In this article, we will take a look at Billionaire Lee Ainslie’s top 10 stock picks. For more Ainslie’s stocks, head on over to Billionaire Lee Ainslie’s Top 5 Stock Picks.
Hedge fund managers are known for investing in various asset classes in the race to unlock value in the market. But not Lee Ainslie, a billionaire who has made a name for himself as a value investor focusing purely on stocks.
Ainslie does not like betting on commodities, currencies or bonds. Instead, he leverages in-depth fundamental and technical analysis to place long and short bets on stocks he thinks will generate significant returns during different market cycles. When he was just 28, he founded Maverick Capital, a Dallas-based hedge fund.
The $4.4 billion hedge fund boasts a diversified portfolio, with technology stocks accounting for the largest share of its portfolio. Ainslie accrued significant returns amid the artificial intelligence boom due to its exposure to Nvidia, Meta Platforms, and Amazon. Likewise, the head fund is heavily invested in the service financial, consumer goods, and healthcare sectors.
Maverick Capital has been one of the standout hedge funds commonly followed for insights into the overall market direction. The hedge fund gained 16.3% during the COVID-19 pandemic in 2020. It returned an average of 13% annually between 1995 and 2014, further affirming Ainslie and other managers’ edge in picking stocks capable of outperforming the overall market.
In early 2023, Ainslie had a quarter to forget as the hedge fund incurred a 22.9% loss compared to a 4.6% gain for the S&P 500. The loss could be attributed to the fund’s significant holding on Coupang. Biotech stocks under pressure also contributed to the losses.
Ainslie has also sought exposure to emerging startups with tremendous upside potential. Since 2021, Maverick Capital has invested in venture bets through its $7 billion Tiger Club. However, some investments have turned sour, forcing the hedge fund to mark down some of its investments hurt by the high interest rates.
Lee Ainslie of Maverick Capital
Our Methodology
We scanned Maverick Capital’s Q3 portfolio and picked the fund’s top 10 stock picks.
Billionaire Lee Ainslie’s Top Stock Picks
10. Microsoft Corporation (NASDAQ:MSFT)
Maverick Capital’s Equity Stake: $104.7 million
Year-to-date gain: 54%
Maverick Capital has been buying and selling shares in the company since 2015. It held stakes worth $104.7 million in the company as of Q3 2023.
In its Q3 2023 investor letter, Baron Technology Fund provided the following commentary regarding Microsoft Corporation (NASDAQ:MSFT):
“Microsoft Corporation is the world’s largest software company. Microsoft was traditionally known for its Windows and Office products, but over the last five years, it has built an over $60 billion cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. The stock detracted from performance because Microsoft is the Fund’s largest holding and shares retreated 7.0% after strong first half performance. For the June quarter, Microsoft reported better-than-expected Azure results for the third straight period, highlighted by Azure revenue growing 27% in constant currency. Its computing division also beat expectations, with Windows revenue benefiting from an early back-to-school inventory build. Microsoft’s September quarter revenue guidance came in below Street expectations; however, with Azure effectively in line and demonstrating stabilization, but computing seeing the negative sequential impact of the pull-forward in back-to-school purchases. Looking at the big picture, Microsoft continues to execute at a high level, navigating a challenging macro backdrop while aggressively investing in long-term growth, and we remain confident that Microsoft is well positioned to leverage AI over the medium to long term as it infuses Open AI and other generative AI technologies across its entire product portfolio.”
9. Nu Holdings Ltd. (NYSE:NU)
Maverick Capital’s Equity Stake: $105.6 million
Year-to-date gain: 126%
Nu Holdings Ltd. (NYSE:NU) is a financial services company offering a digital banking program and digital financial services. Its product line includes Nu credit and debit cards and other mobile payment solutions. Nu Holdings Ltd. (NYSE:NU) also offers a savings solution under Nu Personal Accounts.
Nu Holdings Ltd. (NYSE:NU) remains one of billionaire Lee Ainslie’s top stock picks, going by the 126% gain year to date.
8. Visa Inc. (NYSE:V)
Maverick Capital’s Equity Stake: $110.1 million
Year-to-date gain: 20%
Visa Inc. (NYSE:V) is a financial services play in Maverick Capital’s portfolio. It operates as a payment technology company. Visa offers a transaction processing network that enables the authorization, clearing and settlement of payment transactions. Visa Inc. (NYSE:V) also provides credit, debit and prepaid card products.
Visa Inc. (NYSE:V), up about 20% for the year, has benefited from the company’s solid financial results amid increased consumer spending. Consequently, Ainslie increased Maverick Capital’s stakes in Visa Inc. (NYSE:V) to 478,510 shares, accounting for 2.48% of the portfolio.
Baron FinTech Fund shared its thoughts on Visa Inc. (NYSE:V) in its Q2 2023 investor letter:
“We modestly trimmed Visa Inc. (NYSE:V), Mastercard Incorporated, and Accenture plc to manage the position sizes and raise capital to fund purchases elsewhere. These stocks remain full-sized positions and high-conviction ideas in the Fund.
Another fintech industry trend we’re seeing is a pickup in M&A activity, most notably in the payments sector. The year started with Nuvei’s $1.3 billion acquisition of Paya announced in January. In April, Network International received an initial takeover offer from a group of private equity firms, which was then topped by Brookfield Asset Management whose $2.8 billion offer was accepted by the Board in June. Following reports earlier this year of a bidding war between Visa Inc. and Mastercard Incorporated to acquire cloud-based issuer processor and core banking software provider Pismo, Visa announced its intention to acquire the Brazilian company for $1 billion in late June.”
7. Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT)
Maverick Capital’s Equity Stake: $115.4 million
Year-to-date gain: 10.5%
Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) remains billionaire Lee Ainslie’s top stock pick in the healthcare sector, operating a multi-platform biotechnology company.
This is what Baron Health Care Fund said about Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) in its Q3 2023 investor letter:
“The relative shortfall in biotechnology mostly had to do with not owning a few larger cap names, particularly AbbVie Inc., Amgen Inc., and Regeneron Pharmaceuticals, Inc., whose share prices were up double digits for the quarter as investors flocked to larger, safer, cash flow positive biotechnology companies as long-term interest rates rose. These losses were somewhat offset by strong performance from argenx SE and Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT).
In biotechnology, we continue to focus on select biotechnology companies that we believe have innovative products and are well funded and well positioned in a more difficult pricing environment. Examples include Rocket Pharmaceuticals, Inc., a developer of gene therapies for rare, undertreated diseases.”
6. Uber Technologies, Inc. (NYSE:UBER)
Maverick Capital’s Equity Stake: $118.9 million
Year-to-date gain: 125%
Ainsle’s hedge fund owns a stake worth $118.9 million in Uber as of the end of the third quarter of 2023.
Here is what RiverPark Advisors said about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”
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Disclosure: None. Billionaire Lee Ainslie’s Top 10 Stock Picks is originally published on Insider Monkey.