In this article, we will discuss the 5 tech stocks to invest in today according to Thomas E. Claugus’ GMT Capital. If you want to read our detailed analysis of Claugus’ history, investment philosophy, and hedge fund performance, go directly to the 10 Tech Stocks to Invest in Today According to Thomas E. Claugus’ GMT Capital.
5. IAC/InterActiveCorp (NASDAQ: IAC)
Claugus’ Stake Value: $27,057,000
Percentage of Thomas E. Claugus’ 13F Portfolio: 2.01%
Number of Hedge Fund Holders: 50
IAC/InterActiveCorp (NASDAQ: IAC) is an international media and internet company. It was founded in 1995 and is placed fifth on the list of 10 tech stocks to invest in today according to Thomas E. Claugus’ GMT Capital. IAC/InterActiveCorp (NASDAQ: IAC) shares have offered investors more than 62.91% in returns over the course of the past 12 months.
On August 24 Citi analyst Nicholas Jones lowered the price target on IAC/InterActiveCorp (NASDAQ: IAC) to $175 from $185 and kept a “Buy” rating on the shares. The analyst attributes the target reduction to comp group multiple contractions and weaker Angi Inc. (NASDAQ: ANGI) expectations. On August 4, IAC/InterActiveCorp (NASDAQ: IAC) posted earnings for the second quarter of 2021. It reported earnings per share of $2.02 where the consensus estimate was -$0.34. Revenue over the period was $829.5 million, up 14.2% YoY, in line with the previous.
Thomas E. Claugus’ GMT Capital owns 175,500 shares of IAC/InterActiveCorp (NASDAQ: IAC), worth $27.06 million. The company is a latest addition to Thomas E. Claugus’ portfolio. Hedge fund sentiment decreased for IAC/InterActiveCorp (NASDAQ: IAC) in the second quarter of 2021. Insider Monkey’s data shows that 50 hedge funds held stakes in the company in the second quarter of 2021, down from 63 funds a quarter earlier.
Alphyn Capital Management, in its fourth-quarter 2020 investor letter, mentioned IAC/InterActiveCorp (NASDAQ: IAC). Here is what the fund said:
“On November 22nd, IAC announced it would look into spinning out Vimeo, its Software-As-A-Service video creation company, on the back of strong revenue growth and robust investor interest. To quote from the IAC shareholder letter “We just tested Vimeo’s ability to access capital with a small private fundraise to bolster Vimeo’s balance sheet and to repay capital to IAC. We entered into agreements today to raise $150 million of equity capital at Vimeo from outside investors at an implied enterprise value of $2.75 billion, a large multiple of current revenue. We don’t normally think in terms of revenue multiples, but we found real appetite among investors who do – we had more interest in Vimeo than the number of shares we were willing to let Vimeo sell.” In other words, IAC will exploit current valuations while the market is willing to pay for it. This has so far been a good example of our defensive approach towards investing software companies from the cover of an undervalued holding company run by intelligent capital allocators.”
4. VMware, Inc. (NYSE: VMW)
Claugus’ Stake Value: $52,737,000
Percentage of Thomas E. Claugus’ 13F Portfolio: 3.93%
Number of Hedge Fund Holders: 28
VMware, Inc. (NYSE: VMW) delivers software in the areas of hybrid and multi-cloud, contemporary apps, networking, security, and digital workspaces. The company was founded in 1998 and ranks fourth on the list of 10 tech stocks to invest in today according to Thomas E. Claugus’ GMT Capital. VMware, Inc. (NYSE: VMW) currently has a market capitalization of $59.18 billion.
On September 3, VMware, Inc. (NYSE: VMW) announced earnings for the second quarter of 2021. It declared earnings of $1.75, beating the market predictions by $0.11. On September 2, Citi analyst Tyler Radke raised the price target on VMware, Inc. (NYSE: VMW) to $190 from $178 and maintained a “Buy” rating on the shares.
Thomas E. Claugus’ GMT Capital currently holds 329,670 shares of VMware, Inc. (NYSE: VMW), worth $52.74 million. However, the hedge fund has reduced its stake in the firm by 12% in the second quarter of 2021. Overall, hedge funds are loading up on VMware, Inc. (NYSE: VMW), as 28 out of 873 funds tracked by Insider Monkey held stakes in the company in the second quarter of 2021, compared to 25 funds a quarter earlier. Two Sigma Advisors is the most significant stakeholder in the company, with 1.26 million shares worth over $201.21 million.
