In this article, we discuss the 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. If you want to skip our detailed analysis of these companies, go directly to the 5 Best Tech Stocks to Buy According to Japanese Billionaire Masayoshi Son.
Masayoshi Son, the Japanese billionaire and chief executive officer of Tokyo-based multinational SoftBank Group, also runs a successful hedge fund, SB Management, with a portfolio value of over $15 billion. Son is an ardent admirer of the technology sector, with close to half of all the investments of the hedge fund in the tech market. The services economy and health companies make up the rest of the profile of the fund that has trimmed stakes in all top holdings at the end first quarter of 2021 compared to the end of last year.
These top holdings include Amazon.com, Inc. (NASDAQ: AMZN), the Washington-based ecommerce giant, Facebook, Inc. (NASDAQ: FB), the California-based technology company, and PayPal Holdings, Inc. (NASDAQ: PYPL), the California-based digital payments firm. Son has trimmed stakes in these by 12%, 10%, and 25% respectively. Some of this shedding might have to do with the overall lull in the market around growth stocks amid fears of inflation and a dramatic drop in the prices of cryptocurrencies over the past few months.
Interestingly, the top two holdings of SB Management, the fund controlled by Son, account for more than 60% of the entire investment portfolio. Son has a net worth of over $45 billion, putting him among the top 30 richest people in the world. Son was placed 29th on a list of billionaires in the world published by business news publication Forbes in early April. He is also one of the richest men in Japan. Son has the honour of controlling Vision Fund, the largest technology-focused investment fund in the world with over $100 billion in capital.
Son has gained fame all over the world due to his investment exploits. At the end of the first quarter of 2021, SoftBank Group reported a net income of more than $17 billion for the first three months of the year. This represented the largest-ever quarterly profit made by a Japanese firm, cementing the place of Son as one of the most shrewd investors on the other side of the Pacific. However, the share price of SoftBank has continued to drop despite the record profits, with investors skeptical over the heavy focus on technology by the conglomerate.
Son has earned a reputation for himself in the finance world at a time when even big corporations are finding it hard to satisfy investors. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Masayoshi Son of SB Management
With this context in mind, here is our list of the 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. These companies were ranked keeping in mind the investment portfolio of SB Management at the end of the first quarter of 2021.
Best Tech Stocks to Buy According to Japanese Billionaire Masayoshi Son
10. Adobe Inc. (NASDAQ: ADBE)
Number of hedge fund holders: 107
Adobe Inc. (NASDAQ: ADBE) is a software company that markets offerings for professional animators, designers, photographers, and other creative works. It is placed tenth on our list of 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. The stock has offered investors returns exceeding 35% over the course of the past twelve months. SB Management holds 20,048 shares in the firm worth over $9.5 million, representing 0.06% of their portfolio.
On June 24, Adobe Inc. (NASDAQ: ADBE) announced that it would be transitioning to a new work model whereby employees would be allowed to work from home at least 50% of the time as it embarks on a plan to double remote workers in the coming weeks and months.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Adobe Inc. (NASDAQ: ADBE) with 5.9 million shares worth more than $2.8 billion.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and PayPal Holdings, Inc. (NASDAQ: PYPL), Adobe Inc. (NASDAQ: ADBE) is one of the best tech stocks to buy according to Japanese billionaire Masayoshi Son.
Here is what Polen Capital has to say about Adobe Inc. (NASDAQ: ADBE) in its Q1 2021 investor letter:
“Adobe and Autodesk are both prime examples of the rotation that occurred during the quarter. Both are dominant businesses in their respective markets, which are experiencing structural tailwinds. Despite each business’s position of strength, the stocks of cyclicals and businesses with higher leverage and lower profitability were more favored this past quarter. In stark contrast, Adobe and Autodesk both have low leverage, high levels of profitability, high recurring revenues that mitigate cyclicality, and are both capital-light business models—all attributes we appreciate as investors. Adobe and Autodesk were also two of the top three performers within the Portfolio during 2020.”
9. Pacific Biosciences of California, Inc. (NASDAQ: PACB)
Number of Hedge Fund Holders: 24
Pacific Biosciences of California, Inc. (NASDAQ: PACB) is ranked ninth on our list of 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. The company’s shares have returned more than 947% to investors in the past year. The firm is a biotechnology company focusing on genetic analysis. SB Management is in possession of over 9.8 million shares in the company that are worth more than $328 million. This accounts for 2.11% of the investment firm’s portfolio.
On June 23, Pacific Biosciences of California, Inc. (NASDAQ: PACB) disclosed a collaboration with a genomic medicine institute on research related to identifying genetic variants of rare diseases in order to develop better treatments for them.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Pacific Biosciences of California, Inc. (NASDAQ: PACB) with 21 million shares worth more than $709 million.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and PayPal Holdings, Inc. (NASDAQ: PYPL), Pacific Biosciences of California, Inc. (NASDAQ: PACB) is one of the best tech stocks to buy according to Japanese billionaire Masayoshi Son.
