10 Stocks to Buy in 2021 According to Guy Spier’s Aquamarine Capital

Published on October 19, 2021 at 12:12 pm by Ruchi Gupta in Hedge Funds, News

In this article, we discuss the 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital based on Q2 holdings of the fund. If you want to skip our detailed analysis of Spier’s history, investment philosophy, and hedge fund performance, go directly to the 5 Stocks to Buy in 2021 According to Guy Spier’s Aquamarine Capital.

Guy Spier is a Zurich-based investor. In 1988, he graduated from Oxford University with a first class degree in philosophy, politics, and economics. Guy Spier also obtained an MBA degree from Harvard Business School. He worked as a Research Associate at Braxton Associates, as President at Oxford Alumni Association of New York, and as an investor at Berkshire Hathaway. Spier also served on the boards of UN Watch, and Swiss Friends of Oxford University. He is currently the managing director of Aquamarine Capital Management.

Guy Spier started Aquamarine Capital in 1997, inspired by Warren Buffett’s investing philosophies and with financial backing from his family and friends. The hedge fund soon grew to include third-party investors. Guy Spier is a fervent Warren Buffett supporter who believes in Buffett’s value investing and capital allocation strategies.

As of the second quarter of 2021, some notable stock picks of Guy Spier’s Aquamarine Capital portfolio include Berkshire Hathaway Inc. (NYSE:BRK-A), Alibaba Group Holding Limited (NYSE:BABA), and Bank of America Corporation (NYSE:BAC).

Aquamarine Capital’s most significant investment, with 140,600 shares valued at $39.08 million, is Berkshire Hathaway Inc. (NASDAQ: BRK.A).

Based on the latest 13F holdings for the second quarter of 2021, Guy Spier’s Aquamarine Capital owns 47,500 shares in Alibaba Group Holding Limited (NYSE:BABA), worth $10.77 million. On October 1, KeyBanc analyst Hans Chung lowered his price target on Alibaba Group Holding Limited (NYSE:BABA) to $200 from $250 and kept an “Overweight” rating on the shares.

Bank of America Corporation (NYSE:BAC) is another large-cap stock in Aquamarine Capital’s portfolio, in which the fund holds 767,845 shares worth $31.66 million.

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Why should we pay attention to Guy Spier’s stock picks? 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 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). 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.

With this background in mind, let’s start our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital. We used Spier’s 13F portfolio for Q2 2021 for this analysis.

Stocks to Buy in 2021 According to Guy Spier’s Aquamarine Capital

10. Daily Journal Corporation (NASDAQ:DJCO)

Spier’s Stake Value: $3,893,000

Percentage of Guy Spier’s 13F Portfolio: 1.82%

Number of Hedge Fund Holders: 3

Daily Journal Corporation (NASDAQ:DJCO), based in Los Angeles, California, is a publishing and technology firm.

At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $4.55 million in Daily Journal Corporation (NASDAQ:DJCO), up from 1 in the preceding quarter worth $222,000. In addition, the stock is a new arrival on Guy Spier’s portfolio, as his hedge fund bought about 11,500 shares of Daily Journal Corporation (NASDAQ:DJCO), worth $3.89 million.

Just like Berkshire Hathaway Inc. (NYSE:BRK-A), Alibaba Group Holding Limited (NYSE:BABA), and Bank of America Corporation (NYSE:BAC), Daily Journal Corporation (NASDAQ:DJCO) is one of the stocks to buy according to Guy Spier’s Aquamarine Capital.

9. Seritage Growth Properties (NYSE:SRG)

Spier’s Stake Value: $9,200,000

Percentage of Guy Spier’s 13F Portfolio: 4.31%

Number of Hedge Fund Holders: 10

Seritage Growth Properties (NYSE:SRG) is placed ninth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital. The firm is a publicly listed, self-administered, and self-managed real estate investment trust.

At the end of the second quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $122.88 million in Seritage Growth Properties (NYSE:SRG). Mohnish Pabrai is the leading shareholder of Seritage Growth Properties (NYSE:SRG) with 4.73 million shares, worth over $87.09 million.

