In this article, we discuss the 10 stocks Carl Anderson’s Marcho Partners is investing in.
Serving as its chief investment officer, Carl Anderson is the founder of the London-based global technology-focused hedge fund, Marcho Partners. After earning his bachelor’s degree from Princeton University and his M.B.A from the Stanford University Graduate School of Business, Carl Anderson began his career in finance and investment banking, earning over 2 decades of valuable investment experience. Prior to founding Marcho Partners in 2019, Carl Anderson served as managing director at both, Stonebrook Fund Management and Glynn Capital Management. He was also a partner at Social Capital LP.
Marcho Partners, as an investment management firm, manages more than $1.49 billion in its investment portfolio, as of the end of the second quarter. The fund’s portfolio is diversified across 5 principal sectors, with the Technology sector proving to be the heaviest one, making up 55.2% of the total portfolio value.
Some of the notable stocks in the investment portfolio of Marcho Partners at the end of the second quarter of 2021 include Shopify, Inc. (NYSE:SHOP), Sea Limited (NYSE:SE) and Unity Software Inc. (NYSE:U), among others discussed in detail below.
Our Methodology
With this background in mind, let us now look towards the 10 stocks Carl Anderson’s Marcho Partners is investing in. We made use of Marcho Partners’ 13F portfolio for the second quarter for this analysis.
Why should we pay attention to Carl Anderson’s stocks? 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 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). 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.
Carl Anderson’s Marcho Partners Is Investing In These 10 Stocks
10. Ribbit LEAP Ltd. (NYSE:LEAP)
Marcho Partners’ Stake Value: $5.3 million
Percentage of Marcho Partners’ 13F Portfolio: 0.35%
Number of Hedge Fund Holders: 28
Ribbit LEAP Ltd. (NYSE:LEAP) is a California-based special purpose acquisition company that offers mergers, asset acquisition and business combination services.
After going public in September 2020, Ribbit LEAP Ltd. (NYSE:LEAO) raised around $402 million through its initial offering.
As of the second quarter of 2021, Marcho Partners has 500,000 shares in Rabbit LEAP Ltd., valued at $5.3 million. Rabbit LEAP Ltd. accounts for 0.35% of the 13F portfolio. Of the 873 elite funds tracked by Insider Monkey, 28 held stakes in the company, worth more than $230.5 million.
9. Farfetch Limited (NYSE:FTCH)
Marcho Partners’ Stake Value: $78.7 million
Percentage of Marcho Partners’ 13F Portfolio: 5.27%
Number of Hedge Fund Holders: 63
Farfetch Limited (NYSE:FTCH) is a UK-based company that owns and runs an online marketplace for luxury fashion apparel.
On October 4, Wedbush analyst Tom Nikic initiated coverage of Farfetch Limited with a Neutral rating and $38 price target on its shares.
Latest data shows that Marcho Partners owned 1.56 million shares in Farfetch Limited in the second quarter of 2021, worth $78.7 million, representing 5.27% of the portfolio. At the end of the second quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $4 billion in Farfetch Limited, up from 57 in the previous quarter worth $3 billion.
In its Q1 2021 investor letter, RiverPark Funds, an asset management firm, commented on the growth and profits of Farfetch Limited. Here is what the fund said:
“We established a small position in e-commerce company Farfetch, which is benefitting from the secular trends of growing ecommerce, the global market for personal luxury goods, and emerging market growth, particularly in China. The company is an e-commerce platform like Amazon, Mercado Libre, or Alibaba, and is the leading online luxury fashion retail platform.
Luxury fashion has much lower online penetration than general ecommerce, and Farfetch is differentiated because of its longstanding relationships with the generally family-controlled, brand-protective luxury product companies. Because of its luxury focus, Farfetch has both higher average order values and higher take rates relative to peers, driving higher gross margins.
In its recently ended fiscal 2020, Farfetch grew revenue 64% and gross profit 68%, the company should be EBITDA positive this year, and we believe the company can grow revenue more than 20% per year and EBITDA more than 50% per year for the foreseeable future. With its extremely low capital needs—capital expenditures were less than 2% of revenue last year—we expect the company’s free cash flow to grow even faster.”
8. Spotify Technology S.A. (NYSE:SPOT)
Marcho Partners’ Stake Value: $97.86 million
Percentage of Marcho Partners’ 13F Portfolio: 6.55%
Number of Hedge Fund Holders: 48
Spotify Technology S.A. (NYSE:SPOT) is a Sweden-based technology company and one of the world’s largest and most popular digital music-streaming mobile apps. With more than 365 million actives listeners, the music-streaming company comes in at eighth on our list of the 10 stocks Carl Anderson’s Marcho Partners is investing in.
Marcho Partners owned 355,095 shares in Spotify Technology S.A. at the end of the second quarter of 2021, worth over $97.86 million.
On September 13, Goldman Sachs analyst Eric Sheridan initiated coverage of Spotify Technology S.A. with a Neutral rating and $260 price target on its shares.
In addition to Shopify, Inc., Sea Limited and Unity Software Inc., Spotify Technology S.A. is a decent stock to buy.
