In this article, we discuss 10 tech stocks to buy according to Select Equity Group. If you want to skip our detailed analysis of these stocks, go directly to 5 Tech Stocks to Buy According to Select Equity Group.
Select Equity Group is a New York-based employee-owned hedge fund, founded in the early 1990s. The hedge fund is operated primarily on the premise that solid research and long-term investing horizons will result in high returns. The portfolio at Select Equity Group is worth approximately $30 billion, and the fund manages discretionary assets under management of $43.9 billion as of Q3 2021.
Select Equity Group pursues long-only and long/short equity strategies, and invests in the materials, information technology, industrials, healthcare, finance, consumer discretionary, and communications sectors. The hedge fund serves global clients including endowments, foundations, public and corporate pensions, private banks, family offices, and high-net-worth individuals.
Select Equity Group’s top buys for the third quarter include Coupa Software Incorporated (NASDAQ:COUP), PowerSchool Holdings, Inc. (NYSE:PWSC), and Ceridian HCM Holding Inc. (NYSE:CDAY). Whereas, the hedge fund reduced holdings in GoDaddy Inc. (NYSE:GDDY), Cincinnati Financial Corporation (NASDAQ:CINF), and Signet Jewelers Limited (NYSE:SIG).
The most notable stocks in the third quarter portfolio of Select Equity Group include Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), and Alphabet Inc. (NASDAQ:GOOG).
Photo by Stephen Dawson on Unsplash
Our Methodology
We used the Q3 portfolio of Select Equity Group to select the fund’s top tech stocks. We ranked the securities according to the stake value of Select Equity Group in each holding.
Tech Stocks to Buy According to Select Equity Group
10. PowerSchool Holdings, Inc. (NYSE:PWSC)
Select Equity Group’s Stake Value: $238,025,000
Percentage of Select Equity Group’s 13F Portfolio: 0.79%
Number of Hedge Fund Holders: 11
PowerSchool Holdings, Inc. (NYSE:PWSC), one of the leading American K-12 education technology companies, is one of the top tech stocks in Select Equity Group’s portfolio. The hedge fund acquired a stake in PowerSchool Holdings, Inc. (NYSE:PWSC) in the third quarter of 2021, buying 9.6 million shares of the company, worth over $238 million, representing 0.79% of the total 13F securities.
Jefferies analyst Brent Thill on January 6 lowered the price target on PowerSchool Holdings, Inc. (NYSE:PWSC) to $32 from $38 and kept a Buy rating on the shares as he adjusted his targets across the app, infrastructure, and security software spaces.
Publishing its Q3 results on November 10, PowerSchool Holdings, Inc. (NYSE:PWSC) posted a loss per share of $0.04, missing estimates by $0.19. The quarterly revenue equaled $148.95 million, exceeding estimates by $6.58 million.
Among the hedge funds tracked by Insider Monkey, Robert Smith’s Vista Equity Partners is the largest PowerSchool Holdings, Inc. (NYSE:PWSC) stakeholder from Q3 2021, with 75.4 million shares worth $1.85 billion. Overall, 11 hedge funds in the third quarter database of Insider Monkey were bullish on PowerSchool Holdings, Inc. (NYSE:PWSC), with stakes totaling $2.27 billion.
In addition to Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), and Alphabet Inc. (NASDAQ:GOOG), PowerSchool Holdings, Inc. (NYSE:PWSC) is a notable tech stock in the Q3 portfolio of Select Equity Group.
9. Trimble Inc. (NASDAQ:TRMB)
Select Equity Group’s Stake Value: $254,568,000
Percentage of Select Equity Group’s 13F Portfolio: 0.85%
Number of Hedge Fund Holders: 34
Select Equity Group elevated its position in Trimble Inc. (NASDAQ:TRMB) by 46% during the third quarter, holding a total of 3.09 million shares worth $254.5 million, representing 0.85% of the fund’s 13F portfolio. Trimble Inc. (NASDAQ:TRMB) is a software, hardware, and services technology company that assists customers in the construction, agriculture, geospatial, utilities, government, and transportation sectors.
