In this article we present the list of Billionaire Stephen Mandel’s 10 Must-Buy Tech Stocks. Click to skip ahead and see the Billionaire Stephen Mandel’s 5 Must-Buy Tech Stocks.
Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META), and Workday, Inc. (NYSE:WDAY) are a few of Stephen Mandel’s must-buy tech stocks for 2022.
Stephen Mandel’s Lone Pine Capital is a Connecticut-based hedge fund that was founded in 1997 by the 66-year-old Tiger Cub, who no longer actively manages the firm’s investments but remains its managing director. The fund, which applies fundamental analysis and a bottom-up approach to its investment decisions, has been incredibly successful since inception.
Mandel started his career at global consulting firm Mars & Co. in 1982, where he served as a senior consultant. He moved on to Goldman Sachs in 1984 to take up the mantle of retail analyst before landing at Julian Robertson’s Tiger Management in 1990, where he was a consumer analyst and senior managing director.
Mandel started his own firm in 1997 with seed money from Robertson and quickly turned Lone Pine into a force in the hedge fund world, generating annualized returns of 19.5% through 2020 and growing to manage $36 billion in assets. That performance has spurred Mandel to a net worth of $3.9 billion according to Forbes, which rose by $1.1 billion in a one-year span between October 2020 and October 2021.
Stephen Mandel of Lone Pine Capital
The fund has hit a rough patch in recent quarters however as some of its high-growth tech stock picks have been battered by a market that has rapidly pivoted away from speculative stocks and into safer investments. Lone Pine lost 9% last year and was down by 22% in the first quarter of 2022.
Despite the rough Q1, Mandel and his team didn’t significantly alter Lone Pine’s 13F portfolio during Q1. The fund sold out of eight positions and added nine new stocks to its portfolio during the quarter, while its sector allocation remained relatively stable, with tech and consumer discretionary stocks each accounting for close to a third of the fund’s equity exposure.
In this article we’ll take a look at Stephen Mandel’s 10 must-buy tech stocks following a challenging quarter for his fund and tech investors in general.
Our Methodology
The following data is gathered from Lone Pine Capital‘s latest 13F filing with the SEC. We follow hedge funds like Lone Pine Capital because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
Billionaire Stephen Mandel’s 10 Must-Buy Tech Stocks
10. Bill.com Holdings, Inc. (NYSE:BILL)
Value of Lone Pine Capital‘s 13F Position: $310 million
Number of Hedge Fund Shareholders: 58
Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META), and Workday, Inc. (NYSE:WDAY) aren’t the only tech stocks Stephen Mandel loves, as he was particularly keen on Bill.com Holdings, Inc. (NYSE:BILL) during the first quarter. Lone Pine Capital bought 1.37 million BILL shares in Q1 to build a new stake in the software company, which provides various expense management and billing tools to its clients.
His Q1 struggles haven’t changed Mandel’s appetite for somewhat risky growth stocks, as Bill.com Holdings, Inc. (NYSE:BILL) fits that bill (ahem). The company isn’t expected to generate positive EPS this year or next, and is coming off a fiscal Q3 in which inflation drove its non-GAAP loss from operations to $5.67 million, a 167% increase from a year earlier. On the other hand, Bill.com has more than enough cash on its balance sheet to withstand many more quarters like that.
Bill.com Holdings, Inc. (NYSE:BILL) is well positioned to capitalize on the back-to-office trend, which should drive customer acquisition and is also enjoying growing adoption among financial institutions. The company’s revenue is expected to soar by 162% this fiscal year and given its high gross margins, it shouldn’t be long before the company reaches profitability.
9. Block, Inc. (NYSE:SQ)
Value of Lone Pine Capital‘s 13F Position: $405 million
Number of Hedge Fund Shareholders: 84
Stephen Mandel slashed his fund’s Block, Inc. (NYSE:SQ) position by 95% during Q4, only to come roaring back into the stock in Q1, turbocharging his stake by 976% to 2.98 million shares. Nonetheless, Block got caught up in the Q1 Tech Selloff: Hedge Funds are Dumping These 5 Stocks in 2022, as there was a 13% quarter-over-quarter drop in the number of funds long SQ.
Block, Inc. (NYSE:SQ) is another tech growth stock that’s been battered this year, losing 60% of its value. Fintechs like Block have been particularly hard hit this year given the mounting concerns about a recession. Block’s Q1 results were also a mixed bag. Net revenue sank by 21.6% year-over-year to $3.96 billion due to bitcoin revenue being cut in half to $1.73 billion. Adjusted earnings per share also tumbled 56% year-over-year and missed estimates.
Block, Inc. (NYSE:SQ)’s gross profit did rise by 34% to $1.29 billion in Q1, with both Square and Cash App showing healthy gross profit gains year-over-year. Truist Securities analyst Andrew Jeffrey recently lowered his price target on Block to $105, down by $40, but maintained a ‘Buy’ recommendation on it. The analyst believes payment processors will face near-term margin pressure, but believes Block will emerge as “the most important software integrated processor and leading neobank”.
