In this piece, we will take a look at the 5 tech stock picks of Cristan Black’s Empirical Capital. If you want more details about Mr. Black and his hedge fund, then head over to 10 Tech Stock Picks of Cristan Black’s Empirical Capital.
5. Snap Inc. (NYSE:SNAP)
Empirical Capital’s Holdings: $2.64 million
Percentage of Empirical Capital’s Portfolio: 2.77%
Number of Hedge Fund Holders: 78
Snap Inc. (NYSE:SNAP) is an American social media company known for its smartphone application Snapchat. This application allows its users to share highlights and events from their daily lives with friends and followers.
For its third quarter, Snap Inc. (NYSE:SNAP) revealed that it had earned $1 billion in revenue and $0.17 in non-GAAP EPS, beating analyst estimates for EPS only. Its price target was lowered to $65 by Morgan Stanley in November 2021, which was worried that the social media sector will face several headwinds in the upcoming year.
Mr. Black’s investment firm held 35,776 Snap Inc. (NYSE:SNAP) shares as of the end of Q3 2021, which were worth $2.64 million and represented 2.77% of its portfolio. 78 of the 867 hedge funds polled by Insider Monkey held stakes in the company during the third quarter of 2021.
Stephen Mandel’s Lone Pine Capital is Snap Inc.’s (NYSE:SNAP) biggest shareholder via holding 22 million shares worth $1.6 billion.
In its Q3 2021 investor letter, Jefferies Group mentioned Snap Inc. (NYSE:SNAP), stating that:
“We believe SNAP may be one of the best positioned virtual platforms in the development of the Metaverse. In order to better understand SNAP’s leadership position, we examine the significance of four key product areas; 1) the camera and augmented reality, 2) virtual avatars, 3) the Snap Map, and 4) hardware.
• Camera and Augmented Reality: SNAP distinguishes itself from its peers by building products that leverage camera and AR technology as the principal drivers of engagement and user generated content. Currently, SNAP has 290M+ DAUs who create on average 5B snaps per day, open the app on average 30 times per day, and regularly use AR lenses to communicate with friends and brands (200M+ DAUs using AR). As we mentioned in the “Virtual Platforms” section of this report, the Metaverse is enabled by platforms that provide the “picks and shovels for content creation, the ongoing maintenance of live experiences, user interface, and social interactions”. We believe SNAP is beginning to successfully democratize its AR tool sets through its recently launched Lens Studio and Camera Kit. We highlight that the Lens Studio enables a community of 200K+ creators to build their own AR experiences using their own machine learning models. The Camera Kit makes the tools from the Lens Studio interoperable with partner apps like Zoom, the MLB, and Disney. In our view, SNAP is one of few platforms making AR technology easily accessible both inside and outside its App, which should support the company’s AR leadership for years to come…”
4. Change Healthcare Inc. (NASDAQ:CHNG)
Empirical Capital’s Holdings: $2.7 million
Percentage of Empirical Capital’s Portfolio: 2.84%
Number of Hedge Fund Holders: 50
Change Healthcare Inc. (NASDAQ:CHNG) is a data analytics services provider that targets the American healthcare industry. Its products allow customers to manage their revenue and workflow among other tasks.
By the end of this year’s third quarter, Mr. Black’s Empirical Capital held 129,160 Change Healthcare Inc. (NASDAQ:CHNG) shares. These were worth $2.7 million and represented 2.84% of its portfolio. Similarly, 50 of the 867 hedge funds polled by Insider Monkey for Q3 2021 held a stake in the company.
Change Healthcare Inc. (NASDAQ:CHNG) reported $828 million in revenue and $0.35 in non-GAAP EPS for its Q2, missing analyst estimates for both. In August 2021, Piper Sandler kept the company’s price target at $25.75.
Change Healthcare Inc.’s (NASDAQ:CHNG) largest shareholder is David Abrams’s Abrams Capital Management who holds 16.9 million shares worth $355 million.