Investment management firm Worm Capital LLC mentioned Spotify Technology S.A. in its Q3 2021 investor letter. Here is what the firm said:
“The beauty of continuously accumulating marginal gains is that it has a profound compounding effect over time: If your goal as an individual, organization, investor—whatever you are—is trained on the belief that you should always be improving, there is the potential for exponential growth.
Spotify is a wonderful example of this dynamic as well.
Although the market has pummeled this position in recent months, falling more than 35% from all-time highs—and has contributed significantly to our negative year-to-date performance—the company is meeting and often exceeding our internal expectations. Spotify is expanding territory, reducing frictions for creators, enabling the next-generation of audio advertising (a high margin opportunity), and continuously experimenting to improve the experience for both creators and fans to create an essential platform.
Spotify is, in many ways, building the essential audio infrastructure for the Internet, much like Google built the search infrastructure to power Web 2.0 or Apple built the hardware infrastructure power the app economy. We think the valuation represents one of the wider deviations between price and value in the market today, but we think time will be on our side here—like all our positions, we maintain a long-term view on the company and certain theses may take multiple years to play out.
In our view, Daniel Ek’s vision for Spotify is far grander than most may realize, and we encourage you to listen to his recent podcast with Patrick O’Shaughnessy. “The value of what you are building is the sum of all the problems that you solve,” Daniel says. “I still think we’re early days with Spotify. There’s so many problems left to be solved.” (We agree.)
Two charts below that help contextualize both Spotify’s lead (largely as a result of aggregating marginal gains, and passing those gains to consumers) as well as a chart that represents just how early we are in the streaming audio era.
Like most great growth business stories, the market tends to vastly underestimate the total addressable market in its early days. We believe Spotify will ultimately prove out to be the Google of audio, and it should command a far higher multiple today. For those interested, Eric spoke in detail about our investment thesis on Spotify with John Rotonti in September – link here. Again, in terms of fund performance, we understand this year has been frustrating. And we want to again thank you for your trust and patience.”
7. Sea Limited (NYSE:SE)
Marcho Partners’ Stake Value: $112.6 million
Percentage of Marcho Partners’ 13F Portfolio: 7.54%
Number of Hedge Fund Holders: 104
Sea Limited is a Singapore-based consumer technology company that operates in the digital entertainment, e-commerce, and financial services industries.
On October 15, Citi analyst Alicia Yap raised the price target on Sea Limited to $424 from $335, and kept a Buy rating on the shares of the company.
As of the end of the June quarter, Marcho Partners holds 410,092 shares of Sea Limited, amounting to more than $112.6 million in worth, and representing 7.54% of the fund’s portfolio value.
Tao Value mentioned Sea Limited in its Q2 2021 investor letter. Here is what the firm has to say:
“Sea continued to execute above expectation. The gaming business continued strong momentum, recording bookings of $1.1 billion, growing 117% y-o-y. The major franchise Free Fire showed no sign of slowing down in established ASEAN & LatAm market and received positive reception from new markets like US. On e-commerce side, Shopee demonstrated early success in expanding to Brazil, by adopting a low-price category & gamification strategy. For 2021, Shopee is now top downloaded e-commerce app in Brazil, almost 2x of the second-place local leader Mercado Libre (MELI). I also see the most promising development is in its FinTech business – SeaMoney, which more than doubled its revenue in Q1 2021 from the previous quarter! With online lending products rolling out, SeaMoney is poised to grow rapidly, becoming the 3rd growth curve for Sea.”
6. Unity Software Inc. (NYSE:U)
Marcho Partners’ Stake Value: $134.7 million
Percentage of Marcho Partners’ 13F Portfolio: 9.02%
Number of Hedge Fund Holders: 29
Unity Software Inc. is a San Francisco-based tech company that provides software solutions used in creating video games and animation. Coming in at sixth on our list of the 10 stocks Carl Anderson’s Marcho Partners is investing in, Unity Software Inc. has a market capitalization of $41.86 billion.
Carl Anderson’s Marcho Partners owned 1.2 million shares of Unity Software Inc. worth $134.7 million as of Q2 2021, accounting for 9.02% of the fund’s portfolio value. At the end of the second quarter, 29 hedge funds in the database of Insider Monkey held stakes worth $7.26 billion in Unity Software Inc., down from 39 in the preceding quarter worth $6.69 billion.
On October 14, Credit Suisse analyst Stephen Ju lowered his price target on Unity Software Inc. to $160 from $170, but kept an Outperform rating on the shares of the company.
5. Wix.com Ltd. (NASDAQ:WIX)
Marcho Partners’ Stake Value: $152.8 million
Percentage of Marcho Partners’ 13F Portfolio: 10.23%
Number of Hedge Fund Holders: 35
Wix.com Ltd. (NASDAQ:WIX) is an Israeli web development and software company that provides cloud-based web development tools and services.
On October 27, Berenberg analyst Sunil Rajgopal initiated coverage of Wix.com Ltd. with a Buy rating and $251 price target on the shares of the company.