8. Moody’s Corporation (NYSE:MCO)

Spier’s Stake Value: $9,784,000

Percentage of Guy Spier’s 13F Portfolio: 4.58%

Number of Hedge Fund Holders: 44

Moody’s Corporation (NYSE:MCO) is ranked eighth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital. It is a commercial and financial services firm based in the United States.

In September, Oppenheimer analyst Owen Lau raised his price target on Moody’s Corporation (NYSE:MCO) to $418 from $406 and maintained an “Outperform” rating on the stock.

Out of the hedge funds being tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway is a leading shareholder in Moody’s Corporation (NYSE:MCO) with 24.67 million shares worth more than $8.94 billion. Aquamarine Capital holds 27,000 shares in Moody’s Corporation (NYSE:MCO) worth over $9.78 million, representing 4.58% of their portfolio.

In addition to Berkshire Hathaway Inc. (NYSE:BRK-A), Alibaba Group Holding Limited (NYSE:BABA), and Bank of America Corporation (NYSE:BAC), Moody’s Corporation (NYSE:MCO) is one of the stocks to buy according to Guy Spier’s Aquamarine Capital.

In its second-quarter 2021 investor letter, Qualivian Investment Partners, an investment management firm, mentioned Moody’s Corporation (NYSE: MCO). Here is what the fund said:

“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional ratings business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”

7. Alibaba Group Holding Limited (NYSE:BABA)

Spier’s Stake Value: $10,772,000

Percentage of Guy Spier’s 13F Portfolio: 5.05%

Number of Hedge Fund Holders: 146

Alibaba Group Holding Limited (NYSE:BABA) is commonly known as China’s Amazon. It is a global technology conglomerate focused on e-commerce, retail, the Internet, and technology. It is placed seventh on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital.

Alibaba Group Holding Limited (NYSE:BABA) is the latest addition in Guy Spier’s hedge fund portfolio, as Aquamarine Capital bought 47,500 shares worth $10.77 million. Hedge fund sentiment increased for Alibaba Group Holding Limited (NYSE:BABA) in the second quarter. Insider Monkey’s data shows that 146 elite hedge funds held stakes in the company at the end of the second quarter, up from 135 funds a quarter earlier.

In its second-quarter 2021 investor letter, Polen Capital Management, an investment management firm, mentioned Alibaba Group Holding Limited (NYSE:BABA). Here is what the fund said:

“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”

6. Ferrari N.V. (NYSE:RACE)

Spier’s Stake Value: $16,506,000

Percentage of Guy Spier’s 13F Portfolio: 7.74%

Number of Hedge Fund Holders: 27

Ferrari N.V. (NYSE:RACE) develops, manufactures, and distributes premium performance sports vehicles through its subsidiaries. It stands sixth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital.

On September 16, Ferrari N.V. (NYSE:RACE) was downgraded from “Outperform” to “Neutral” by Exane BNP Paribas analyst Giulio Pescatore.

At the end of the second quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $992.82 million in Ferrari N.V. (NYSE:RACE), up from 26 in the previous quarter worth $1.26 billion. In addition, Aquamarine Capital holds 80,000 shares in Ferrari N.V. (NYSE:RACE) worth $16.51 million, representing 7.74% of its investment portfolio.

In its second-quarter 2021 investor letter, Ensemble Capital, an investment management firm, mentioned Ferrari N.V. (NYSE: RACE). Here is what the fund said:

“Ferrari: After posting standout performance in 2020, beating the S&P 500 by over 20%, Ferrari’s share price performance has lagged for much of this year. The main issue this quarter was the company pushing out their medium-term financial targets due to development and production delays caused by COVID, but this only led to a 1% decline in the stock price for the full quarter. While we believe the company did a fantastic job maintaining production in light of COVID, it did not surprise us that some of their longer-term, new model introductions might be delayed by a couple of quarters. While disappointing of course, Ferrari is curating a set of extremely exclusive mechanical works of art and we are much happier seeing them take the time to do things right, rather than rushing to meet a self-imposed financial target.”

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