In this article, we discuss 10 software stocks to buy now according to Jim Davidson’s Silver Lake Partners. If you want to skip our detailed analysis of Davidson’s history, investment philosophy, and hedge fund performance, go directly to 5 Software Stocks to Buy Now According to Jim Davidson’s Silver Lake Partners.
During the late 1990s tech boom, Silver Lake Partners was formed to make private equity investments in established technology companies. Among the hedge fund founders were Jim Davidson, who oversaw Hambrecht & Quist’s Technology Investment Banking division; David Roux, who worked as chairman and CEO of Liberate Technologies, executive vice president of Oracle Corporation, and senior vice president of Lotus Development; Roger McNamee who managed Integral Capital Partners; and Glenn Hutchins, who worked for Thomas H. Lee Partners and was a Special Advisor on Healthcare Policy and Economics in the early Clinton Administration.
Jim Davidson is the managing director and managing partner at Silver Lake Partners. For more than 30 years, he has been an active counselor and investor in the technology industry. Silver Lake Partners’ 13F public stock portfolio was valued at $21.23 billion in the fourth quarter of 2021, with a top 10 holdings concentration of 92.44%. The hedge fund made significant investments in information technology, finance, communications, and consumer discretionary sectors in Q4.
As of the fourth quarter of 2021, Silver Lake Partners owns positions in several big companies like Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and Dell Technologies Inc. (NYSE:DELL), among others discussed in detail below.
Our Methodology
In this article, we will focus on 10 software stocks to buy now according to Jim Davidson’s Silver Lake Partners. For this list, we considered data from Davidson’s 13F portfolio as of Q4 2021.
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Software Stocks to Buy Now According to Jim Davidson’s Silver Lake Partners
10. Snowflake Inc. (NYSE:SNOW)
Silver Lake Partners’ Stake Value: $3,208,000
Percentage of Silver Lake Partners’ 13F Portfolio: 0.01%
Number of Hedge Fund Holders: 84
In the United States and globally, Snowflake Inc. (NYSE:SNOW) offers a cloud-based data platform. SMBC Nikko initiated coverage of Snowflake Inc. (NYSE:SNOW) on March 31, rating the stock as Neutral with a price objective of $253.
Out of 924 hedge funds from Insider Monkey’s database, 84 funds held stakes in Snowflake Inc. (NYSE:SNOW), worth $14.57 billion in the fourth quarter of 2021. In the third quarter, the number of hedge funds bullish on Snowflake Inc. (NYSE:SNOW) was 73, owning stakes worth $14.57 billion.
According to fourth quarter 13F filings, Silver Lake Partners owned 9,471 shares of Snowflake Inc. (NYSE:SNOW) worth $3.21 million, representing 0.01% of the hedge fund’s portfolio.
Along with Snowflake Inc. (NYSE:SNOW), Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and Dell Technologies Inc. (NYSE:DELL) are some of Silver Lake Partners’ significant holdings in Q4 2021.
RiverPark Funds, in its Q3 2021 investor letter, mentioned Snowflake Inc. (NYSE:SNOW). Here is what the fund said:
“Following torrid second quarter results, Snowflake, a position we initiated in March, was also a top contributor for 3Q. The company reported 103% year-over-year product revenue growth, 169% net revenue retention and a 74% non-GAAP gross margin, up 700 basis points year over year. Management also raised guidance to 92% product revenue growth for the full year.
Snowflake offers cloud-based data storage and analytics, generally termed “data warehouse-as-a service.” The data warehousing market—created by the massive, growing amount of user, customer and account data and the need to search and analyze it—has historically stored its data on physical servers located on-premises. Incremental warehouse data capacity and renewals are expected to be stored off-premises on cloud servers, with more than 75% of databases projected to move to the cloud by 2022, resulting in a nearly $100 billion market…” (Click here to see the full text)
9. DiDi Global Inc. (NYSE:DIDI)
Silver Lake Partners’ Stake Value: $14,667,000
Percentage of Silver Lake Partners’ 13F Portfolio: 0.06%
Number of Hedge Fund Holders: 21
DiDi Global Inc. (NYSE:DIDI) is a firm established in China that operates a mobility technology platform. Cherry Leung of Bernstein initiated coverage of DiDi Global Inc. (NYSE:DIDI) on February 14, assigning it an Outperform rating and a price target of $6.20. In a research note, Leung assured investors that the company’s regulatory storm was almost gone and that it was striving to improve licensing compliance.
According to Insider Monkey’s database, Philippe Laffont’s Coatue Management held the most significant stake in DiDi Global Inc. (NYSE:DIDI) in Q4 2021, with 40.49 million shares worth $201.62 million. It is followed by Paulson & Co, with a position worth $59.27 million.
DiDi Global Inc. (NYSE:DIDI) was favoured by hedge funds. At the end of the fourth quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $440.49 million in DiDi Global Inc. (NYSE:DIDI), up from 15 hedge funds in the preceding quarter worth $701.65 million.
