In this article, we discuss the 5 technology stock picks of John Kim’s Night Owl Capital. If you want to read our detailed analysis of John Kim’s history and hedge fund performance, go directly to 10 Technology Stock Picks of John Kim’s Night Owl Capital.
5. ServiceNow, Inc. (NYSE:NOW)
Night Owl Capital’s Stake Value: $35.54 million
Percentage of Night Owl Capital’s 13F Portfolio: 6.23%
Number of Hedge Fund Holders: 87
ServiceNow, Inc. (NYSE:NOW) is a California-based software company that develops and provides a cloud-based computing platform to its customers for the management of workflow regarding the firm’s operations.
Among the hedge funds tracked by Insider Monkey, New York-based Tiger Global Management is the leading shareholder in ServiceNow, Inc. (NYSE:NOW) with 2.26 million shares worth $1.37 billion, making up 2.63% of the portfolio.
RiverPark Funds mentioned ServiceNow, Inc. (NYSE:NOW) in its third-quarter 2021 investor letter. Here is what it said:
“NOW shares were our final top contributor for 3Q on a strong beat and raise quarter. The company reported 31% subscription revenue growth, 30% subscription billings growth, and a 19% non-GAAP FCF margin for the quarter, while raising full year subscription revenue and billings guidance to 29% and 31%, respectively, as well as raising non-GAAP FCF margin by 100 basis points to 31%.
ServiceNow is a best-of-breed provider of both IT Service Management (ITSM) and IT Operations Management (ITOM) solutions to enterprise customers. The company’s products serve mainly its clients’ internal employee base with a current focus on automating the process of IT deployment, configuration and service and management of IT assets across an organization. Both its ITSM and ITOM solutions are delivered as a software-as-a-service (SaaS), and are each leading solutions in growing markets, driven by the secular trend of enterprises transitioning all aspects of their business and operations to the cloud. As the company maintains and adds customers, upsells them, and expands into adjacent markets, we believe NOW should sustain a strong long-term revenue and FCF growth trajectory.”
4. Fiserv, Inc. (NASDAQ:FISV)
Night Owl Capital’s Stake Value: $38.29 million
Percentage of Night Owl Capital’s 13F Portfolio: 6.71%
Number of Hedge Fund Holders: 65
Fiserv, Inc. (NASDAQ:FISV) is a Wisconsin-based Fortune 500 multinational company that offers services of financial technology and other financial solutions. The company has three segments: merchant acceptance, financial technology, and payments and network. The company caters to financial institutions, merchants, banks, corporations, healthcare institutes, and more.
According to the database of the 867 hedge funds tracked by Insider Monkey, 65 funds held stakes in Fiserv, Inc. (NASDAQ:FISV) worth $3.94 billion in the third quarter, down from 72 funds holding stakes worth $2.65 billion in the previous quarter.
On December 10, Evercore ISI analyst David Togut downgraded the stock from Outperform to In Line and lowered the price target from $161 to $101, citing the rising revenue and margin headwinds expectation in regards to the 3 U.S. merchant acquirers.
According to the third quarter filings, Night Owl Capital Management owned 352,906 shares in Fiserv, Inc. (NASDAQ:FISV) worth $38.29 million, representing 6.71% of the portfolio. The fund increased its activity in the company by 43%.
Fiserv, Inc. (NASDAQ:FISV) was mentioned in Madison Funds’ first-quarter 2021 investor letter. Here is what it said:
“This quarter we researched several new stock ideas, but because of high prices, acted on only one. Thus, a new portfolio name is Fiserv, with corporate headquarters in Brookfield, WI, just down I-94 from us. Fiserv is a technology company serving financial institutions (“FIs”) and retail merchants. It has two main business lines. In the first, it’s a market leader in outsourced IT solutions for banks and credit unions, online and mobile banking technology, digital money movement solutions, and card issuing services. Fiserv’s second core business is merchant acquiring and processing, where it’s a leader in providing a variety of solutions to help all types of merchants accept digital payments. They entered this business through the acquisition of First Data in 2019.
