In this article, we will discuss the 5 best new stocks to buy according to hedge funds. If you want to read our detailed analysis of these companies, go directly to the 11 Best New Stocks To Buy According to Hedge Funds.
5. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 39
Price as of October 20, 2021: $21.05
SoFi Technologies, Inc. (NASDAQ:SOFI) is a digital financial services company with over two million members and more than $50 billion in funded loans.
Since becoming public in December 2020, the stock price of the San Francisco-based firm has more than doubled. Betsy Graseck at Morgan Stanley has given SoFi Technologies Inc. (NASDAQ:SOFI) an Overweight rating and a target price of $25. Furthermore, Jim Cramer at CNBC also recommended the stock as a way to get exposure into “nouveau banks.”
According to Insider Monkey’s database, 39 hedge funds hold a cumulative stake of $1.78 billion in the company as of June 30, 2021, which is equivalent to 11% of SoFi’s market value. Silver Lake Partners is the leading shareholder with a stake of over $738 million in SoFi Technologies Inc. (NASDAQ:SOFI).
Miller Value Partners discussed its stance on SoFi Technologies Inc. (NASDAQ:SOFI) in its Q2 2021 investor letter. Here’s what the firm said:
“We entered SoFi Technologies Inc. (SOFI) on a private investment and public equity (PIPE) deal earlier this year, and it closed in the quarter. SoFi is a “fin-tech” company offering borrowing, saving, spending and investing offerings. The company has no brick and mortar locations allowing them certain efficiencies. SoFi reinvests savings back into the business by providing customers with higher interest rates on deposits and lower loan rates. It uses data to improve loss ratios and reduce risk.
SoFi is led by Anthony Noto who we’ve known for many years. Most recently he served as Twitter’s CFO and worked at Goldman Sachs prior to that. He’s a thoughtful executive that understands how to drive business value. Overtime, they think they can continue to gain market share from traditional players in the space. We think there’s significant potential in SoFi.”
4. Vimeo, Inc. (NASDAQ:VMEO)
Number of Hedge Fund Holders: 48
Price as of October 20, 2021: $33.54
Vimeo, Inc. (NASDAQ:VMEO) is an SaaS video creation, hosting, and sharing platform that is focused on providing HD videos based out of New York. The organization became public in May 2021 after its spin-off from IAC.
A cumulative position of $1.13 billion is held by 48 hedge funds in Vimeo Inc. (NASDAQ:VMEO) as of the second quarter of 2021. All of these positions have been taken during the second quarter of 2021. Joshua Kushner led Thrive Capital has the largest stake worth nearly $287 million in Vimeo, Inc. (NASDAQ:VMEO).
Alphyn Capital Management shared its perspective on Vimeo Inc. (NASDAQ:VMEO) in its Q2 2021 investor letter:
“Clients will notice a new ticker, VMEO, on your brokerage statements following its spin-out from IAC. I profiled IAC’s companies, including Vimeo, in some detail last year. The pandemic accelerated the use of video by both enterprises and small businesses, and I believe this will continue given the high engagement that video generates. The most recent numbers bear this out: May revenues rose 42% from a year earlier while subscriber base and average revenue per user increased 18%. With its comprehensive set of tools to make video creation more accessible, Vimeo has a great opportunity to capture a share of this growth. It further benefits from an attractive customer acquisition funnel – 65% of Fortune 500 enterprises have at least one self-serve Vimeo subscription (with ARPU6 of $250). The company is building out its sales team to help upsell these into enterprise accounts (with ARPU of $12,000). Finally, by buying IAC shares ahead of the spin, we received a long-term, high-growth SAAS “call option” at a much more palatable valuation than the current 20x price-to-sales. Historically, it has been very rewarding to hold onto IAC spins…”
3. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 58
Price as of October 20, 2021: $169.76
Airbnb, Inc. (NASDAQ:ABNB) is an online lodging marketplace with a presence of over 4 million hosts and has catered to over 1 billion guests since its inception. The San Francisco, California-based giant has changed the landscape of the lodging industry through its platform.
The stock price of Airbnb Inc. (NASDAQ:ABNB) has seen an increase of 22% since becoming public in December 2020 and has outperformed the S&P 500 Index, which has observed a rise of just over 17% during the same period.
Investment management firm, Worm Capital LLC mentioned Airbnb Inc. (NASDAQ:ABNB) in its Q2 2021 investor letter. Here’s what the fund said:
“Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.
Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)
Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work …” (Click here to see the full text)
2. SentinelOne, Inc. (NYSE:S)
Number of Hedge Fund Holders: 67
Price as of October 20, 2021: $62.56
SentinelOne, Inc. (NYSE:S) is a cybersecurity company based out of Mountain View, California. The demand for cybersecurity has increased significantly as people have started working from home and using cloud technology to access data and are open to threats from everywhere.
SentinelOne Inc. (NYSE:S) was mentioned in Third Point Management’s Q2 2021 investor letter. Here’s what the investment management firm said:
“Our largest winner in Q2 was SentinelOne, which completed its initial public offering on June 30th. Today, it has a market cap of roughly ~$14 billion, over 4x its last private round valuation in November 2020. We first invested in SentinelOne in 2015, leading its Series B round at a post-money valuation of $98 million, and Robert Schwartz joined the board. After participating at each subsequent round, as well as in the IPO and after-market, we now own over 10% of the company and Rob remains a board member. SentinelOne’s next generation, AI-powered autonomous security product for the endpoint market continues to take share from legacy incumbents such as Symantec and McAfee. Its technology compares favorably to its most relevant next-gen endpoint protection competitor, Crowdstrike, in an environment where cybersecurity has become an essential enterprise need, highlighted by frequent, well-publicized attacks.”
1. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 70
Price as of October 20, 2021: $334.13
Snowflake Inc. (NYSE:SNOW) is a provider of cloud-based data storage and analytics service headquartered in Bozeman, Montana. The company has more than 1,300 partners and has 250 petabytes (PB) of data under its management. The organization employs over 3,000 people across 20 countries.
Patrick Walravens at JMP Securities raised the price target for Snowflake Inc. (NYSE:SNOW) from $320 to $350 and maintained an Outperform rating.
Investment management firm, RiverPark Funds mentioned Snowflake Inc. (NYSE:SNOW) in its Q1 2021 investor letter. Here’s what the firm said:
“We also established a position in Snowflake during the quarter. 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. The cloud data platform market—storing data off-premises on cloud servers—is a relatively new $70 billion+ market. Significantly, incremental warehouse data capacity and renewals are expected to be driven by and to the cloud, with more than 75% of databases in the cloud by 2022 … Click here to continue reading.”
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