In this article we presented billionaire Paul Tudor Jones’ top 10 stock picks.
Paul Tudor Jones II is an American billionaire and hedge fund manager who founded Tudor Investment Corporation in 1980. The Boston-based fund has over $38.4 billion discretionary assets under management and over $3.54 billion in managed 13F securities
Son of a lawyer, Paul Tudor Jones earned a bachelor’s degree in economics from the University of Virginia. Although Jones was accepted by the Harvard Business School, he chose not to attend. A welterweight boxing champion during university days, Tudor asked his cousin to introduce him to trading after finishing his studies and began trading cotton futures at the New York Cotton Exchange. But that stint quickly came to an end when his boss fired Jones for sleeping at his desk after a night of partying in New Orleans.
Paul Tudor Jones’ Investment Strategy
While working as a commodities broker for E. F. Hutton & Co., Tudor met billionaire hedge fund manager Glenn Dubin. In 1980, Jones founded his own hedge fund. He is known for global macro trading, fundamental equity investing in global markets, venture capital, commodities, event-driven strategies, and technical trading systems. One of the most successful bets of Jones was his prescient prediction regarding Black Monday market crash in 1987. The billionaire returned 125.9% after fees from this single event, earning an estimated $100 million.
Last year Jones talked about several important things in an interview with CNBC. Here’s what he said about the stimulus package.
“The reason why I prefaced all this by saying we’re going to have so much volatility, you’re going to also have, in the next 6 to 8 to 12 weeks, first, stimulus package which is going to be around $1.7 trillion. That will probably be effective sometime in the first quarter next year, and sometime in February. Let’s say you’re going to have $700 billion, that will ultimately end up in the bank accounts of Americans, and we saw what happened when that happened last April. The other Robinhood nation went crazy and bought stocks, so at some point at first quarter next year, we’re going to have a big move to the upside from whatever level that might be, as people get cash from this stimulus program, and deploy that in a variety of financial assets which could be stocks and bonds so it’s going to be really tricky. I could easily see a situation where the market sells off into year end and then you have that typical beginning of the year rally that might ramp all the way through the mid part of the first quarter.”
Paul Tudor Jones on the Stock Market
“I think the stock market is on a combination of fiscal monetary pulse that we’ve never seen before in history. That’s why you’ve got more companies with a P/E over a hundred. At any point, any other time in history, I think we’re something like 50% more that we had in the top of the 2000 NASDAQ bubble. But if you compare and contrast in 2000, we had real rates of about 250 basis points, we had nominal rates near 6%, and yet you still were able to achieve these lofty valuations for a variety of companies. Fast forward to where we are now, you’ve got real rates that are -200 basis points, nominal rates zero, and you can see why you’ve got Tesla (NASDAQ: TSLA) at 900x earnings, because that fact there’s really no real good alternative for your cash. What we’re seeing is what you see normally in many post-election years. A redeployment of cash back into risky assets after the fears that are associated with presidential elections, and changing parties, and the uncertainties, and then knowing after they go away, irrespective a lot of times, and even what the fundamentals are, risk capital comes back in the markets. That’s kind of what we’re seeing right now. I assume the trend is going to continue.”
Jones is an exception a struggling industry. The hedge fund industry that once used to post sterling gains is also feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start our list of Paul Tudor Jones’ top 10 stock picks.
10. iShares 7-10 Year Treasury Bond ETF (NASDAQ: IEF)
Value: $43,771,000
Percent of Paul Tudor Jones’ 13F Portfolio: 1.23%
Number of Hedge Fund Holders: 6
iShares is a new arrival in billionaire Paul Tudor Jones’ portfolio. Tudor’s hedge fund bought 115,435 shares of the ETF, worth $43.78 million. iShares is one of the biggest ETFs in the world. The fund has nearly $2 trillion invested in over 800 different product offerings.
The company is also getting the attention of the smart money, as 6 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 4 funds a quarter earlier.
9. Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN)
Value: $52,087,000
Percent of Paul Tudor Jones’ 13F Portfolio: 1.47%
Number of Hedge Fund Holders: 77
Alexion Pharmaceutical ranks 9th on the list of billionaire Paul Tudor Jones’ top 10 stock picks. The company is known for atypical hemolytic uremic syndrome (aHUS) drug Soliris. The company also makes several treatments for autoimmune diseases. In the fourth quarter, the company’s revenue jumped 15.2% to $1.59 billion, beating the Street’s forecast by $80 million. Last year, AstraZeneca said it would acquire Alexion for a whopping $39 billion. The deal is currently being watched as the FTC announced plans for an “aggressive” approach towards M&A activity in the pharma sector in 2021.
Tudor Investment Corp. currently holds 333,377 shares of Alexion Pharmaceuticals that amounts $52.1 million. ALXN occupies 1.47% of Tudor Investment Corp.’s total portfolio.
8. Airbnb, Inc. (NASDAQ: ABNB)
Value: $52,114,000
Percent of Paul Tudor Jones’ 13F Portfolio: 1.47%
Number of Hedge Fund Holders: 68
Billionaire Paul Tudor Jones’ hedge fund loaded up on vacation rental company Airbnb in the fourth quarter, as the firm bought 355,000 new shares of the company, worth $52.11 million. Airbnb shares have gained 20% over the last 12 months. The stock was under pressure amid the coronavirus crisis as international traveling came to a halt. However, the stock is poised to grow amid recovery. Susquehanna recently called ABNB as their top recovery pick. The firm said it believes ABNB is a “must-own name” for the recovery which is expected to start playing out this year.
There were 68 hedge funds that hold a position in Airbnb in the fourth quarter of 2020. The biggest stakeholder of the company is Silver Lake Partners, with 2.6 million shares, worth $375.7 million.
Blue Hawk Investment Group mentioned Airbnb stock in their Q4 letter and said that they established a position in Airbnb, Inc. (NASDAQ: ABNB), and has high growth expectations from it. Here is what Blue Hawk Investment Group said:
“We typically avoid new issues, with ABNB being a rare exception. ABNB fits right into our wheelhouse as a leader in a promising industry, with a disruptive business model, unique company culture, massive addressable market, and a name synonymous with a category (“got an Airbnb for the weekend”). Towards the end of the year, the narrative of the hot IPO/SPAC environment we found to be fitting, with exception. We believe grouping ABNB into this category is a mistake. The IPO was botched, but the mistake was the initial offering price being far too low in this case. We believe the reason for this initial mispricing was the proximity of the IPO to the vaccine effectiveness data release. The data turned out to be much better than anticipated, a blue-sky result, causing a drastic change in the outlook for travel and lodging, the industry in which ABNB operates. Bayes Theorem in action, people typically have a bias when incorporating new information, in that they do not adjust their view as quickly as they should, and the vaccine data release required an almost complete reversal of views.
Back to the company, we started buying on day one and continued to build a position into the $120s and $130s. A founder-led firm, we believe the company has an excellent management team, a very attractive growth profile with many levers at their disposal, and embedded optionality due to their attractive position in the travel ecosystem (and minimal reliance on Google). The most underappreciated aspect of the story is the attractiveness of the financial model. Not many IPOs come along that get us excited, but we believe the future is bright for this young company. We will reveal more details about our thesis in future letters.”
7. ConocoPhillips (NYSE: COP)
Value: $56,971,000
Percent of Paul Tudor Jones’ 13F Portfolio: 1.6%
Number of Hedge Fund Holders: 49
ConocoPhillips ranks 7th on the list of billionaire Paul Tudor Jones’ top 10 stock picks. ConocoPhillips recently completed its $9.7 billion acquisition of the company. According to the deal between the two oil companies, Concho common share was converted into the right to receive 1.46 common shares of ConocoPhillips. The combined entity will have a pro forma production of more than 1.5M boe per day.
A total of 49 hedge funds tracked by Insider Monkey were bullish COP at the end of the fourth quarter, up from 45 funds a quarter earlier.
