Billionaire Tom Sandell is Buying These 10 Stocks

Tom Sandell is a London-based Swedish billionaire hedge fund manager who studied in Sweden and the United States. After completing his studies, Sandell worked in the Parisian financial sector and then at Wall Street. Tom Sandell completed his bachelor’s in international business and economics from Uppsala, the oldest university in Europe. It was a trend in the 1980s for fresh graduates to move to London or Frankfurt to further their careers due to an excessively high tax regime in Sweden. However, Sandell saw an opportunity in the unexplored French stock markets and decided to become an equity analyst at Atlantic Finance in Paris in May 1986. According to Sandell, Atlantic was a leading investment boutique that conducted in-depth research to produce the best equity analysis in France. He worked at Atlantic for one year and switched over to Delphi as head of equity research for a brief stint.

Tom Sandell earned an MBA in Finance from Columbia University and joined Bear Stearns in 1988. In those times, merger arbitrage was the most popular play used to generate stellar returns. Tom became a part of the multi-billion merger arbitrage trading desk that was diversifying across Europe and beyond. At Bear Stearns, Tom Sandell met with arbitrage specialist Ace Greenberg, who became a mentor and an influence on Tom Sandell’s investing mantra. Sandell got the opportunity to work alongside Greenberg on notable deals like the attempted acquisition of Chrysler by Kirk Kerkorian, creative takeover attempt of Lockheed Martin Corporation (NYSE:LMT) by Harold C. Simmons. He left Bear Sterns as senior managing director and co-head of the Risk Arbitrage department in 1997. A year later, he decided to venture out on his own in the hedge fund universe by forming Sandell Asset Management in New York.

Sandell Asset Management is now known as a prominent private asset management firm focused on worldwide corporate event-driven, multi-strategy investment, with a particular emphasis on equity special situations and credit possibilities. The fund aims to find the most appealing hard-catalyst business events anywhere in the world.

Sandell has a worldwide mandate, which allows him to enter less saturated and inefficient areas with greater returns. The hedge fund’s portfolio includes the most appealing risk/reward options. Sandell Asset Management’s portfolio value stands at nearly $178.7 million as of Q3 2021.

In this article, we will be taking a look at the top 10 holdings of Sandell Asset Management, which include the Big Four tech giants, Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ: MSFT), and Amazon.com, Inc. (NASDAQ:AMZN). These top 10 holdings occupy more than 75% of Sandell Asset Management’s portfolio.

Our Methodology

Let’s begin our list of the top 10 stocks being bought by billionaire Tom Sandell. These 10 stocks have been picked from the Q3 portfolio of Sandell Asset Management. We have analyzed the business fundamentals, analysts’ ratings, and hedge fund data based on the 867 funds being tracked by Insider Monkey.

Billionaire Tom Sandell is Buying These 10 Stocks

10. Manchester United plc (NYSE:MANU)

Sandell Asset Management’s Stake Value: $4,653,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 2.6%

Manchester United plc (NYSE:MANU) is a professional soccer team in the UK and is one of the few professional sports teams that are publicly listed. It is one of the most coveted football clubs in the world that has won record 20 domestic league titles, 12 FA Cups, five League Cups, and has been Champions of European club football on three occasions. Manchester United plc (NYSE:MANU) manages the affairs of the Manchester United football club and other affiliated football clubs. The sales from match-day tickets and team merchandise, broadcasting rights, end-to-end operations of the media network, and the fan zone fall under the domain of the company. The club claims to have 1.1 billion fans across the world.

On November 18, Connor Murphy at Deutsche Bank gave Manchester United plc (NYSE:MANU) stock a Hold rating with an $18 price target. In its Q1 FY22 results, the company reported better revenues due to more broadcasting revenue but the EBITDA missed the analysts’ estimate due to higher expenses related to employee compensation and other expenses during the quarter.