Trimble Inc. (NASDAQ:TRMB) announced on October 27 that it has entered into a partnership with Microsoft Corporation (NASDAQ:MSFT), to increase digital transformation in the construction, transportation, and agriculture industries. The Trimble Construction Cloud will be powered by Microsoft Azure, which will expand Trimble Inc. (NASDAQ:TRMB)’s construction solutions.
Impax Asset Management is the largest stakeholder of Trimble Inc. (NASDAQ:TRMB) from the 34 funds that were bullish on the stock in the third quarter. Impax Asset Management holds a $653.4 million position in Trimble Inc. (NASDAQ:TRMB).
On November 3, Trimble Inc. (NASDAQ:TRMB) reported its third quarter results, posting earnings per share of $0.66, exceeding estimates by $0.05. Revenue over the period jumped 13.70% year-over-year to $901.40 million, outperforming estimates by $16.24 million.
Trimble Inc. (NASDAQ:TRMB) disclosed on December 15 that it has acquired AgileAssets, a company specializing in powerful SaaS asset management solutions that equip organizations with advanced analytics for real-time decision making and insights for efficiently managing routine operations. The company also helps aging transportation infrastructure around the United States.
Piper Sandler analyst Weston Twigg initiated coverage of Trimble Inc. (NASDAQ:TRMB) with an Overweight rating and a $101 price target on October 14. According to the analyst, Trimble Inc. (NASDAQ:TRMB) will benefit from the shift to digitization among its customers, anticipating 10% annual recurring growth with the potential to accelerate as digitization efforts expand.
8. Visa Inc. (NYSE:V)
Select Equity Group’s Stake Value: $269,245,000
Percentage of Select Equity Group’s 13F Portfolio: 0.90%
Number of Hedge Fund Holders: 143
Visa Inc. (NYSE:V) is a multinational financial technology company offering credit cards and payment systems worldwide. Select Equity Group increased its stake in Visa Inc. (NYSE:V) by 65% in Q3 2021, owning 1.20 million shares of the company, worth $269.2 million.
On October 26, Visa Inc. (NYSE:V) declared a $0.375 per share quarterly dividend, which is a 17.2% increase from the prior dividend of $0.320. The dividend was paid on December 7, to shareholders of record on November 12.
Mizuho analyst Dan Dolev downgraded Visa Inc. (NYSE:V) to Neutral from Buy with a price target of $220, down from $255 on January 7.
Among the hedge funds tracked by Insider Monkey in Q3 2021, TCI Fund Management is the biggest Visa Inc. (NYSE:V) stakeholder, with approximately 20 million shares worth $4.44 billion. Overall, 143 funds were long Visa Inc. (NYSE:V) in the third quarter, down from 162 funds in the prior quarter.
Here is what L1 Capital has to say about Visa Inc. (NYSE:V) in its Q3 2021 investor letter:
“In our view, the payment network company, Visa, remains very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa’s transaction volumes, however in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. Nearer term, we believe the recovery in international travel as the world gradually normalizes and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
7. Coupa Software Incorporated (NASDAQ:COUP)
Select Equity Group’s Stake Value: $306,387,000
Percentage of Select Equity Group’s 13F Portfolio: 1.02%
Number of Hedge Fund Holders: 52
Coupa Software Incorporated (NASDAQ:COUP) is a California-based company offering a global technology platform to assist with business spend management. Coupa Software Incorporated (NASDAQ:COUP) is a new arrival in Select Equity Group’s Q3 portfolio, with the hedge fund holding 1.39 million shares of the company, worth $306.3 million, representing 1.02% of the fund’s total investments.
Reporting its earnings for the quarter ending October 2021, Coupa Software Incorporated (NASDAQ:COUP) announced an EPS of $0.31, exceeding estimates by $0.28. Revenue over the period equaled $185.82 million, up 39.75% year-over-year, surpassing estimates by $7.93 million.