3. Alphabet Inc. (NASDAQ: GOOG)
Claugus’ Stake Value: $60,971,000
Percentage of Thomas E. Claugus’ 13F Portfolio: 4.55%
Number of Hedge Fund Holders: 155
Alphabet Inc. (NASDAQ: GOOG) is placed third on the list of 10 tech stocks to invest in today according to Thomas E. Claugus’ GMT Capital. Shares of Alphabet Inc. (NASDAQ: GOOG) surged 86.65% in the past 12 months.
On July 28, Wedbush analyst Michael Pachter raised the price target on Alphabet Inc. (NASDAQ: GOOG) from $3,127 to $3,424 and maintained an “Outperform” rating on the shares.
The hedge fund managed by Thomas E. Claugus owns 24,327 shares in Alphabet Inc. (NASDAQ: GOOG), worth over $60.97 million, representing 4.55% of their portfolio. GMT Capital has decreased its stake in the firm by 4% in the second quarter of 2021. Alphabet Inc. (NASDAQ: GOOG) saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions decreased to 155 in the second quarter of 2021, compared to 159 positions in the previous quarter.
Qualivian Investment Partners, in its second-quarter 2021 investor letter, mentioned Alphabet Inc. (NASDAQ: GOOG). Here is what the fund said:
“The opportunity in online advertising remains very attractive for Alphabet’s subsidiary Google. In the recent June quarter, Google’s ad sales grew 69%. Alphabet’s subsidiary YouTube’s ad revenue soared 84%, to $7 billion, in the second quarter, putting the business on par with Netflix, which reported quarterly revenue of $7.3 billion. Netflix is expected to grow sales by 19%, to $29.7 billion this year, while YouTube’s ad revenue is forecast to rise 45%, to $28.7 billion.
Alphabet slashed operating losses for the Google Cloud by more than half, as the business continues to scale, growing at 50%+ clips. Furthermore, the company continues to have potentially new growth options via its investments in autonomous driving (Waymo) and various healthcare businesses such as Verily and Calico.”
2. Alibaba Group Holding Limited (NYSE: BABA)
Claugus’ Stake Value: $70,982,000
Percentage of Thomas E. Claugus’ 13F Portfolio: 5.29%
Number of Hedge Fund Holders: 146
Alibaba Group Holding Limited (NYSE: BABA) ranks second on the list of 10 tech stocks to invest in today according to Thomas E. Claugus’ GMT Capital. Alibaba Group Holding Limited (NYSE: BABA) currently has a market capitalization of $468.18 billion.
On August 17, the South China Morning Post announced that Alibaba (NYSE: BABA) launched a new portion of its Alibaba Auction area for NFTs transacted on a blockchain sponsored by the Sichuan province government.
GMT Capital holds 313,000 shares in Alibaba Group Holding Limited (NYSE: BABA), worth $70.98 million, representing 5.29% of their investment portfolio. The hedge fund has increased its stake in Alibaba Group Holding Limited (NYSE: BABA) by 14% in the second quarter of 2021. There were 146 hedge funds in our database that held stakes in Alibaba Group Holding Limited (NYSE: BABA) in the second quarter of 2021, compared to 135 funds in the previous quarter.
Tweedy, Browne Company LLC, in its second-quarter 2021 investor letter, mentioned Alibaba Group Holding Limited (NYSE: BABA). Here is what the fund said:
“A position that we established around year-end, and have added to across three of our Funds during the quarter, is Alibaba, the Chinese internet giant. Our pricing opportunity in these shares is in part related to increased regulatory scrutiny of the internet sector by the Chinese government which we continue to monitor closely.
