In this article, we will discuss the 5 best technology stocks to buy according to billionaire Dan Loeb. If you want to read our detailed analysis of these stocks, you can go directly to 10 Best Technology Stocks to Buy According to Billionaire Dan Loeb.
5. Dell Technologies (NYSE:DELL)
Third Point LLC’s Stake Value: $349,574,000
Percentage of Third Point LLC’s 13F Portfolio: 1.9%
Dell Technologies (NYSE:DELL) is a designer, developer, manufacturer, and seller of IT products, solutions, and services across the world. The Round Rock, Texas-based company, was founded in 1984 by Michael Dell and employs more than 165,000 people today. On November 1, the company announced the spin-off of its 81% equity stake in VMware, Inc. (NYSE:VMW).
Katy Huberty at Morgan Stanley increased the price target from $67 to $68 on Dell Technologies (NYSE:DELL) while maintaining an Overweight rating on November 24.
Third Point Management shared its detailed stance on Dell Technologies (NYSE:DELL) in its Q3 investor letter. Here’s what the fund said:
“Michael Dell has created substantial value for shareholders since re-listing the company several years ago. Earlier this year, Dell Technologies announced that it would be spinning its $50 billion stake in VMWare, which we believe will unlock the underappreciated value of the Dell server and PC businesses. Dell’s best attribute has been strong free cash flow generation, which the company has used to de-lever and create significant latent value for equity holders. Looking ahead, we believe this core Dell business, which still trades at a discount to its hardware peer group, should instead command a premium multiple thanks to its leading market share, profitability, and impressive execution. There are few large cap companies which possess a nearly 10% FCF yield, 2.5% dividend yield and 1.5x leverage ratio; Dell is one of them.”
4. Microsoft Corporation (NASDAQ:MSFT)
Third Point LLC’s Stake Value: $451,072,000
Percentage of Third Point LLC’s 13F Portfolio: 2.46%
Microsoft Corporation (NASDAQ:MSFT) is a $2.5 trillion tech giant that can be broadly divided into three business segments, namely Cloud and AI Group, Experiences and Devices, and Technology and Research. The Redmond, Washington-based company is the 11th biggest holding in Third Point’s portfolio through 1.6 million shares.
On November 22, Michael Turrin at Wells Fargo commenced coverage on Microsoft Corporation (NASDAQ:MSFT) stock with an Overweight rating and a price target of $400, reflecting a potential upside of over 18%. The analyst sees a “bright future ahead” with an opportunity to grow in “huge categories” of the IT sector. The analyst pinpointed the growth of Azure along with its presence everywhere and impressive margin profile in the research note.
Polen Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter. Here’s what the investment management firm said:
“After modest Portfolio activity during the second quarter of 2021, activity increased during the third quarter. We would broadly characterize the various trades into two objectives: 1) managing risk, and 2) managing valuation. In both cases, we aimed to maintain the Portfolio’s growth profile. In aggregate, we believe we were able to increase expected earnings growth while reducing risk and the overall portfolio valuation… We also trimmed Microsoft, which had grown to nearly 10% of the Portfolio. At an 8% weighting, it still represents one of our largest positions.”
3. Intel Corporation (NASDAQ:INTC)
Third Point LLC’s Stake Value: $479,520,000
Percentage of Third Point LLC’s 13F Portfolio: 2.61%
Intel Corporation (NASDAQ:INTC) is another legacy player in the technology sector and the 10th biggest holding in Third Point LLC’s portfolio.
To counter the impact of stagnation and investor activism from Third Point, the company brought back Pat Gelsinger as its CEO in January 2021, after he left Intel Corporation (NASDAQ:INTC) in 2009 to become the President and COO at EMC. In 2012, he took over as the CEO of VMWare, Inc. (NYSE:VMW). Following his appointment, Dan Loeb revealed that he is “excited” to be a long-term investor in Intel Corporation (NASDAQ:INTC) and thinks that the company has “unmatched” resources in the semiconductor industry. He thinks that Gelsinger is the right person to motivate thousands of employees at Intel Corporation (NASDAQ:INTC) and take the company into the future.