6. SPDR S&P 500 ETF Trust (NYSE: SPY)
Value: $71,088,000
Percent of Paul Tudor Jones’ 13F Portfolio: 2%
Number of Hedge Fund Holders: 75
Billionaire Paul Tudor Jones increased his exposure to the broader market as his hedge fund bought more shares of SPDR S&P 500 ETF Trust, increasing its hold in the ETF by 3500% in the fourth quarter. The fund owns 190,136 shares of the ETF, worth $71.1 million. The index comprises 500 stocks, usually large cap, from over 24 industries.
As of the end of the fourth quarter, 75 hedge funds in Insider Monkey’s database of 887 funds held stakes in SPY, compared to 66 funds in the third quarter. Israel Englander’s Millennium Management is the biggest stakeholder in the company, with 8.5 million shares, worth $3.2 billion.
5. Liberty Broadband Corporation (NASDAQ: LBRDA)
Value: $72,711,000
Percent of Paul Tudor Jones’ 13F Portfolio: 2.05%
Number of Hedge Fund Holders: 26
Liberty Broadband ranks 5th on the list of billionaire Paul Tudor Jones’ top 10 stock picks. The telecom and cable company owns interests in Charter Communications, Inc. (Charter) and its subsidiary Skyhook Holding, Inc. (Skyhook). In October 2020, Citibank reaffirmed its Buy rating for the stock, citing increased quarterly buybacks. The firm set a $735 price target on the stock. In the fourth quarter, Liberty’s revenue jumped 870% to $33.87 million. The company completed the acquisition of GCI Liberty in December.
Tudor Investment Corp. currently owns 459,121 shares of LBRDA, worth $72.7 million. Liberty Broadband Corp. occupies 2.05% of Tudor Investment Corp.’s overall equity.
Andvari Associates said in their Q4 letter that one of their holdings, Liberty Broadband Corporation (NASDAQ: LBRDA), had a notable acquisition last year. Here is what Andvari Associates has to say about Liberty Broadband Corporation in their investor letter:
“The most notable event in Andvari portfolios was one holding, Liberty Broadband, acquiring another holding, GCI Liberty. This was an all-share transaction. Andvari supported it. Broadband is now over 20% of Andvari’s assets under management.
Like Broadband’s management, we believe the transaction creates meaningful value. First, the two companies generate immediate savings from duplicative public company and overhead costs. Most importantly, the transaction means Broadband has a 25% stake in Charter Communications (the second-largest cable operator in the U.S. by subscribers) and also owns 100% of GCI.
GCI is Alaska’s largest communication company with over $900 million in annual revenues and capable of producing $150 million in free cash flow. With access to a cash producing asset in GCI, Broadband has greater flexibility to deploy capital. In fact, after the announcement of the deal last August, Broadband increased its share repurchase authorization from $200 million to $1.2 billion. Broadband remains an attractive investment and Andvari looks forward to many more years as shareholders.”
4. Grubhub Inc. (NYSE: GRUB)
Value: $84,143,000
Percent of Paul Tudor Jones’ 13F Portfolio: 2.37%
Number of Hedge Fund Holders: 38
Grubhub provides an online platform for food pick-up and delivery orders. The stock ranks 4th in billionaire Paul Tudor Jones’ Q4 portfolio, as his hedge fund upped its stake in the company by 70%. The fund owns 1.13 million shares of the company, worth over $84.14 million. The Illinois-based company serves over 31 million active diners, and delivers 658,000 daily orders. Last year, European food delivery company Just Eat Takeaway bought Grubhub for $7.3 billion in stock.
With a $295.9 million stake in Grubhub, Pentwater Capital Management owns 3.98 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 38 hedge funds held stakes in Grubhub as of the end of the fourth quarter, versus 49 funds in the third quarter.