Within the first business, Fiserv’s software is critical to the daily operations of FI clients. Their solutions not only provide the vital central processing systems, but also enable services such as electronic bill pay and digital money transfers at both large institutions and local banks and credit unions alike. As such, it is an incredibly sticky business that is resilient through economic cycles. On the merchant acquiring side of Fiserv, they process trillions of dollars annually for millions of merchant clients. Their solutions cater to all types of merchants and optimize for seamless acceptance and high authorization rates while also limiting fraud. Similar to the IT outsourcing business, Fiserv’s merchant solutions are critical to their customers’ daily operations. Furthermore, we are especially encouraged by their investments in new solutions, particularly Clover and Carat. Clover is a small and midsize business merchant acquiring platform and Carat is an e-commerce acquiring platform. Both these products hit the bullseye in terms of the way people are interacting with the retail industry, and both are growing at above market rates, which we believe will sustain into the future…” (Click here to see the full text)
3. Shopify Inc. (NYSE:SHOP)
Night Owl Capital’s Stake Value: $42.99 million
Percentage of Night Owl Capital’s 13F Portfolio: 7.54%
Number of Hedge Fund Holders: 73
Shopify Inc. (NYSE:SHOP) is an Ontario-based multinational company that offers an e-commerce platform to businesses of different sizes.
Among the hedge funds tracked by Insider Monkey, Connecticut-based Lone Pine Capital has the most significant stake in Shopify Inc. (NYSE:SHOP) with 1.43 million shares worth $1.93 billion, making up 6.53% of the portfolio.
ClearBridge Investments mentioned Shopify Inc. (NYSE:SHOP) in its second-quarter 2021 investor letter. Here is what it said:
“Shopify (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Night Owl Capital’s Stake Value: $50.18 million
Percentage of Night Owl Capital’s 13F Portfolio: 8.8%
Number of Hedge Fund Holders: 242
On December 2, UBS analyst Kunal Madhukar initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) with a Buy rating and a price target of $4,700.
Among the 867 hedge funds tracked by Insider Monkey, 242 funds held stakes in Amazon.com, Inc. (NASDAQ:AMZN) worth $42.55 billion in the third quarter.
According to the database of Insider Monkey, Washington-based Fisher Asset Management is the leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 1.93 million shares worth $6.34 billion, representing 3.94% of the portfolio.
Amazon.com, Inc. (NASDAQ:AMZN) was mentioned in the third quarter 2021 investor letter of Davis Funds. Here is what it said:
“E-commerce, online search and advertising, social media and software are another component of the portfolio that have proven, attractive businesses. The online portion of the Fund is currently dominated by such market leaders as Amazon.com. We are attracted to these names based on the size and rapid expansion of their market opportunities globally, their ability to generate and grow new revenue sources through constant innovation, ample operating leverage as they continue to scale and capable, focused, highly competitive leadership teams. If purchased at sensible prices, these types of businesses in our experience can contribute meaningfully to long-term results.”
1. Microsoft Corporation (NASDAQ:MSFT)
Night Owl Capital’s Stake Value: $53.1 million
Percentage of Night Owl Capital’s 13F Portfolio: 9.31%
Number of Hedge Fund Holders: 250
According to the third quarter filings, Microsoft Corporation (NASDAQ:MSFT) is the most significant investment in Night Owl Capital Management’s portfolio. In the third quarter of 2021, the fund owned 188,381 shares worth $53.1 million, making up 9.31% of the portfolio.
According to recent regulatory filings, on November 22, the CEO of Microsoft Corporation (NASDAQ:MSFT), Satya Nadella, sold around 838,600 of common stock worth $285.3 million which reduced his holding in the company by around 50%.
Polen Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its third-quarter 2021 investor letter. Here is what it 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.”
You can also take a look at Matthew Davis’ Coann Capital Portfolio: Top 10 Stock Picks and Echo Street Capital Management: Greg Poole’s Top 10 Stock Picks.