Baron Funds mentioned Manchester United plc (NYSE:MANU) in its Q2 2021 investor letter. Here’s what the fund said:

“Manchester United plc is the best-known team in the English Premier League, generating revenue primarily from broadcasting, sponsorship, and licensing. Shares fell on continued pandemic-related impact to commercial and matchday revenues. Investors were also disappointed by the failed attempt to form a new Super League that would have replaced the Champions League and allowed Manchester United to participate each year as a founding member. Despite these setbacks, we view Manchester United as a unique media company with 1.1 billion fans globally and broad appeal that should compound value.”

Apart from Manchester United plc (NYSE:MANU), Apple Inc., Meta Platforms, Inc., and Microsoft Corporation, Tom Sandell also held stakes in Amazon.com, Inc. at the end of Q3 2021.

9. PayPal Holdings, Inc. (NASDAQ:PYPL)

Sandell Asset Management’s Stake Value: $5,300,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 2.96%

PayPal Holdings, Inc. (NASDAQ:PYPL) is a provider of online payments systems with 416 million active accounts globally. The stock jumped earlier this month after CEO Dan Schulman revealed that the “Buy Now Pay Later” (BNPL) option observed a 400% increase on a YoY basis during the Black Friday period. PayPal Holdings, Inc. conducted 750,000 transactions related to BNPL and has processed $1 billion worth of transactions related to this service.

On November 17, Rayna Kumar at UBS reiterated a Buy rating on the stock with a $263 target price. Kumar highlighted that the expected depressed earnings during the first half of 2022 are already factored in the stock price. However, PayPal Holdings, Inc. should benefit from the increased adoption and volume of digital payments during the COVID-19 pandemic through its two-side payment processing offering.

Investment management firm Polen Capital shared its stance on PayPal Holdings, Inc. in its Q3 investor letter. Here’s what the investment management firm said:

8. Berkshire Hathaway Inc. (NYSE:BRK-B)

Sandell Asset Management’s Stake Value: $6,250,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 3.49%

Berkshire Hathaway Inc. (NYSE:BRK-B) is a conglomerate holding company based out of Omaha, Nebraska. It is the eighth biggest publicly listed company in the world and owns Dairy Queen, Duracell, GEICO, Lubrizol, Shaw Industries, and many other enterprises. Furthermore, the Warren Buffett-led company has a minority stake in publicly listed companies like American Express Company (NYSE:AXP), Apple Inc., The Coca-Cola Company (NYSE:KO), and the Kraft-Heinz Company (NYSE:KHC).

Tom Sandell held 29,350 shares in Berkshire Hathaway Inc. at the end of Q3 2021, worth $6.25 million. The investment represents 3.49% of the overall portfolio, up from 2.09% in Q2. Overall, 106 hedge funds out of the 867 being tracked by Insider Monkey held stakes in Berkshire Hathaway Inc. at the end of Q3.

Black Bear Value Partners discussed its stance on Berkshire Hathaway Inc.  in its Q3 2021 investor letter. Here’s what the investment management firm said:

7. The Walt Disney Company (NYSE:DIS)

Sandell Asset Management’s Stake Value: $6,266,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 3.5%

The Walt Disney Company (NYSE:DIS) is an entertainment and media conglomerate with a film studio division comprising of the Walt Disney Studios, Lucasfilms, Marvel Studios, Pixar, 20^th Century Studios, to name a few. The TV segment is led by Disney Channel, ESPN, FX, and National Geographic.

In the annual report for its investors issued on November 24, The Walt Disney Company revealed that it intends to spend $33 billion on content in 2022, compared to $25 billion targeted for 2021. Meanwhile, the Walt Disney Company intends to execute a capital expenditure target of $6.1 billion in 2022 compared to $3.6 billion in 2021. The increased spending will be focused on production facilities and technology along with cruise ship fleet expansion.

The Walt Disney Company was mentioned in the Q2 2021 investor letter of RivePark Funds. Here’s what the firm said:

“DIS shares declined for the quarter, taking a pause after a big fourth quarter and first quarter stock price advance, as Disney+ subscriber numbers were disappointing to investors. Disney+, the company’s DTC streaming business, had blown past previous subscriber projections, having gone from zero to 104 million in 17 months, but investors were now expecting 109 million subscribers. Management still expects significant continued growth to 230-260 million subscribers in 2024.