As of the end of the second quarter, 35 hedge funds tracked by Insider Monkey reported owning stakes in Wix.com Ltd.. The total worth of these stakes is $1.38 billion. This is compared to 40 funds that had stakes in the company in the previous quarter, with a total worth of $1.46 billion. Carl Anderson reported owning 526,410 shares in the company. These shares are valued at $152.8 million and account for 10.23% of the fund’s portfolio value.
4. Elastic N.V. (NYSE:ESTC)
Marcho Partners’ Stake Value: $175.9 million
Percentage of Marcho Partners’ 13F Portfolio: 11.78%
Number of Hedge Fund Holders: 55
Founded in Netherlands and headquartered in California, Elastic N.V. (NYSE:ESTC) is a search company that specializes in self-managed and SaaS services for search, logging, security, observability, and analytics. The company ranks fourth on our list of the 10 stocks Carl Anderson’s Marcho Partners is investing in.
On September 17, Barclays analyst Raimo Lenschow raised the price target on Elastic N.V. to $200 from $185, and kept an Overweight rating on the shares of the company.
As of Q2 2021, Marcho Partners holds over 1.2 million shares in Elastic N.V., worth more than $175.9 million in its investment portfolio. Of the 873 hedge funds being tracked by Insider Monkey, 55 held stakes in the company by the end of June.
In its second-quarter 2021 investor letter, Greenhaven Road Capital mentioned Elastic N.V.. Here is what the fund said:
“Our top five holdings represent more than half of our total long exposure and therefore five greatly influence overall returns. Elastic Software (ESTC) – Management continues to innovate and execute, rolling out new products and converting existing users from free to paid versions. They made adjustments to their licensing agreements, making it more difficult for Amazon to rip them off, and provided forward guidance that convinced investors that the growth train will continue to run for at least a few more years.”
3. AppLovin Corporation (NASDAQ:APP)
Marcho Partners’ Stake Value: $178.8 million
Percentage of Marcho Partners’ 13F Portfolio: 11.97%
Number of Hedge Fund Holders: 16
AppLovin Corporation (NASDAQ:APP) is a mobile technology company based in California that provides marketing and advertisement platforms for developers to publish and monetize their apps.
On October 19, Citi analyst Jason Bazinet raised his price target on AppLovin Corporation to $112 from $81, and kept a Buy rating on the company’s shares.
During the second quarter 0f 2021, 16 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in AppLovin Corporation worth $987 million. Carl Anderson’s Marcho Partners reported owing over 2.3 million shares in the company, amounting to more than $178.8 million in worth and representing 11.97% of the fund’s portfolio value.
2. Shopify Inc. (NYSE:SHOP)
Marcho Partners’ Stake Value: $187.3 million
Percentage of Marcho Partners’ 13F Portfolio: 12.55%
Number of Hedge Fund Holders:
By the end of the second quarter of 2021, 85 hedge funds out of the 873 tracked by Insider Monkey held stakes in Shopify Inc. worth roughly $13.97 billion. This is compared to 91 hedge funds in the previous quarter with a total stake value of approximately $9.98 billion.
Carl Anderson of Marcho Partners currently holds 128,269 shares in Shopify Inc., valued at $187.3 million and accounting for 12.55% of his hedge fund’s total portfolio value.
On October 14, TD Securities analyst Daniel Chan initiated coverage of Shopify, Inc. with a Hold rating and $1,500 price target.
In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Shopify Inc.. Here is what the fund said:
“Shopify (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”
1. Mercadolibre, Inc. (NASDAQ:MELI)
Marcho Partners’ Stake Value: $200.4 million
Percentage of Marcho Partners’ 13F Portfolio: 13.42%
Number of Hedge Fund Holders: 74
MercadoLibre, Inc. (NASDAQ:MELI), based in Buenos Aires, Argentina, is a company that operates online marketplaces dedicated to e-commerce, as well as online auctions.
Marcho Partners currently owns 128,681 shares of MercadoLibre, Inc., amounting to more than $200.4 million in worth and accounting for 13.42% of the fund’s portfolio. At the end of the first half of 2021, 74 hedge funds in the database of Insider Monkey held stakes worth $4.02 billion in MercadoLibre, Inc., down from 69 in the previous quarter worth $5.2 billion.
On October 25, Scotiabank analyst Rodrigo Echagaray upgraded MercadoLibre, Inc. to Outperform from Sector Perform, with a $2,100 price target.
In the Q2 2021 investor letter of Polen Capital, the fund mentioned MercadoLibre, Inc.. Here is what the fund had to say:
“Argentina-based MercadoLibre operates Latin America’s leading ecommerce website and digital wallet. Both e-commerce and consumer finance are underpenetrated among the nearly 400 million citizens living in the company’s three largest markets: Brazil, Argentina, and Mexico.
MercadoLibre’s digitally native solution gives more than 70 million users an easy access point for both online shopping and a digital wallet.
From humble beginnings as a third-party marketplace, MercadoLibre’s management built the business over the last twenty years by steadily expanding the platform’s reach with new services to suit both merchants and consumers. Today’s offerings include financing capabilities for buyers and sellers, logistics, loyalty programs, classifieds listings, and grocery items. We think MercadoLibre can compound earnings at a 25% rate for the next five years.”
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This article is originally published at Insider Monkey.