Goldman Sachs analyst Gabriela Borges initiated coverage of Coupa Software Incorporated (NASDAQ:COUP) with a Buy rating and a $251 price target on December 13, implying 61% upside. The analyst views Coupa Software Incorporated (NASDAQ:COUP) as a category leader “still early” in penetrating its business spend management total addressable market. She sees “several levers to growth” over the next three years for the company.
Stephen Mandel’s Lone Pine Capital is the largest Coupa Software Incorporated (NASDAQ:COUP) stakeholder as of Q3 2021, with 4.5 million shares worth over $1 billion. Overall, 52 hedge funds monitored by Insider Monkey were bullish on Coupa Software Incorporated (NASDAQ:COUP) in the third quarter, with stakes totaling $4.5 billion.
Here is what ClearBridge Investments has to say about Coupa Software Incorporated (NASDAQ:COUP) in its Q2 2021 investor letter:
“Within IT, we added positions in Coupa Software, a leader in the fast growing Business Spend Management market with opportunity to double its total addressable market by harnessing B2B payments with its Coupa Pay product; and AppLovin, a leading mobile gaming advertising network in a unique position to utilize its ad expertise to grow its own mobile game business at low user acquisition costs.”
6. Everbridge, Inc. (NASDAQ:EVBG)
Select Equity Group’s Stake Value: $573,975,000
Percentage of Select Equity Group’s 13F Portfolio: 1.92%
Number of Hedge Fund Holders: 23
Everbridge, Inc. (NASDAQ:EVBG), an American software company offering information about critical events, personal safety, and business continuity, is one of the top tech stock picks of Select Equity Group. On December 9, Everbridge, Inc. (NASDAQ:EVBG) CEO David Meredith resigned unexpectedly, and the next day, the shares dropped 45% as investors sold the tech stock.
The hedge fund owns 3.80 million Everbridge, Inc. (NASDAQ:EVBG) shares as of September 2021, worth approximately $574 million, representing 1.92% of the total 13F portfolio.
On November 9, Everbridge, Inc. (NASDAQ:EVBG) announced its third quarter results, reporting earnings per share of $0.06, exceeding estimates by $0.20. The Q3 revenue equaled $96.75 million, up 35.77% from the prior-year quarter, surpassing estimates by $2.47 million.
Truist analyst Terry Tillman lowered the price target on Everbridge, Inc. (NASDAQ:EVBG) to $85 from $185 but kept a Buy rating on the shares on December 27. The analyst updated his model to reflect the company’s “disappointing initial 2022 growth framework of 20% to 23%” that was provided at the time of its “surprise” CEO departure announcement a few weeks ago. The analyst noted that with the stock down 40%, sentiment has “over indexed to the negative”.
Among the hedge funds tracked by Insider Monkey in Q3, Daniel Patrick Gibson’s Sylebra Capital Management is one of the leading Everbridge, Inc. (NASDAQ:EVBG) stakeholders, with a $303.2 million position in the company. Overall, 23 hedge funds were bullish on the stock in the third quarter.
Just like Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), and Alphabet Inc. (NASDAQ:GOOG), Everbridge, Inc. (NASDAQ:EVBG) is a notable stock in the third quarter portfolio of Select Equity Group.
In its Q1 2021 investor letter, Baron Discovery Fund highlighted a few stocks and Everbridge Inc. (NASDAQ:EVBG) is one of them. Here is what the fund had to say:
“Everbridge, Inc. provides a cloud-based software solution to companies for critical event management (“CEM”) as well as general population alerts for public authorities. Shares declined during the first quarter as part of the broader market rotation from high-valuation software stocks coupled with continued pandemic-related pressure on Everbridge’s organic growth rates. We retain conviction given the company’s significant lead over its competition and the early stage of CEM adoption, with just 2% of Everbridge’s 5,000-plus population alert customers having adopted CEM thus far.”
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Disclosure: None. 10 Tech Stocks to Buy According to Select Equity Group is originally published on Insider Monkey.