Alibaba is the largest e-commerce company in China, with over 50% market share in terms of gross merchandise value. We first purchased Alibaba for the Funds around calendar year-end. Its core consumer marketplace businesses consist of Taobao (China’s largest consumer-to-consumer online shopping destination) and Tmall (China’s largest third-party platform for brands and retailers). Additionally, Alibaba operates the dominant cloud platform in China (AliCloud), international e-commerce operations (Lazada, etc.), and digital media services, and has several strategic investments, including a 33% stake in Ant Financial…” (Click here to see the full text)
1. Baidu, Inc. (NASDAQ: BIDU)
Claugus’ Stake Value: $78,344,000
Percentage of Thomas E. Claugus’ 13F Portfolio: 5.84%
Number of Hedge Fund Holders: 59
Baidu, Inc. (NASDAQ: BIDU) primarily serves the Chinese market with internet search services. It was incorporated in 2000 and stands first on the list of 10 tech stocks to invest in today according to Thomas E. Claugus’ GMT Capital. Baidu, Inc. (NASDAQ: BIDU) shares have offered investors returns exceeding 36.05% over the course of the past 12 months.
On August 19, Baidu, Inc. (NASDAQ: BIDU) announced that it launched an underwritten offering in which it publicly offered $1 billion common stock shares. The issue includes $300 million in 1.625% notes due 2027 and $700 million in 2.375% notes due 2031. Net proceeds of $0.99 billion are expected to be utilized for general company operations, debt reduction, and to fund existing Eligible Projects.
GMT Capital owns 384,227 shares of Baidu, Inc. (NASDAQ: BIDU), worth $78.34 million. This represented 5.84% of the investment portfolio of GMT Capital. There were 59 hedge funds in our database that held stakes in Baidu, Inc. (NASDAQ: BIDU) in the second quarter of 2021, compared to 89 funds in the previous quarter.
Longleaf Partners Fund, in its first-quarter 2021 investor letter, mentioned Baidu, Inc. (NASDAQ: BIDU). Here is what the fund said:
“Baidu (3%, 0.70%), the dominant artificial intelligence (AI) company in China, was another top contributor for the quarter. Baidu reported fourth-quarter results ahead of the market’s expectation. The advertising business saw a gradual recovery compared to the first half of the year. A key area of outperformance was the non-advertising revenue, which grew 52%y year-over-year (YoY) and now comprises 18% of Baidu Core. The total addressable market value of Baidu’s non-advertising business (ex-autonomous driving) is 10x the size of online advertising, and the expected compound annual growth rate (CAGR) to 2025 for non-advertising is three times faster than that of online marketing. The recent YY Live acquisition should help to further boost the non-advertising mix. Baidu’s cloud business grew 67% YoY in the quarter with an annualized run rate of US$2 billion. Baidu also made progress in Apollo, the company’s autonomous driving platform. Apollo has been granted the first driverless testing permit and received the first qualifications for commercialized autonomous driving operations in China. Baidu has set up an EV joint venture with automotive maker Geely, which could accelerate Apollo’s adoption in the industry. In March, Baidu completed a secondary listing in Hong Kong, hedging any potential risks from a forced delisting in the US. The significant investment and market leadership in Chinese autonomous vehicles and AI are material underappreciated sources of value for the company. Baidu issued 10-year bonds at 2.375% last October, which implies a cash flow multiple of 42x. Baidu currently trades at 21x earnings, but excluding cash, listed securities, and investments, and assigning zero value for their loss-making Cloud and A.I. businesses, Baidu trades at 13.4x free cash flow (FCF), equivalent to a FCF yield of 7.5%. In December, the company upsized its buyback program from $3 billion to $4.5 billion to take advantage of its severe undervaluation.
In one of the more dramatic price moves we have seen this year, Baidu’s share price spiked by 57% in the first seven weeks through late-February, after adding 71% in 2020. Taking advantage of this February strength, we cut the Baidu position in half. However, towards the end of the quarter, Baidu’s price plummeted as a result of forced liquidation sale of Archegos Capital Management’s substantial holdings in Baidu by their lenders. On March 26th, banks liquidated their margin collateral in Baidu stock through a series of block trade transactions. A massive $23.7 billion and $12 billion worth of Baidu traded on March 26th and 29th. This huge margin call is completely unrelated to Baidu’s fundamentals and our investment thesis.”
You can also take a peek at 10 Best Tech Stocks To Buy Now According To Billionaire Laffont and 10 Best Tech Stocks to Buy According to Billionaire Julian Robertson