3. Roblox Corporation (NYSE:RBLX)
Empirical Capital’s Holdings: $3.3 million
Percentage of Empirical Capital’s Portfolio: 3.54%
Number of Hedge Fund Holders: 50
Roblox Corporation (NYSE:RBLX) is a software company that provides a digital environment, or platform, in which its users can interact with each other without leaving their homes. It is headquartered in San Mateo, California.
Empirical Capital owned 44,650 Roblox Corporation (NYSE:RBLX) shares by Q3 2021 end, which were worth $3.3 million and represented 3.54% of its portfolio. Out of the 867 hedge funds Insider Monkey surveyed for the same time period, 50 had holdings in the company.
Roblox Corporation (NYSE:RBLX) reported $509 million in revenue and -$0.13 in GAAP EPS for its Q3, beating EPS analyst estimates. In an October 2021 note, Truist reduced the company’s share price target to $92 outlining that Chinese gaming curbs spelled uncertainty for the company.
Roblox Corporation’s (NYSE:RBLX) biggest shareholder is Chase Coleman and Feroz Dewan’s Tiger Global Management LLC. It holds 17 million shares worth $1.3 billion.
In its Q3 2021 investor letter, Jefferies Group mentioned Roblox Corporation (NYSE:RBLX). It stated that:
“If we look at the Metaverse concept with more lenient guidelines for interoperability, then it becomes easier to see why certain companies are being referred to as Metaverse. On the virtual side, we’d point to companies like Epic Games, TakeTwo and Roblox. In augmented reality, it would be Niantic and SNAP. These are the large capitalized players in the space but albeit, not the only ones. We expect new mulit-billion dollar companies will rise as the
Metaverse becomes more mature.Roblox is a good example. The content is almost entirely user generated, the engine that powers the developer studio is provided by Roblox and developers/creators share in almost all the money that users spend on the platform. In addition, many of the items that you purchase in the avatar marketplace, or even a branded experience like Vans World, can be taken across experiences. Roblox talks a lot about platform extension, which would move the platform beyond just gaming/leisure experiences and into education and workplace offerings. The developer community has the capability to build tools for other developers, there are professional studios being built on the platform and many consumer-facing brands/content are partnering with Roblox to ensure a virtual presence. Roblox actually has a lot of the pieces for our utopian definition of Metaverse, but things like technology, interoperability with outside platforms and a dynamic, two-way economy are what’s missing. However, given our thesis that full interoperability is somewhat unrealistic, it’s easy to see how Roblox fits the definition…
Many already consider RBLX a Metaverse, or at least an early iteration of one, and here’s why. The platform offers all the tools required for content creation in a low-code / no code format and handles publication, language translations, billing, collections, safety and security of the environment and more. It’s hard to find a platform that makes the creative process easier for developers than Roblox; we see this as very supportive of creator
economy.The content is almost entirely user generated and developers/creators share in almost all the money that users spend on the platform. The developer community has the capability to build tools for other developers, there are professional studios being built on the platform and many consumer-facing brands/content are partnering with Roblox to ensure a virtual presence. Roblox talks a lot about platform extension, which would move the platform beyond just gaming/leisure experiences and into education and workplace offerings. Lastly, many of the items that you purchase in the avatar marketplace, or even a branded experience like Vans World, can be taken across experiences. In essence, the RBLX ecosystem includes creator economy, a virtual platform, picks and shovels of the Metaverse and some interoperability – many of the key enablers for Metaverse.
However, there’s always work to be done. We would expect to see a more dynamic economy emerge with resale moving beyond limited items and premium members, particularly with newer gaming models such as play-to-earn. Increasingly, gamers are going to want somereturn for the time and money invested on a platform. Advancements in technology will allow for truly shared experiences among a larger and larger group of people. We remain
skeptical on the reality of interoperability; RBLX could very well end up being one of many Metaverses.”
