In this article, we discuss 5 stocks to buy according to David Fear’s Thunderbird Partners. If you want our detailed analysis of these stocks, go directly to 10 Stocks to Buy According to David Fear’s Thunderbird Partners.
5. Spotify Technology S.A. (NYSE:SPOT)
Thunderbird Partners’ Stake Value: $78,524,000
Percentage of Thunderbird Partners’ 13F Portfolio: 9.41%
Number of Hedge Fund Holders: 48
Spotify Technology S.A. (NYSE:SPOT), a Swedish audio streaming and media services company, is one of the top stocks to buy according to David Fear’s Thunderbird Partners. The hedge fund owns 348,469 shares of Spotify Technology S.A. (NYSE:SPOT), worth $78.5 million. The stock represents 9.41% of Thunderbird Partners’ Q3 portfolio.
Spotify Technology S.A. (NYSE:SPOT) announced its third quarter results on October 27, reporting an EPS of $0.01, beating estimates by $0.17. Revenue for the period jumped 25.85% year-over-year to $2.90 billion, exceeding estimates by $64.16 million.
Benchmark analyst Matthew Harrigan initiated coverage of Spotify Technology S.A. (NYSE:SPOT) with a Buy rating and a $300 price target on November 24. Spotify Technology S.A. (NYSE:SPOT) is “the marquee global audio streaming service” and “continues to out innovate larger hyperscale tech competitors”, according to the analyst. He sees advertising and podcasting growth increasingly complementing premium music streaming.
Cathie Wood’s ARK Investment Management is the largest Spotify Technology S.A. (NYSE:SPOT) stakeholder as of Q3 2021, with 4.6 million shares worth over $1 billion. Overall, 48 hedge funds were bullish on Spotify Technology S.A. (NYSE:SPOT) in the third quarter.
Here is what Rowan Street Capital has to say about Spotify Technology S.A. (NYSE:SIX) in its Q3 2021 investor letter:
“At Rowan Street, the #1 fundamental principle of everything we do is we have a mindset of a business owner — this is how we approach all our investments. When you start looking at the world through the lens of a business owner, you start paying less and less attention to the stock tickers that bounce up and down every day and realize that most of the time these daily stock price gyrations have very little to do with the long term intrinsic value of the business. Over the long run, however, stock prices accurately reflect the fundamentals of businesses. For example, when you purchase a house or a commercial property or buy into a small business, you do not get a quote on it every single moment or every single day. You are in it for the long run, and you make your investment decision based on the earnings that your property or business can generate over the next 5-10 years in relation to the capital that you have to put up up-front.
This is exactly how we structure the portfolio of our fund and how we judge the performance of our businesses, in which we are minority owners.
Let’s look at one of our investments, Spotify, as an example. We encourage you to review our investment thesis on Spotify that we published in our Q2 2020 Letter and in H1 2021 Letter. The company went public in April of 2018 and since the stock has delivered the following calendar year returns:
2018: -24% (since IPO date)
2019: +32%
2020: +110%
2021: -26% (as of this writing)
As you can see, performance of an individual stock can be very lumpy from year to year. Spotify was the biggest contributor to our funds’ performance in 2020 and it’s the second biggest detractor thus far in 2021. Do these short-term stock price gyrations matter to us? Absolutely not! Focusing on this and judging our investment based on how it performs in any given year would be akin to attempting to win a football game while keeping our eyes on the scoreboard. This is why at Rowan Street, our eyes will always be focused on the “playing field”. If we continue to do that, the score will take care of itself over time!
What does it look like on the “playing field” for Spotify?…” (Click here to see the full text)
