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)
4. Alibaba Group Holding Limited (NYSE:BABA)
Thunderbird Partners’ Stake Value: $81,924,000
Percentage of Thunderbird Partners’ 13F Portfolio: 9.81%
Number of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA), a Chinese multinational ecommerce, technology, and retail corporation, is one of the top stock picks of Thunderbird Partners as of September 2021. The hedge fund holds 553,356 Alibaba Group Holding Limited (NYSE:BABA) shares, worth $81.9 million. The stock represents 9.81% of Thunderbird Partners’ Q3 portfolio.
115 hedge funds were bullish on Alibaba Group Holding Limited (NYSE:BABA) in the third quarter, with stakes valued at $10.20 billion, as compared to 146 funds in the preceding quarter holding stakes in the company worth $16.7 billion. Billionaire Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 14.2 million shares worth $2.1 billion.
On November 18, Alibaba Group Holding Limited (NYSE:BABA) reported its Q3 results, posting earnings per share of $1.75, missing estimates by $0.19. The company announced a $31.43 billion revenue, up 33.83% year-over-year, but missed estimates by approximately $670 million.
Citi analyst Alicia Yap lowered the price target on Alibaba Group Holding Limited (NYSE:BABA) to $216 from $234 and kept a Buy rating on the shares on January 10. The analyst reduced fiscal Q3 and out year estimates for Alibaba citing the “challenging” macro environment.
Here is what Distillate Capital has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2021 investor letter:
“The largest sales in the quarter were the Chinese E-commerce giant Alibaba. While Alibaba is still attractively valued, it is not as attractively valued as other Chinese names after the significant sell-off that has occurred in that region. Alibaba was therefore sold to make room for other Chinese stocks within the limits of the regional weight.”
3. Western Digital Corporation (NASDAQ:WDC)
Thunderbird Partners’ Stake Value: $100,142,000
Percentage of Thunderbird Partners’ 13F Portfolio: 12%
Number of Hedge Fund Holders: 41
Western Digital Corporation (NASDAQ:WDC) is a California-based manufacturer of computer hard disk drives, storage devices, data center systems, and cloud storage services. Thunderbird Partners owns 1.77 million shares of Western Digital Corporation (NASDAQ:WDC) as of the third quarter of 2021, worth $100.1 million, representing 12% of the fund’s Q3 13F securities.
Among the hedge funds tracked by Insider Monkey, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management is the largest stakeholder of Western Digital Corporation (NASDAQ:WDC) in the third quarter, with 4.23 million shares worth $239.1 million. Overall, 41 hedge funds were bullish on Western Digital Corporation (NASDAQ:WDC) in Q3 2021, down from 57 funds in the preceding quarter.
Publishing its Q3 results on October 28, Western Digital Corporation (NASDAQ:WDC) posted an EPS of $2.49, exceeding estimates by $0.05. The $5.05 billion revenue missed estimates by $7.48 million.
Evercore ISI analyst C.J. Muse raised the price target on Western Digital Corporation (NASDAQ:WDC) to $75 from $65 to reflect 7.2 times his calendar 2023 EPS estimate. He kept an Outperform rating on the shares on December 13, which he contends are “structurally under-valued”.
Here is what ClearBridge Investments has to say about Western Digital Corporation (NASDAQ:WDC) in its Q1 2021 investor letter:
“Our high active share approach made the most difference in IT, where the portfolio’s holdings gained 4.5% compared to a loss for the benchmark. Results were led by our more cyclical positions in digital storage provider Western Digital.”
2. Alphabet Inc. (NASDAQ:GOOG)
Thunderbird Partners’ Stake Value: $134,120,000
Percentage of Thunderbird Partners’ 13F Portfolio: 16.07%
Number of Hedge Fund Holders: 156
Thunderbird Partners owns 50,166 shares of Alphabet Inc. (NASDAQ:GOOG) as of Q3 2021, worth $134.1 million, representing 16.07% of the fund’s 13F portfolio.
Tigress Financial analyst Ivan Feinseth raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,540 from $3,185 and reiterated a Strong Buy rating on the shares on December 3, citing the company’s increasing artificial intelligence-first focus is driving greater product functionality and “significant” growth opportunities.
Alphabet Inc. (NASDAQ:GOOG) announced solid Q3 results on October 26, posting earnings per share of $27.99, exceeding estimates by $4.75. The $65.12 billion revenue also outperformed estimates by $1.83 billion.
Chris Hohn’s TCI Fund Management is the largest Alphabet Inc. (NASDAQ:GOOG) stakeholder, with 2.95 million shares worth $7.86 billion. Overall, 156 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG) as of September 2021, with stakes amounting to $34.95 billion.
Here is what Saturna Capital Amana Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Thunderbird Partners’ Stake Value: $145,679,000
Percentage of Thunderbird Partners’ 13F Portfolio: 17.45%
Number of Hedge Fund Holders: 248
Meta Platforms, Inc. (NASDAQ:FB), the parent company of Facebook, Instagram, and WhatsApp, is the largest holding in David Fear’s Thunderbird Partners’ Q3 portfolio. The fund owns 429,239 shares of Meta Platforms, Inc. (NASDAQ:FB), worth $145.6 million, representing 17.45% of the total Q3 investments.
On October 25, Meta Platforms, Inc. (NASDAQ:FB) reported its third quarter financial results, posting an EPS of $3.22, beating estimates by $0.04. Revenue over the period totaled $29.01 billion, up 35.12% from the prior-year quarter, but missed estimates by $513.23 million.
Loop Capital analyst Alan Gould on December 20 lowered the price target on Meta Platforms, Inc. (NASDAQ:FB) to $380 from $420 but kept a Buy rating on the shares. The magnitude of Meta Platforms, Inc. (NASDAQ:FB)’s spending on the Metaverse over the next several years and how rapidly the spending at Facebook Reality Labs will increase from the $10 billion being spent in 2021 will be a key focus for investors, according to the analyst.
Fisher Asset Management is one of the biggest Meta Platforms, Inc. (NASDAQ:FB) stakeholders, with 7.59 million shares worth $2.5 billion. Overall, 248 hedge funds in the third quarter database of Insider Monkey were long Meta Platforms, Inc. (NASDAQ:FB), down from 266 funds in the prior quarter.
Here is what ClearBridge Large Cap Growth Strategy has to say about Meta Platforms, Inc. (NASDAQ:FB) in its Q3 2021 investor letter:
“While Amazon.com and Facebook, the Strategy’s overweights in the mega cap group, underperformed both their FAAMG peers and the benchmark in the third quarter, we maintain conviction in these names because they have the highest growth profiles. Amazon is projected to grow earnings per share at 19% next year and Facebook at 13%, while Apple is expected to see only breakeven earnings in 2022 (Exhibit 1). Facebook remains at the center of regulatory attention, although we believe that the worst-case scenario options are low-probability events and that the digital advertising market continues to be quite healthy. In a similar way, we prefer to play the secular growth trends in digital advertising through Facebook rather than Google and the rollout of 5G via Qualcomm instead of Apple. Facebook has multiple products that can continue to drive attractive revenue growth including direct e-commerce solutions, payments, AR/VR and monetizing WhatsApp. In addition, the Federal Trade Commission’s dismissal of the government’s antitrust case against Facebook (even though the case was subsequently re-filed) supports our view that antitrust action against the company will be difficult to achieve.”
You can also take a look at 10 Best Tech Stocks to Buy Now According to Nishkama Capital and 10 Best Stocks To Buy According to Billionaire Larry Robbins.