Of the 867 elite funds being tracked by Insider Monkey, 66 reported owning a stake worth $6.47 billion in Intel Corporation (NASDAQ:INTC) at the end of Q3 2021. Dan Loeb’s Third Point owns 9 million shares in the company, worth nearly $479.5 million.
2. Intuit Inc. (NASDAQ:INTU)
Third Point LLC’s Stake Value: $593,461,000
Percentage of Third Point LLC’s 13F Portfolio: 3.23%
Intuit Inc. (NASDAQ:INTU) provides important software related to accounting, finance, taxes, and customer relationship management. The company is catering to 100 million consumers and small businesses worldwide through its 14,200 employees spread across nine countries. Following the acquisition of Mailchimp in November 2021, Intuit Inc.’s (NASDAQ:INTU) software portfolio comprises some of the notable platforms like Credit Karma, Mint, QuickBooks, and TurboTax under its umbrella.
On November 19, Kash Rangan at Goldman Sachs upgraded Intuit from a Neutral to a Buy rating, while increasing the target price from $535 to $840. The analyst anticipates Intuit Inc. (NASDAQ:INTU) to reach $17 billion in revenue by FY24 with an operating margin of 38% to 40%. This is similar to the topline and operating margins of Adobe Inc. (NASDAQ:ADBE) in FY21, which is trading at 1.8 times the market capitalization of Intuit. The analyst observes a strong execution plan at Intuit Inc. (NASDAQ:INTU) in achieving long-term growth.
In its Q3 2021 investor letter, Cooper Investments shared its views on Intuit Inc. (NASDAQ:INTU). Here’s what the fund said:
“The other meaningful deal during the quarter was Intuit’s acquisition of Mailchimp for $12bn. Intuit has reinvented itself over the last decade and thrived with a leadership position in QuickBooks Online, the financial accounting software for small businesses (effectively the ‘Xero of the US’). We originally invested in Intuit in February 2020, excited by the QuickBooks prospects.
Management have executed exceptionally well on the opportunity set which has seen the shares double since our initial purchase. However, the company has now conducted two meaningful deals in Mailchimp and Credit Karma worth a combined US$20bn over the last 12 months. The investment proposition has shifted from a focus on QuickBooks to now being a financial and small business software conglomerate. We continue to very much admire the company, but with Intuit now trading on 50x forward earnings we no longer see such attractive latency on offer, nor the rewards for the level of execution risk and thus we have exited the position.”
1. SentinelOne, Inc. (NYSE:S)
Third Point LLC’s Stake Value: $1,396,008,000
Percentage of Third Point LLC’s 13F Portfolio: 7.62%
SentinelOne, Inc. (NYSE:S) is a provider of cybersecurity services through its proprietary Singularity platform that detects and prevents attacks against cyber threats by employing artificial intelligence. The stock price of the Mountain View, California-based company has risen as much as 70% from its IPO in late June 2021 and is currently up 30%. SentinelOne, Inc. (NYSE:S) is the second-biggest holding in Third Point LLC’s portfolio, and the hedge fund increased its holdings in the company by 6% during Q3 2021.
In a research note issued on September 9, Yun Kim at Loop Capital raised the target price from $60 to $82 and maintained a Buy rating on SentinelOne, Inc. (NYSE:S) stock.
Third Point Management shared its stance on SentinelOne, Inc. (NYSE:S) in its Q3 2021 investor letter:
“Our top winners on a percentage basis in Q3 were our two largest positions; (which includes) SentinelOne, up 26%, as public market investors rewarded both companies’ disruptive business models and high-growth trajectories. We expect SentinelOne to grow rapidly and continue to gain market share over the next decade as flexible work patterns, cloud adoption, and IoT create more security vulnerabilities. This market is still dominated by legacy vendors whose solutions pale when compared to SentinelOne’s autonomous, machine-learning based security, which is taking share and helping the company grow annual recurring revenue by more than 100% year-over-year.”
You can also take a peek at Brian Higgins’ King Street Capital Portfolio: Top 10 Stock Picks and Top Tech Stock Picks of Amir Mokari’s Emerson Point Capital.