In its Q1 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Pacific Biosciences of California, Inc. (NASDAQ: PACB) was one of them. Here is what the fund said:
“Pacific Biosciences of California, Inc. provides long-read DNA sequencing systems to scientists conducting genetic analysis. Shares performed well for the quarter. We believe there is increasing excitement about the potential for its platform to move beyond research into clinical applications. The recently appointed CEO was previously Chief Commercial Officer at Illumina, and we think he is well qualified to commercially execute on Pacific Biosciences’ differentiated long-read platform.”
8. Netflix, Inc. (NASDAQ: NFLX)
Number of Hedge Fund Holders: 110
Netflix, Inc. (NASDAQ: NFLX) stock has returned more than 17% to investors over the course of the past year. The company operates a digital streaming platform with more than 200 million paid subscribers around the world. It is placed eight on our list of 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. SB Management owns 731,375 shares in the streaming platform that are worth over $381 million, representing 2.45% of the portfolio of the investment management company.
On June 25, investment advisory Credit Suisse upgraded Netflix, Inc. (NASDAQ: NFLX) stock to Outperform from Neutral with a price target of $586 on the back of strong competitive position and user satisfaction with the services offered by the company.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in Netflix, Inc. (NASDAQ: NFLX) with 4.1 million shares worth more than $2.1 billion.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and PayPal Holdings, Inc. (NASDAQ: PYPL), Netflix, Inc. (NASDAQ: NFLX) is one of the best tech stocks to buy according to Japanese billionaire Masayoshi Son.
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.
We believe Netflix’s growth in content spend is beginning to moderate, which could allow margin expansion to continue for many years when paired with ongoing subscriber growth and price increases. While there is competition from the likes of Apple (Apple TV+), Amazon (Prime Video), Disney (Disney+ and Hulu), and others, we believe there can be a handful of winners in this industry. Already, we see many people subscribe to multiple streaming video services, with Netflix being their “anchor” service. That said, the barriers to entry are high, and we believe they are getting higher given the substantial amount of capital and size of the subscriber base required to maintain a competitive service for both viewers and content producers. Over the next five years, we expect Netflix’s earnings growth to be approximately 30% annualized and free cash flow to grow at an even higher rate.”
7. Salesforce.com, Inc. (NYSE: CRM)
Number of Hedge Fund Holders: 91
Salesforce.com, Inc. (NYSE: CRM) is a software company that specializes in cloud-based enterprise offerings for client management. It is ranked seventh on our list of 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. The company’s shares have returned more than 31% to investors in the past twelve months. SB Management has a stake worth more than $384 million in the company. It owns more than 1.8 million shares in the software firm that account for 2.47% of its investment portfolio.
On June 9, Salesforce.com, Inc. (NYSE: CRM) revealed that it was offering special corporate and investment banking services on the Financial Services Cloud, a new offering by the firm to help businesses manage client relationships and comply with data regulations.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Salesforce.com, Inc. (NYSE: CRM) with 12.9 million shares worth more than $2.7 billion.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and PayPal Holdings, Inc. (NASDAQ: PYPL), Salesforce.com, Inc. (NYSE: CRM) is one of the best tech stocks to buy according to Japanese billionaire Masayoshi Son.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Salesforce.com, Inc. (NYSE: CRM) was one of them. Here is what the fund said:
“We added to our software-as-a-service (SaaS) exposure with the initiation of SaaS leader salesforce.com, which develops software for customer relationship management (we added Workday, which enterprise resource planning applications, last quarter). Saleforce.com is well-positioned in the most attractive end markets in software and will benefit from secular drivers such as remote work and the digital transformation. Salesforce.com is a sustainability leader as well, with a commitment to carbon-neutral cloud, toward which it has set a goal of 100% renewable energy for global operations by fiscal year 2022. The company has a strong focus on equality, in terms of equal rights, pay, education and opportunity. As a data company it has been leading on workforce disclosures and seeks to have 50% of its U.S. workforce made up of underrepresented groups by 2024.”
6. Alphabet Inc. (NASDAQ: GOOG)
Number of Hedge Fund Holders: 159
Alphabet Inc. (NASDAQ: GOOG) is placed sixth on our list of 10 best tech stocks to buy according to Japanese billionaire Masayoshi Son. The stock has returned more than 78% to investors in the past year. The firm is one of the largest technology corporations in the world with interests in many tech-related businesses. SB Management owns 277,750 shares in the tech company that are worth more than $574 million. Although this represents 3.7% of the investment portfolio, the investment firm has trimmed stake in Alphabet by 65% since last year.
On June 29, news publication The Information reported that Alphabet Inc. (NASDAQ: GOOG) would be getting a 50% year-on-year boost from the increased spending on the Google Cloud by tech giant Apple this year, which planned to increase user data stored on the platform.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in the firm with 2.9 million shares worth more than $6.1 billion.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and PayPal Holdings, Inc. (NASDAQ: PYPL), Alphabet Inc. (NASDAQ: GOOG) is one of the best tech stocks to buy according to Japanese billionaire Masayoshi Son.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ: GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
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Disclose. None. 10 Best Tech Stocks to Buy According to Japanese Billionaire Masayoshi Son is originally published on Insider Monkey.