DIS is blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar and Lucasfilm, as well as the ABC network. The company also has a wealth of upcoming new content, expecting over 100 original titles per year, including two new Star Wars spin-off series, 10 Star Wars films, 10 Marvel films, 15 Disney and Pixar films and 15 Disney and Pixar series.

Now that the disruption in its theme park, cruise and theatrical businesses appears to be coming to an end, we believe that Disney is among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution. We also note that DIS has an extremely strong balance sheet and a growing pool of free cash flow to be used both to return to shareholders and to invest in future opportunities.”

6. Alphabet Inc. (NASDAQ:GOOG)

Sandell Asset Management’s Stake Value: $7,736,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 4.32%

Alphabet Inc. (NASDAQ:GOOG) is a Mountain View, California-based tech giant that became the parent of Google and its various subsidiaries following restructuring in October 2015. Google is the bread and butter of the organization, which is involved in a wide range of products and services related to AI, cloud computing, self-driving cars, robotics, etc.

In October, Jason Helfstein at Oppenheimer increased the target price on Alphabet Inc. from $3,000 to $3,500 and reiterated an Outperform rating. The analyst highlighted that Alphabet Inc. was least impacted by Apple’s Identifier for Advertisers (IDFA) update that will grant the user option to block the IDFA identifier at the application level.

Investment management firm, RiverPark Funds mentioned Alphabet Inc. in its Q3 2021 investor letter. Here’s what the firm had to say about the company:

“Internet services leader Alphabet was also a top contributor for the quarter, hitting its all-time high on September 1. Fundamentals at the company remain stellar—the company reported its highest quarter ever for sales and profit in late July. The company reported second quarter revenue of $62 billion, an increase of 62% year over year, which, when combined with strong expense controls, led to a tripling of operating income to $19 billion. The company experienced strong revenue growth across all its segments—Google Services (mostly Advertising) grew 63%, Google Cloud grew 54% and Other Bets grew 30%.

With its continued strength across its core Search and YouTube franchises and emerging strength in its still small Cloud business, we continue to view Alphabet as among the best-positioned secular growth franchises. Additionally, despite its strong performance this year, GOOG shares trade at a compelling 20x our 2022 EPS estimate (which includes earnings drags from losses in its Other Bets and Google Cloud segments, which lost a combined $2 billion last quarter), only a slight premium to the market.”

In addition to Alphabet Inc., Tom Sandell also has stakes in other big-cap companies like Apple Inc., Meta Platforms, Inc., Microsoft Corporation, and Amazon.com, Inc. as of Q3 2021.

5. Meta Platforms, Inc. (NASDAQ:FB)

Sandell Asset Management’s Stake Value: $8,541,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 4.78%

Tom Sandell held 32,610 shares in Meta Platforms, Inc. at the end of Q3 2021. The total value of the stake is $8.54 million.

Jefferies Group mentioned Meta Platforms, Inc. in its Q3 2021 investor letter. Here’s what the investment management firm said:

“While still early, FB is in the process of building the platforms that will ultimately support the development the Metaverse. We look at FB’s position through the lens of 4 current investment initiatives: 1) Oculus VR hardware, 2) Smart glasses, 3) Augmented Reality lenses, and 4) “Horizon Workrooms”

Oculus Virtual Reality hardware: Since acquiring Oculus in 2014 ($2B deal), FB has been focused on developing best-in-class hardware and complementary software & services to support VR experiences. The Oculus Quest 2 is FB’s newest VR headset; it retails at $299 and allows users to play games, try fitness classes, play sports, and watch concerts in virtual environments. Most importantly, Quest 2 is linked to users’ Facebook accounts, which means users can seamlessly connect with friends in virtual environments to play games or spend time together. We believe one of FB’s biggest differentiators in VR is its large array of non-gaming experiences that were designed for Oculus. For instance, users can explore extreme terrain in National Geographic Explore VR, join virtual fitness classes, or simulate being a chef. As FB’s hardware continues to improve and becomes less cumbersome, we would expect a flywheel of greater developer and user adoption of VR…” (Click here to see the full text)

4. Microsoft Corporation (NASDAQ:MSFT)

Sandell Asset Management’s Stake Value: $13,102,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 7.33%

Microsoft Corporation is a Richmond, Washington-based tech giant that designs, produces, and sells computer software, consumer electronics like smartphones and gaming consoles, personal computers, and related services. Microsoft Corporation is also home to professional networking site LinkedIn and video and instant messaging software Skype.

