees in English and Mathematics, and is known for focusing on fundamental research as part of his stock picking process.
In today’s piece, we will focus on Alyeska Investment’s top technology stock picks. Given the popularity of the industry, some top companies likely to pique your attention include Alphabet Inc. (NASDAQ:GOOG), Adobe Inc. (NASDAQ:ADBE), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO).
Our Methodology
We took a look at Alyeska Investment’s filings with the U.S. government to gain an idea about its favorite technology stocks as of this year’s second quarter. The firms were then briefly analyzed through their financials, relevant industry developments, and hedge fund holdings gathered through Insider Monkey’s 895 hedge fund survey for Q2 2022.
Best Tech Stocks to Buy According to Anand Parekh’s Alyeska Investment
10. RingCentral, Inc. (NYSE:RNG)
Alyeska Investment’s Stake Value: $85 million
Percentage of Alyeska Investment’s 13F Portfolio: 0.97%
Number of Hedge Fund Holders: 42
RingCentral, Inc. (NYSE:RNG) is an American company that provides a software as a service (SaaS) platform that allows businesses to communicate with each other. The service includes several features such as video calls and SMS messaging. The company is headquartered in Belmont, California.
RingCentral, Inc. (NYSE:RNG)’s communications market is slated to grow at a compounded annual growth rate (CAGR) of 13% to stand at $69 billion by the end of 2028. The company posted 28% annual revenue growth in its third fiscal quarter, and at the same time, its subscription revenue grew by 32% annually. Credit Suisse set a $40 share price target for the company in September 2022, stating that it is playing in a highly lucrative market.
Alyeska Capital owned 1.6 million RingCentral, Inc. (NYSE:RNG) shares as part of its Q2 2022 investments, allowing the fund to hold an $85 million stake in the company that represented 0.97% of its portfolio. For the same time period, 42 out of the 895 hedge funds polled by Insider Monkey had also invested in the firm.
RingCentral, Inc. (NYSE:RNG)’s largest investor in our database is Panayotis Takis Sparaggis’s Alkeon Capital Management which owns 3.7 million shares that are worth $193 million.
RiverPark Funds mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
As the company’s revenue scales, we expect gross margin to continue to improve from its already strong 80%, while we expect the company to continue to expand its EBITDA margin from 18% in 2022, toward typical SaaS margins of 40% or higher over the next several years…” (Click Here to read the full text)
RingCentral, Inc. (NYSE:RNG) joins Adobe Inc. (NASDAQ:ADBE), Alphabet Inc. (NASDAQ:GOOG), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in the list of Alyeska Capital’s top technology stock picks for Q2 2022.
9. Akamai Technologies, Inc. (NASDAQ:AKAM)
Alyeska Investment’s Stake Value: $88 million
Percentage of Alyeska Investment’s 13F Portfolio: 1.01%
Number of Hedge Fund Holders: 27
Akamai Technologies, Inc. (NASDAQ:AKAM) is a cloud services company that offers security solutions for infrastructure, websites, and applications. The firm also provides media delivery solutions, cybersecurity protection, and DNS infrastructure. It is headquartered in Cambridge, Massachusetts.
Mr. Parekh’s investment firm owned an $88 million stake in Akamai Technologies, Inc. (NASDAQ:AKAM) by the end of the June 2022 quarter. It came in the form of 971,237 shares and it represented 1.01% of its investment portfolio. Insider Monkey studied 895 hedge fund portfolios for their Q2 2022 holdings to discover that 27 had also bought the company’s shares.
Akamai Technologies, Inc. (NASDAQ:AKAM)’s latest financial performance is far from stellar. While its revenue in the first half of this year grew by 7%, its net income dropped by a massive 24% annually. However, for a silver lining, its revenue grew by 28% and net income by 8% when compared to the pre-pandemic period.
Akamai Technologies, Inc. (NASDAQ:AKAM)’s largest investor after Alyeska Investment is Israel Englander’s Millennium Management which owns 386,852 shares that are worth $35 million.
8. Workday, Inc. (NASDAQ:WDAY)
Alyeska Investment’s Stake Value: $97 million
Percentage of Alyeska Investment’s 13F Portfolio: 1.11%
Number of Hedge Fund Holders: 71
Workday, Inc. (NASDAQ:WDAY) provides enterprise cloud applications that let its customers manage their businesses, execute other applications, maintain financial information, and generate real time financial and operational insights. The company is based in Pleasanton, California.