8. Atlassian Corporation Plc (NASDAQ:TEAM)
Value of Lone Pine Capital‘s 13F Position: $412 million
Number of Hedge Fund Shareholders: 65
Lone Pine Capital bought just over 1.4 million shares of Atlassian Corporation Plc (NASDAQ:TEAM) during the first quarter, building a new stake in the IT software developer. Fellow Tiger Cub Daniel Sundheim of D1 Capital Partners also built a sizable new position in the company during the quarter. After gaining 63% in 2021, TEAM shares slumped by 16% in Q1, creating a more intriguing entry point into the stock for money managers.
Atlassian Corporation Plc (NASDAQ:TEAM) has delivered strong financial results even in the midst of its stock slumping heavily this year. Revenue grew by 30% in the company’s fiscal third quarter to $740 million, while the company’s $0.50 in EPS topped estimates by $0.12. Atlassian also grew its customer base by 25% during the quarter.
While multiple Tiger Cubs were buying Atlassian Corporation Plc (NASDAQ:TEAM) in Q1, the ClearBridge Investments International Growth ADR Strategy was trimming its stake in the company, explaining why in its Q1 2022 investor letter:
“The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out. We also trimmed back workflow software maker Atlassian (NASDAQ:TEAM) after a strong runup in its shares in 2021. Most of our reductions in emerging growth have involved IT or related companies where innovation is a key to their business model. That said, we remain positive on the IT sector and have largely maintained holdings in our highest-conviction ideas.”
7. Datadog, Inc. (NASDAQ:DDOG)
Value of Lone Pine Capital‘s 13F Position: $449 million
Number of Hedge Fund Shareholders: 82
Datadog, Inc. (NASDAQ:DDOG) shares have been a hot commodity among hedge funds in recent quarters, as their ownership of the software company has risen for four straight quarters, jumping by 71% during that period. In contrast, Mandel has been trimming his stake in the company over each of the past five quarters, including by 10% in Q1, leaving Lone Pine Capital with 2.97 million DDOG shares.
Datadog, Inc. (NASDAQ:DDOG) shares are down by 34% this year despite the company posting impressive Q1 results that revealed revenue that surged by 83% year-over-year to $363 million. The company expects revenue to hit $378 million in Q2, which would represent a 62% increase from the prior year. With an addressable market the company estimates as topping $50 billion by 2025, the cloud monitoring company still has a long potential growth runway ahead of it. Datadog also turned a GAAP profit in Q1 of $9.73 million after losing $13 million a year earlier.
The Baron Global Advantage Fund is bullish on Datadog, Inc. (NASDAQ:DDOG)’s continued product innovation and the growing uptake of those products among its customers, sharing this about the company in its Q1 2022 investor letter:
“Another example is Datadog, the leading infrastructure monitoring, application performance monitoring and log management software platform. Datadog’s stock declined 15% during the quarter, despite reporting sparkling operational results, with revenues accelerating to a growth rate of 84% year-over-year with 33% free cash flow margins, while guiding for 2022 significantly above expectations. Datadog added 4,600 new customers in the quarter, while existing customers continued to increase their spending on Datadog products at a rapid pace with the number of customers using four or more products increasing to 33% from 22% last year. While Datadog’s stock was down, its intrinsic value has undoubtedly increased. This is enabled by rapid innovation (Datadog released 13 new products in 2021) into a market that is benefiting from the secular growth in cloud, digital transformation, and the explosion in complexity as the number of vendors, diversity of technologies and related infrastructure continued to expand.”
6. Snap Inc. (NYSE:SNAP)
Value of Lone Pine Capital‘s 13F Position: $664 million
Number of Hedge Fund Shareholders: 54
Snap Inc. (NYSE:SNAP) was Stephen Mandel’s top tech stock pick just two quarters ago and the billionaire money manager even raised his stake in the social media company by another 48% on top of that in Q4. He slashed his stake in the company by 45% in Q1 however, leaving him with 18.5 million shares. Hedge fund ownership of SNAP has plummeted by 32% over the past two quarters, with most of those funds abandoning the stock in Q4.
There’s a lot to digest surrounding Snap Inc. (NYSE:SNAP) at the moment. The stock has slumped by 69% this year in part due to the release of disappointing guidance that was later slashed even further. The social media platform is still growing users, but that growth is slowing, and the app was recently overtaken by TikTok as the most popular among teens.
On the plus side, there is mounting pressure on Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOG) to ban TikTok from their app stores, with the FCC commissioner sending them a letter at the end of June in which he called TikTok a “sophisticated surveillance tool” and “serious national security threat”. A ban of TikTok would surely result in a surge of users heading over to Snap Inc. (NYSE:SNAP), which also has a similar short-form video platform.
We’ll check out Stephen Mandel’s top 5 must-buy tech stocks in the second part of this article, linked to below, which includes Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META), and Workday, Inc. (NYSE:WDAY).
Click to continue reading and see the Billionaire Stephen Mandel’s 5 Must-Buy Tech Stocks.
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Disclosure: None. Billionaire Stephen Mandel’s 10 Must-Buy Tech Stocks is originally published at Insider Monkey.
