In this article, we will take a look at the 7 new stock picks from Brad Gerstner’s portfolio.
Gerstner Expects More M&As in New Term
Strategists and investors are confident that the new administration will fuel the state of mergers and acquisitions in the United States. It is no surprise that renowned investor Brad Gerstner, founder and CEO of Altimeter Capital, believes the same. On November 6, Gerstner appeared in an interview on CNBC Television where he shared his expectations of the stock market.
Gerstner shares that the Republicans have been particularly critical of big tech companies and their “bundling powers” that happen to “crowd out startups” and “stifle innovation and startups.” He expects the new administration to scrutinize this trend heavily. He also adds that the true beauty of Silicon Valley lies in the innovation and technology bolstered by small tech and mergers and acquisitions.
Speaking of big tech, he suggests that these names have been cutting down on M&A deals and have instead directed their resources to stock repurchases, dividends, and onboarding new GPUs. He expects the new administration to alter the trend and loosen up the ability to do mergers and acquisitions.
Gertsner also suggests that the US market will be better off with a functioning mergers and acquisitions flow in Silicon Valley, which he refers to as the “heartbeat” of the place. He also shared his thoughts on the program, Invest America, which is expected to provide kids with $1,000 in seed money into investment accounts as soon as they are born. He has been working with leading lawmakers in the country to promote the program and is highly optimistic about its outcomes.
Gerstner is bullish on the program and highlighted that the move will bring a new era of enterprise, innovation, and capital management to the US economy. He added that this program will bolster the private market and likely create 3.7 million new stock market investors yearly. In addition to investors like Brad Gerstner, many large tech companies are on board with the program.
Brad Gerstner is one of the top technology investors and has had many notable transactions over the past few years through his firm. He is bullish on tech and innovation, particularly artificial intelligence. In Q3 2024, he initiated 8 new positions and also raised his stakes in 7 stocks, ending the quarter with a portfolio of $6.75 billion in 13F securities. With that, let’s discuss his top new picks as of Q3 2024.
Brad Gerstner of Altimeter Capital
Our Methodology
We scanned Altimeter Capital’s Q3 2024 portfolio and picked new additions from the fund’s top 13F holdings. Additionally, we’ve also added overall hedge fund sentiment, as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Brad Gerstner Portfolio: Top 7 New Stock Picks
7. Lineage Cell Therapeutics, Inc. (NYSE:LCTX)
Altimeter Capital’s Stake Value: $31,352,000
Number of Hedge Fund Holders: 7
Lineage Cell Therapeutics, Inc. (NYSE:LCTX) ranks seventh on our list of the new stock picks in Brad Gerstner’s portfolio. The new addition is a biotechnology company that is in the clinical stage of developing therapies for unmet serious medical conditions. Lineage Cell Therapeutics’ (NYSE:LCTX) neuroscience pipeline includes OpRegen, a retinal pigment epithelial cell therapy, OPC1, an oligodendrocyte progenitor cell therapy, ReSonance (ANP1), an auditory neuronal progenitor cell therapy, PNC1, a photoreceptor neural cell therapy, and ND1, a novel hypo immune induced pluripotent stem cell line.
OpRegen and OPC1 are in phase 2 clinical trials, of which OpRegen is enrolling candidates and OPC1 has already treated 30. On the technology front, the company’s proprietary Lineage Platform helps develop specialized human cells from certain starting materials. Overall, in the third quarter of 2024, Lineage Cell Therapeutics, Inc. (NYSE:LCTX) logged $3.8 million in revenues, a net increase of nearly $2.5 million from the same period in 2023.
Analysts are extremely bullish on the stock and their median price target of $4.5 represents an upside of 691% from current levels. The company has immense growth potential, attributable to its technologies and product pipeline, which also explains why Brad Gerstner is favoring the stock.
6. Duolingo, Inc. (NASDAQ:DUOL)
Altimeter Capital’s Stake Value: $54,042,082
Number of Hedge Fund Holders: 31
Duolingo, Inc. (NASDAQ:DUOL) is a mobile language learning platform operational across the globe. It offers courses in over 40 languages including Spanish, English, French, German, and Japanese to name a few. In the third quarter of 2024, Duolingo, Inc. (NASDAQ:DUOL) saw a 38% increase in total bookings and a 45% increase in subscription bookings. Total paid subscribers reached 8.6 million, up by 47% year-over-year. The company locked in a 54% increase in daily active users to reach 37.2 million and a 36% increase in monthly active users to reach 113.1 million. Overall, revenues generated during the quarter were $192.6 million, an increase of 40% from the same quarter in 2023.
The company has an element of fun that attracts users from across the globe. Its marketing strategy is unique and is built on interactions with customers seeking education and expanding into new avenues. To align with this strategy, on August 15, Duolingo, Inc. (NASDAQ:DUOL) announced a partnership with Sony Music to add popular and hit recordings to the music course on the Duolingo app. Previously in July, the company acquired Hobbes, an animation and motion design studio in Detroit. This will help the company facilitate a dedicated motion design team at Duolingo.
Overall, Brad Gerstner is bullish on DUOL. The company’s growth trajectory and key strategic decisions position it as an emerging leader in the education technology sector.
Baron Opportunity Fund stated the following regarding Duolingo, Inc. (NASDAQ:DUOL) in its Q3 2024 investor letter:
“Duolingo, Inc. (NASDAQ:DUOL) is the world’s leading language learning app with over 100 million monthly active users, known for its effective gamification and high engagement. After monitoring the company over the past year and a half, we developed conviction to buy the stock for a few reasons. The company has maintained premium levels of user growth (daily average user growth of over 50%) and revenue growth (40%-plus), executed well against their product roadmap, gained early traction with new functionality, and maintained impressive 40%-plus incremental margins. We view the founder-led management team as best in class, technically capable (CEO and CTO both earned PhDs in machine learning from Carnegie Mellon University), and product focused. We initiated a position in the quarter as the share price fell to what we deemed attractive levels from a long-term valuation perspective, coupled with material catalysts on the horizon, particularly the broader launch of AI functionality (branded “Max”) that enables users to have real-time conversations with AI based characters and a substantial improvement of the company’s Advanced English offering. We believe that these two initiatives take Duolingo from more of a hobby app to a company that can address the broader market of 1.8 billion people learning English today. As these products roll-out in the coming quarters, we believe their adoption should drive the realization of higher pricing, faster revenue growth, lower churn, and continued margin improvement. We also believe there is additional optionality in newer products such as math and music, which are earlier in their product evolution.”