Workday, Inc. (NASDAQ:WDAY)’s shares have taken a beating on the stock market this year, with the share price down a whopping 41% year to date. This drop comes in the wake of a sharp investor exit from technology companies in an era of high inflation and global geopolitical uncertainty. Despite this, the firm expects to bring in $10 billion in revenue this year.
For its June quarter of 2022 investments, Alyeska Capital held a $97 million stake in Workday, Inc. (NASDAQ:WDAY). This came through it holding 697,844 shares and represented 1.11% of its investment portfolio. Insider Monkey’s 895 hedge fund survey for the same time period outlined that 71 had invested in the firm.
Stephen Mandel’s Lone Pine Capital is Workday, Inc. (NASDAQ:WDAY)’s largest investor. It holds a $700 million stake that comes via 5 million shares.
7. Paycom Software, Inc. (NYSE:PAYC)
Alyeska Investment’s Stake Value: $112 million
Percentage of Alyeska Investment’s 13F Portfolio: 1.28%
Number of Hedge Fund Holders: 43
Paycom Software, Inc. (NYSE:PAYC) is a human resource software provider that allows companies to manage their employment life cycles. It provides software applications that allow firms to acquire talent by tracking job applications, managing labor attendance, and compensation and budget management. It is based out of Oklahoma City, Oklahoma.
Mr. Parekh’s investment firm owned 402,360 Paycom Software, Inc. (NYSE:PAYC) shares as the second quarter of this year ended. This allowed it to own a $112 million stake in the firm that constituted 1.28% of its investment portfolio. Insider Monkey took a look at 895 hedge fund portfolios for their June quarter of 2022 investments to discover that 43 had also held a stake in the company.
Paycom Software, Inc. (NYSE:PAYC)’s systems handled 5.7 million workers by the end of last year, which allowed it to command 10% of its domestic total addressable market. The firm has comfortably grown its revenue by 20% over the course of the past few years, and the firm is playing in a market that is estimated to be worth $27 billion, leaving it with plenty of room to grow.
Paycom Software, Inc. (NYSE:PAYC)’s largest investor in our database is Greg Poole’s Echo Street Capital Management which owns 479,761 shares that are worth $134 million.
Kerrisdale Capital mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
Paycom’s steady and robust growth over the past decade has come by way of taking market share from payroll industry behemoths ADP and Paychex. Paycom has been accompanied in this quest by high-tech peers Paylocity (PCTY) and closely held BambooHR, and has been buttressed by secular job growth trends in the US small and medium business sector. But Paycom is no longer a $100 million annual revenue upstart, and neither are its peers. At $1.4 billion of run-rate recurring revenue, the company is a scaled business, and combined with Paylocity, Bamboo, and other dynamic tech companies in the sector, the group’s share of the SME payroll market is north of 40%. That’s a lot more than the blue-sky implications of Paycom’s 5% market share claim, and it means that further market share gains will be a lot more difficult going forward.
6. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Alyeska Investment’s Stake Value: $124 million
Percentage of Alyeska Investment’s 13F Portfolio: 1.4%
Number of Hedge Fund Holders: 34
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is an IT security products and services provider. The firm’s service lets companies protect their internet of things (IoT) devices, cloud infrastructure, and mobiles from 5th and 6th generation cyberattacks. It is headquartered in Tel Aviv, Israel.
Check Point Software Technologies Ltd. (NASDAQ:CHKP)’s latest fiscal results saw the firm grow its revenue by 9% annually, with its product and subscription revenues growing by 12% and 14% during the same time period. It also has a fortress balance sheet with a mere $25 million of debt, which is paltry compared to its cash and equivalents of $3.7 billion.
Alyeska Investment held a $124 million stake in Check Point Software Technologies Ltd. (NASDAQ:CHKP) as this year’s second quarter ended. This came through the fund owning one million shares of the company and it represented 1.4% of its investment portfolio. Insider Monkey surveyed 895 hedge funds for this year’s second quarter to discover that 34 had also invested in the company.
Out of these, John Overdeck and David Siegel’s Two Sigma Advisors is Check Point Software Technologies Ltd. (NASDAQ:CHKP)’s largest investor. It owns 1.2 million shares that are worth $152 million.
Along with Alphabet Inc. (NASDAQ:GOOG), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Adobe Inc. (NASDAQ:ADBE), Check Point Software Technologies Ltd. (NASDAQ:CHKP) is a top Anand Parekh technology stock.
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Disclosure: None. 10 Best Tech Stocks to Buy According to Anand Parekh’s Alyeska Investment is originally published on Insider Monkey.