In a note issued to investors on November 16, Phil Winslow at Credit Suisse issued an Outperform rating with a $400 target price on Microsoft Corporation stock. The analyst anticipates Microsoft Corporation’s top line to expand by mid-to-high teens for at least the next five years. The top-line growth is expected to translate into more than high-teens to 20% EPS and cash flow per share growth during the same period on the back of margin expansion and fewer outstanding shares.

In its Q3 2021 investor letter, Polen Capital discussed its stance on Microsoft Corporation. Here’s what the fund 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.”

3.  Amazon.com, Inc. (NASDAQ:AMZN)

Sandell Asset Management’s Stake Value: 15,001,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 8.39%

Doug Anmuth at JPMorgan has made the bold claim that Amazon.com, Inc. will take over Walmart Inc. (NYSE:WMT) to become the largest retailer in the US in 2022 in a note he issued to investors on November 24. The analyst highlights that Amazon.com, Inc. has doubled its fulfillment centers since the COVID-19 pandemic began in early 2020, and now the company does not have constraints related to space. The analyst anticipates the holiday sales in the US to increase by more than 14.5% from 2020. In 2020, holiday sales grew by 32% on a YoY basis as the COVID-19 pandemic eased and the US government reinvigorated the economy by giving out stimulus cheques to its citizens.

 Of the 867 hedge funds in Insider Monkey’s database, 242 held a stake in Amazon.com, Inc. at the end of Q3 2021. Davis Funds shared its stance on Amazon.com, Inc. in its Q3 2021 investor letter. Here’s what the investment management firm said:

2. Apple Inc. (NASDAQ:AAPL)

Sandell Asset Management’s Stake Value: $15,420,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 15.42%

Apple Inc. is one of the world’s leading publicly listed companies. The Cupertino, California-based company is the designer, manufacturer of various consumer electronics devices like smartphones (iPhone), personal computers (Mac and iMac), tablets (iPad), wearables (AirPods and Apple Watch), accessories (Beats product), and related services (Apple TV) across the world. The corporation is planning to launch its virtual and augmented reality headset and introduce a self-driving car by 2025.

In a research note issued on November 28, Daniel Ives at Wedbush anticipates Apple Inc. to sell more than 10 million iPhones over Black Friday and nearly 40 million iPhones during the festive period of Black Friday, Christmas, and New Year. If Apple Inc. meets this forecast, it will break records for all previous holiday sales for the company. The analyst kept an Outperform rating with a target price of $185 on Apple Inc..

At the end of Q3 2021, Sandell Asset Management held 133,148 shares in Apple Inc., worth $15.42 million.

1. Danaher Corporation (NYSE:DHR)

Sandell Asset Management’s Stake Value: $39,836,000 

Percentage of Sandell Asset Management’s 13F Portfolio: 22.29%

Danaher Corporation (NYSE:DHR) is a developer, manufacturer, and seller of commercial, industrial, and medical products and services through its three business segments, namely Diagnostics, Environmental and Applied Sciences, and Life Sciences.

Danaher Corporation reported its Q3 2021 results before the opening bell on October 21. The Washington-based company reported strong results beating top-line and bottom-line estimates for the quarter. The company reported revenues of $7.23 billion, increasing by 23% from the same quarter last year and outperforming the analysts’ estimate of $7 billion. Meanwhile, the adjusted EPS came in at $2.39, beating the consensus estimate of $2.15. For Q4 2021, Danaher Corporation anticipates core revenue growth of the low-to-mid-teens percent range.

Danaher Corporation was mentioned in the Q2 2021 investor letter of investment management firm ClearBridge Investments. Here’s what the firm said:

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This article is originally published at Insider Monkey.