Below are the 5 best software stocks according to billionaire Chase Coleman. For a comprehensive list and Coleman’s investment philosophy, please see 10 Best Software Stocks To Buy According To Billionaire Chase Coleman.
5. Atlassian Corporation Plc (NASDAQ: TEAM)
The software developer Atlassian Corporation Plc (NASDAQ: TEAM) is a long-running stock holding of Tiger Global Management. It is ranked at the fifth spot in the list of 10 best software stocks to buy according to Chase Coleman. TEAM stock price grew only 3.5% this year, but strong revenue growth trends will add to its upside momentum in the days ahead. Atlassian anticipated March quarter revenue in the range of $566 to $572 million, up to $85 million compared to the midpoint of previous revenue guidance.
Atlassian Corporation saw an increase in activity from the world’s largest hedge funds of late. It was in record 69 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to the previous all-time high for this statistic of 62.
4. Elastic N.V. (NYSE: ESTC)
The software application company Elastic N.V. (NYSE: ESTC) has been a member of Tiger Global Management’s portfolio since the fourth quarter of 2018. Share of ESTC fell 9% so far this year. Despite the latest selloff, its stock price is still up 144% in the last twelve months. The tiger cub’s hedge fund held more than 4 million shares of Elastic at the end of the latest quarter.
Greenhaven Road Capital, which generated a spectacular net return of 105% in 2020, highlighted a few stocks including Elastic in the fourth-quarter investor letter. Here is what Greenhaven Road Capital stated:
“This open-source software company monetizes a very small subset of their users. Therefore, CEO Shay Bannon is fighting a different fight than most software entrepreneurs. Elastic’s open-source model provides the community far more value than it extracts. Earlier this month, the company made a change to their licensing agreement, which will make it more difficult for others to commercialize Elastic’s software. The EV/sales multiple has clearly risen over the past year as the share price has roughly tripled our initial purchases at the end of 2019. The company prices software based on usage and benefits from the continued growth of data as well as their expanding product lines. With net revenue retention (purchases from their existing base of customers) remaining above 130% since before their IPO, Elastic has a long runway of 30%+ growth that should mute the impact of multiple compression when it occurs.”
3. ServiceNow Inc. (NASDAQ: NOW)
Chase Coleman looks bullish over the future fundamentals of ServiceNow (NASDAQ: NOW). His hedge fund raised its stake in enterprise cloud computing solutions provider by 10% to 1.69 million shares valued at around $900 million. The firm first initiated a position in NOW stock during the third quarter of 2017 and it appears that Tiger Global has been benefiting from its position. Shares of ServiceNow rallied almost 700% in the last four years and the stock price is up 94% in the last twelve months.
ServiceNow was in record 96 hedge funds’ portfolios at the end of December. Our calculations also showed that NOW ranked 25th among the 30 most popular stocks among hedge funds (click for Q4 rankings).
2. CrowdStrike Holdings, Inc. (NASDAQ: CRWD)
CrowdStrike Holdings, Inc. (NASDAQ: CRWD) is the eighth largest stock holding of Tiger management, accounting for 4.06% of the overall portfolio. Its share price appreciated 168% in the last twelve-month, driven by substantial growth in revenues. The company recently outlined its strategy of achieving $3 billion in annual revenues by 2025. CrowdStrike reported year-over-year revenue growth of 74% for the December quarter.
The best stock pickers were in a bullish mood. The number of long hedge fund bets went up by 21 lately. CrowdStrike was in 92 hedge funds’ portfolios at the end of December compared to the previous all-time high for this statistic of 78. Our calculations also showed that CRWD ranked 30th among the 30 most popular stocks among hedge funds.
1. Microsoft Corporation (NASDAQ: MSFT)
Shares of the tech giant Microsoft Corporation (NASDAQ: MSFT) surged strongly last year and extended the upside momentum into 2021. The share price rally is completely backed by double-digit revenue and profit growth. MSFT is the second-largest stock holding of Chase Coleman’s portfolio at the end of the fourth quarter of 2020, representing 6.73% of the overall portfolio. It is ranked first in the list of 10 best software stocks to buy according to Chase Coleman.
Bretton Fund, which returned 11.52% for the fourth quarter, highlighted a few stocks including Microsoft in the Q4 investor letter. Here is what Bretton Fund stated:
“Microsoft’s stock also had a great year, returning 42.4% on increased earnings per share of 30%. The main driver of their growth in recent years is their cloud computing business, and while it did see a bump in demand as office workers went remote, most of the growth is from the continued shift of corporate computing systems to “the cloud.” We think this shift is still in its early stages.”