3. Slack Technologies, Inc. (NYSE: WORK)
Value: $93,448,000
Percent of Paul Tudor Jones’ 13F Portfolio: 2.64%
Number of Hedge Fund Holders: 66
Collaboration software Slack ranks 3rd in billionaire Paul Tudor Jones’ portfolio as of the end of the fourth quarter of 2020. The billionaire’s hedge fund increased its hold in the company by 1845% in the fourth quarter, ending the period with 2.2 million shares of the company, worth $93.45 million. Last year, CRM giant Salesforce said it would buy Slack for $27.7 billion. Earlier this year, the U.S. Justice Department’s Antitrust Division requested more information from the two companies on the merger.
Pentwater Capital Management is one of the 66 hedge funds tracked by Insider Monkey having stakes in WORK at the end of the fourth quarter. The fund owns over 18.1 million shares of the company.
RV Capital, in their Q4 2020 investor letter, said that they saw a spectacular value in Slack Technologies, Inc. (NYSE: WORK) and acquired a position in the company. Here is what RV Capital has to say about Slack Technologies, Inc. in their investor letter:
“We became co-owners in Slack, a channels-based communication service for businesses. In an unexpected twist, a few months later it was acquired by Salesforce.com at roughly a 50% premium to what we had paid.
In accordance with my usual practice, I was planning on writing about our investment in Slack. By laying out my investment hypothesis at the onset of an investment, I hope to enable investors to assess in hindsight whether it worked (or not) because of a plausible investment philosophy consistently applied. Given that Slack has effectively already played out as an investment, this rationale has gone. After all, anyone can make a successful investment decision look smart after the fact.
There is one element of my Slack investment thesis that I would like to lay out as it neatly illustrates an idea in my first-half letter and has not yet played out. I wrote then that I wanted to invest more in “early-stage, listed companies”. What I meant by this are companies whose moat is not yet fully developed, but not so undeveloped that it is difficult to say if they will ever have one. I described early-stage companies as possessing:
The kernel of an idea (however unformed), which – if you squint – you can imagine creating a new paradigm in decades to come.
Slack was the type of company I had in mind when I wrote this. Its moat in its core business of providing channels-based communication within companies is well developed. It benefits from a network effect (the more employees on Slack, the higher the value they derive from it), a broad developer ecosystem (thousands of integrations have been built for Slack) and switching costs (Slack becomes tightly interwoven into a company’s workflow through said integrations).
What really got me excited – the new paradigm – is “Slack Connect”. Connect is a feature that allows companies to extend Slack beyond their own organisation to external partners. Connect has not yet achieved viral growth – the moat is not yet developed.”
2. C3.ai, Inc. (NYSE: AI)
Value: $104,063,000
Percent of Paul Tudor Jones’ 13F Portfolio: 2.94%
Number of Hedge Fund Holders: 37
Paul Tudor Jones initiated a new position in enterprise software company C3.ai Inc in the fourth quarter. Tudor’s hedge fund owns 750,000 shares of the company, worth $104.1 million. The company offers services and platforms to build enterprise-scale AI applications. In the most recent quarter, the company’s subscription revenue jumped 23% year over year to $42.7 million.
A total of 37 hedge funds tracked by Insider Monkey were bullish AI at the end of the fourth quarter. Tudor Investment Corp. currently holds 750,000 shares of C3.ai Inc. that amounts $104.1 million.
1. LVMH Moët Hennessy – Louis Vuitton, Société Européenne (EPA: MC.PA)
Value: $108,498,000
Percent of Paul Tudor Jones’ 13F Portfolio: 3.06%
Tiffany/LVMH tops the list of billionaire Paul Tudor Jones’ top 10 stock picks. Tudor’s Q4 portfolio shows that his hedge fund owns 825,391 shares of the company, worth $108.5 million. French luxury company LVMH acquired Tiffany for $15.8 billion in January 2021.
Tudor Investment Corp. currently holds 825,391 shares of LVMH Moët Hennessy – Louis Vuitton that amounts $108.5 million. LVMH occupies 3.06% of Tudor Investment Corp.’s total portfolio.
You can also take a peek at Tiger Cub Billionaire Stephen Mandel’s Top 10 Stock Picks and David Einhorn’s Top 10 Stock Picks.
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This article is originally published at Insider Monkey.
