In this article, we present the list of the 10 best tech stocks to buy now according to Nishkama Capital. You can skip our comprehensive analysis of Nishkama Capital’s history, investment philosophy, and hedge fund performance, and go directly to 5 Best Tech Stocks to Buy Now According to Nishkama Capital.
Ravee Mehta’s Nishkama Capital is a long/short equity hedge fund based out of Dorado, Puerto Rico. The fund primarily invests in technology and telecommunications stocks but tries to avoid new positions in companies that already have a large hedge fund presence. Given that preference, Nishkama Capital does invest in numerous smaller tech companies, though it seeks out stocks that can be 95% liquidated within a month to provide it with added flexibility and security.
The Nishkama Capital Fund LP, which was launched in June 2013, has delivered compound annual returns of 8.36% through March 2020. The fund had five solid years in a row from 2015 to 2019, posting gains of no less than 6.38% each year, but only topping 7.67% once during that time. Nishkama Capital had $435 million in assets under management as of June 2021.
As Nishkama Capital’s expertise lies in tech stocks, we’ve compiled a list of its ten favorite stocks in that sector according to the fund’s latest filing with the SEC for the reporting period of September 30, 2021. Just under half of Nishkama’s 13F portfolio assets were devoted to tech stocks at that time, a big jump from just 31% at the end of June 2021 as Nishkama pared down its portfolio, which was valued at $343 million at the end of September.
As of the third quarter of 2021, Nishkama Capital owns several important tech stocks, including Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL) and Workday Inc. (NASDAQ:WDAY).
Let’s check out the 10 best tech stocks to buy now according to Nishkama Capital.
Photo by Behnam Norouzi on Unsplash
Best Tech Stocks to Buy Now According to Nishkama Capital
10. Paymentus Holdings, Inc. (NYSE:PAY)
Nishkama Capital was one of 12 shareholders of Paymentus Holdings, Inc. (NYSE:PAY) as of September 30 among the hedge funds tracked by Insider Monkey after buying a stake of 190,000 shares of Paymentus Holdings, Inc. (NYSE:PAY) during Q3. That was the same number of hedge funds that owned the stock after its Q2 IPO.
Clearbridge Investments was one of the funds to grab a stake in PAY’s IPO and discussed Paymentus Holdings, Inc. (NYSE:PAY) in its Q2 investor letter, describing the IPO market as a great source of fresh new ideas and noting that the payment company is targeting more consumer-friendly channels with its streamlined invoicing software, which could allow it to capture some underserved areas of the payments market.
ClearBridge Investments released its Q2 2021 investor letter and highlighted Paymentus Holdings, Inc. (NYSE:PAY). Here is what the fund said:
” The new issue market remains an attractive source of new ideas and we participated in four IPOs in the latest period. Paymentus is a payment company using invoicing in more consumer-friendly channels. The company’s services allow a utility to send a customer a text message to connect a bank account and pay their bill. Paymentus is expanding its streamlined payment process to SMBs like gardeners and local merchants.”
9. Alphabet Inc. (NASDAQ:GOOGL)
Alphabet Inc. (NASDAQ:GOOGL) is one of Nishkama’s few tech stock holdings that need little introduction to the layman. Nishkama owned 1,912 of the search giant’s class A shares on September 30 after unloading 44% of its stake in Google during Q3.
Hedge funds were certainly right about Alphabet Inc. (NASDAQ:GOOGL) in 2021, as Alphabet Inc. (NASDAQ:GOOGL) that ranks as one of the hedge fund industry’s favorites gained 67.65%. While it was Google’s search engine that made it a household name initially, it’s now Alphabet Inc. (NASDAQ:GOOGL)’s cloud computing business and Google Play Store which are driving margins higher and impressing investors so greatly, while its video platform YouTube continues to generate strong user growth.
8. ON24, Inc. (NYSE:ONTF)
Nishkama Capital also opened a new stake during Q3 in another tech company with a recent IPO, ON24, Inc. (NYSE:ONTF), buying 286,926 shares of the webcasting platform. Rather than being a new upstart, ON24 has been around for over two decades but enjoyed accelerated interest and growth thanks to the Covid-19 pandemic which prompted it to finally go public 23 years after its founding.
The wait’s been anything but worth it for ON24, Inc. (NYSE:ONTF) and its investors, however, as the stock has sunk like a boulder since its IPO, losing over 75% of its value. In addition to Nishkama, several other hedge funds looked to capitalize on the depressed stock price during Q3, as there was a 62% jump on hedge fund ownership of ON24, Inc. (NYSE:ONTF) during the quarter. The stock has yet to rebound, however.
7. Workday, Inc. (NASDAQ:WDAY)
Nishkama Capital bought 26,949 shares of Workday Inc. (NASDAQ:WDAY) during Q3, opening a new stake in the enterprise software company that was worth $6.73 million on September 30. Hedge funds have been piling into Workday Inc (NASDAQ:WDAY) over the past few years, as there’s been a 350% surge in ownership of the stock since the middle of 2017.
Workday Inc (NASDAQ:WDAY) had a strong third quarter of 2021, earning $1.10 per share, beating estimates by over 20%, while its revenue rose by 20% year-over-year to $1.33 billion.
6. Semtech Corporation (NASDAQ:SMTC)
Semtech Corporation (NASDAQ:SMTC) closes out the first half of our list of Nishkama’s Capital’s favorite tech stocks, as the fund bought a new stake in Semtech Corporation (NASDAQ:SMTC) during Q3 comprised of 110,817 shares valued at $8.64 million at the end of Q3. The semiconductor maker has enjoyed a recent surge in hedge fund ownership, hitting 29 at the end of Q3 after bottoming out at just 11 hedge funds long SMTC at the end of 2019.
In addition to Microsoft Corporation (NASDAQ:MSFT) Alphabet Inc. (NASDAQ:GOOGL) and Workday Inc. (NASDAQ:WDAY) , SMTC is a notable tech stock in Nishkama Capital’s Q3 portfolio.
Semtech Corporation (NASDAQ:SMTC) posted record numbers pretty much across the board in Q3, setting new highs for net sales, operating income, diluted EPS, gross margins, and cash flow. Semtech Corporation (NASDAQ:SMTC)’s guidance also topped estimates as it anticipates a record year in 2022 on its mission to eventually drive net sales to $1 billion annually.
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Disclosure: None. 10 Best Tech Stocks to Buy Now According to Nishkama Capital is originally published at Insider Monkey.