Davis Global Fund, in its Q4 2021 investor letter mentioned DiDi Global Inc. (NYSE:DIDI). Here is what the fund said:
“The second regulatory action took place shortly after the initial public offering of Didi Global, China’s ride-sharing leader, on the New York Stock Exchange (NYSE). In early July, the Cybersecurity Administration of China (CAC), implementing provisions from the new Data Security Law issued on June 10, announced that Didi will undergo a cybersecurity review, and further downloading of its app was suspended. Didi’s data privacy and collection policies, as well as data security considerations stemming from the company’s U.S. listing, were the focus of the review. On December 3, Didi announced that it planned to delist from the NYSE and relist in Hong Kong. The market understandably dislikes uncertainty, and it will take several months for the relisting process to be finalized. Over the long run, however, we believe a Hong Kong listing will resolve the CAC’s concerns around national data security, and it will provide a globally recognized primary listing venue, as it already does for other large Chinese internet companies such as Tencent and Meituan. Over time, the value of Didi, like any other company, will be determined by its business prospects and profitability rather than the location of its primary exchange listing.”
8. UiPath Inc. (NYSE:PATH)
Silver Lake Partners’ Stake Value: $34,628,000
Percentage of Silver Lake Partners’ 13F Portfolio: 0.16%
Number of Hedge Fund Holders: 28
UiPath Inc. (NYSE:PATH) is a company that develops and sells software that automates business operations. After UiPath Inc. (NYSE:PATH)’s Q4 earnings and below-consensus outlook, RBC Capital analyst Matthew Hedberg trimmed his price objective on UiPath Inc. (NYSE:PATH) to $32 from $37 and maintained a Sector Perform rating on the stock on March 31.
Hedge funds have been loading up on UiPath Inc. (NYSE:PATH). 28 hedge funds in the database of Insider Monkey held stakes valued at $2.53 billion in UiPath Inc. (NYSE:PATH) at the end of the fourth quarter of 2021, up from 27 in the previous quarter worth $3.63 billion.
The hedge fund chaired by Jim Davidson held 802,880 shares in UiPath Inc. (NYSE:PATH), worth over $34.63 million. Catherine D. Wood’s ARK Investment Management is the most significant stakeholder of UiPath Inc. (NYSE:PATH) as of the fourth quarter of 2021, increasing its stake in the company by 13%, holding 26.90 million shares worth almost $1.16 billion.
ClearBridge Investments, in its Q1 2021 investor letter, , highlighted a few stocks and UiPath Inc. (NYSE:PATH) was one of them. Here is what the fund said:
“We participated in the IPO of UiPath, a developer of software for robotic process automation that uses AI, natural language processing and design to streamline complex processes across a variety of technology environments. The company is an industry leader with a superior solution for leveraging software to optimize workloads. Organizations around the world are beginning to understand the power of automation, with momentum picking up toward fully automating business processes, a $60 billion market today that could grow to $200 billion or more by 2030. UiPath has a unique pricing model, broad partner ecosystem and thoughtful management team supporting one of the strongest growth profiles in technology. Risks we are watching include a partial cloud transition ahead and increased competition from larger software platforms over time.”
7. Vacasa, Inc. (NASDAQ:VCSA)
Silver Lake Partners’ Stake Value: $519,780,000
Percentage of Silver Lake Partners’ 13F Portfolio: 2.44%
Number of Hedge Fund Holders: 17
Vacasa, Inc. (NASDAQ:VCSA) is a vacation rental management platform, operating in North America, Belize, and Costa Rica. It also employs a network of real estate brokers to assist individuals in buying and selling vacation homes.
JPMorgan analyst Doug Anmuth initiated coverage of Vacasa, Inc. (NASDAQ:VCSA) on February 16, rating the stock as Overweight and assigning a price target of $10. According to Anmuth in a research note, Vacasa, Inc. (NASDAQ:VCSA) is the most extensive end-to-end apartment management system for servicing homeowners.
As of the fourth quarter of 2021, Silver Lake Partners’ stake in Vacasa, Inc. (NASDAQ:VCSA) was worth over $519.78 million, accounting for 2.44% of the fund’s 13F portfolio. At the end of December 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $765.13 million in Vacasa, Inc. (NASDAQ:VCSA).
6. N-able, Inc. (NYSE:NABL)
Silver Lake Partners’ Stake Value: $682,360,000
Percentage of Silver Lake Partners’ 13F Portfolio: 3.21%
Number of Hedge Fund Holders: 13
Silver Lake Partners held more than 61.48 million shares in N-able, Inc. (NYSE:NABL), worth over $682.36 million. This represented 3.21% of its portfolio. The fund first bought a stake in N-able, Inc. (NYSE:NABL) in the third quarter of 2021.
N-able, Inc. (NYSE:NABL) is a cloud-based software company that works with managed service providers (MSPs) in the United Kingdom, the United States, and worldwide. N-able, Inc. (NYSE:NABL), on February 24, posted earnings for the fourth quarter. The reported EPS came in at $0.07, below the estimates by $0.01.
By the end of the fourth quarter of 2021, 13 hedge funds out of the 924 tracked by Insider Monkey held stakes in N-able, Inc. (NYSE:NABL), worth roughly $726.19 million. In the previous quarter, 11 hedge funds held combined stakes in the company valued at $829.55 million.
In addition to Twitter, Inc. (NYSE:TWTR), Airbnb, Inc. (NASDAQ:ABNB), and Dell Technologies Inc. (NYSE:DELL), N-able, Inc. (NYSE:NABL) is a notable stock from Silver Lake Partners’ Q4 portfolio.
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Disclosure: None. 10 Software Stocks to Buy Now According to Jim Davidson’s Silver Lake Partners is originally published on Insider Monkey.