2. Twitter, Inc. (NYSE:TWTR)
Empirical Capital’s Holdings: $6 million
Percentage of Empirical Capital’s Portfolio: 6.34%
Number of Hedge Fund Holders: 94
Twitter, Inc. (NYSE:TWTR) is a social media platform headquartered in the United States. A global phenomenon, it allows its users to communicate with friends and followers by sharing briefly worded messages.
In its third fiscal quarter, Twitter, Inc. (NYSE:TWTR) reported $1.2 billion in revenue and -$0.67 in non-GAAP EPS, missing analyst estimates for both. Morgan Stanley lowered its price target to $62 in a November 2021 analyst note, outlining that higher investment spending and lower advertisement revenues mark headwinds for the company.
Mr. Black’s investment firm held 100,000 Twitter, Inc. (NYSE:TWTR) shares as Q3 2021 came to an end. These were worth $6 million and represented 6.34% of its portfolio. Similarly, by Q3 2021 end, 94 of the 867 hedge funds polled by Insider Monkey held a stake in the social media firm.
Twitter, Inc.’s (NYSE:TWTR) largest shareholder is Stephen Mandel’s Lone Pine Capital via owning 21 million shares worth $1.3 billion.
ClearBridge Investments said the following about Twitter, Inc. (NYSE:TWTR) in its Q1 2021 investor letter:
“Media has been another bright spot for the Strategy, boosted by the return of live events and subsequent rebound in advertising as well as good initial traction for several of our companies new streaming services. Twitter was also a solid contributor on strong results and better-than-expected projections for future user and revenue growth.”
1. Pinterest, Inc. (NYSE:PINS)
Empirical Capital’s Holdings: $7.8 million
Percentage of Empirical Capital’s Portfolio: 8.27%
Number of Hedge Fund Holders: 58
Pinterest, Inc. (NYSE:PINS) is an American firm that operates an image aggregation platform. This platform allows its users to upload images and allows others to browse through them through keyword search.
By Q3 2021 end, Empirical Capital held 154,650 Pinterest, Inc. (NYSE:PINS) shares, which were worth $7.8 million and represented 8.27% of its portfolio. During the same time period, 58 of the 867 funds polled by Insider Monkey had holdings in the company.
Pinterest, Inc. (NYSE:PINS) reported $623 million in revenue and $0.28 on GAAP EPS for its third quarter, beating analyst estimates for both. Its price target was reduced to $53 by Morgan Stanley in a November 2021 analyst note, which shared that digital companies will have to deal with several headwinds in the future.
Pinterest, Inc.’s (NYSE:PINS) largest investor is Andreas Halvorsen’s Viking Global. The fund holds 7.2 million shares worth $368 million.
Investment firm Alger mentioned Pinterest, Inc. (NYSE:PINS) in its Q3 2021 investor letter outlining that
“Pinterest is an image sharing and social media service designed to help consumers discover product information and save the information on the internet using images and, on asmaller scale, animated GIFs and videos, in the form of Pinboards. The company shows consumers visual recommendations, called Pins, based on their personal tastes and interests. Pinterest provides advertisers with information on consumer activities, such as becoming inspired by images, as well as other points along the sales funnel, which is the process in which potential customers become purchasers of products. Shares of Pinterest underperformed after the company reported a larger-thanexpected decline in monthly active users (MAU) and provided guidance for the third quarter that included revenue growth of 40%, which was in line with consensus. Management didn’t provide MAU guidance for the third quarter due to engagement headwinds. These headwinds resulted from the economy reopening, which means consumers may spend less time online because they are commuting and venturing out for shopping, entertainment and social events. We believe the company appears to be losing its pandemic tailwinds that involved increased online shopping. We have sold the position.”
You can also take a peek at the Top Hedge Funds are Selling These 10 Stocks and 10 Best 15 Most Valuable Alcohol Companies.
