In this article, we discuss Greg Poole’s Echo Street Capital Management’s top 5 stock picks. If you want our detailed analysis of these stocks, go directly to Echo Street Capital Management: Greg Poole’s Top 10 Stock Picks.
5. FactSet Research Systems Inc. (NYSE:FDS)
Echo Street Capital’s Stake Value: $216,266,000
Percentage of Echo Street Capital’s 13F Portfolio: 1.66%
Number of Hedge Fund Holders: 28
FactSet Research Systems Inc. (NYSE:FDS), a top stock in Greg Poole’s portfolio, is a financial data and software company allowing companies to stay on top of worldwide market trends, company and industry intelligence, manage portfolio risk, monitor performance, and execute trades. Greg Poole, via Echo Street Capital Management, owns 644,398 shares in FactSet Research Systems Inc. (NYSE:FDS), worth over $216 million, representing 1.66% of the firm’s Q2 portfolio.
FactSet Research Systems Inc. (NYSE:FDS) on November 3 announced a quarterly cash dividend of $0.82 per common share, payable on December 16 to shareholders on record as of November 30.
At the end of the second quarter of 2021, 28 out of the 873 hedge funds tracked by Insider Monkey were long FactSet Research Systems Inc. (NYSE:FDS), down from 30 in the previous quarter.
Baron Growth Fund mentioned FactSet Research Systems Inc. (NYSE:FDS) in its Q4 2020 investor letter. Here is what they said:
“Shares of FactSet Research Systems, Inc., a leading provider of investment management tools, detracted from performance. The company reported resilient first fiscal quarter 2021 earnings results, but shares lagged during the quarter after outperforming earlier in the year. We retain conviction in FactSet due to the large addressable market, consistent execution on both new product development and financial results, and robust free cash flow generation.”
4. Agilent Technologies, Inc. (NYSE:A)
Echo Street Capital’s Stake Value: $227,464,000
Percentage of Echo Street Capital’s 13F Portfolio: 1.75%
Number of Hedge Fund Holders: 39
Agilent Technologies, Inc. (NYSE:A) is a global provider of laboratory equipment and specialized solutions, which help improve the efficiency of the laboratory processes, from sample prep to data management and analysis. Echo Street Capital Management owns 1.53 million shares in Agilent Technologies, Inc. (NYSE:A), amounting to $227.4 million. This stock accounts for 1.75% of the firm’s portfolio for the second quarter.
Agilent Technologies, Inc. (NYSE:A) declared a quarterly dividend of $0.194 per share, payable on October 27 to shareholders on record as of October 5.
Cowen analyst Dan Brennan kept an Outperform rating on Agilent Technologies, Inc. (NYSE:A) on October 14, lowering the price target from $200 to $180.
At the end of June this year, 39 hedge funds were long Agilent Technologies, Inc. (NYSE:A), down from 42 in the previous quarter.
Here is what Pershing Square Holdings has to say about Agilent Technologies, Inc. (NYSE:A) in its Q2 2021 investor letter:
“Our large commitment to UMG required that we raise cash from the sale of one of our other investments. In light of the high quality of companies in our portfolio, this was a difficult decision to make. Ultimately, we chose to sell Agilent, as its current share price approached our conservative estimate of intrinsic value. If we did not need the capital, we would not have sold the stock.
Agilent has been a highly successful investment since our original purchase nearly two years ago, compounded by our additional investment in the company in the Covid market decline last year. Agilent’s stock price has increased 2.2 times since our initial purchase as a result of the company’s acceleration in revenue growth and profitability.10 Agilent has been a critical supplier of technology and services to labs around the world fighting the Covid pandemic. The company’s management team led by Mike McMullen deserves enormous credit for the company’s success and for its important contribution to science and the fight against Covid for which we all should be extremely grateful.”
3. Thermo Fisher Scientific Inc. (NYSE:TMO)
Echo Street Capital’s Stake Value: $230,611,000
Percentage of Echo Street Capital’s 13F Portfolio: 1.77%
Number of Hedge Fund Holders: 87
Thermo Fisher Scientific Inc. (NYSE:TMO), a top stock pick of Echo Street Capital Management as of the second quarter, is a company offering scientific instruments, laboratory reagents and consumables, and scientific software for research and data analysis. Echo Street Capital Management owns 457,136 shares in Thermo Fisher Scientific Inc. (NYSE:TMO), valued at $230.61 million, representing 1.77% of the firm’s Q2 portfolio.
Thermo Fisher Scientific Inc. (NYSE:TMO) announced on October 27 a Q3 EPS of $5.76, beating estimates by $1.06. The firm’s revenue also exceeded estimates at $9.33 billion by $925.71 million.
Morgan Stanley analyst Tejas Savant kept a $700 price target on Thermo Fisher Scientific Inc. (NYSE:TMO) on October 28, resuming coverage of the stock with an Overweight rating. He said that the Q3 performance was strong, and Thermo Fisher Scientific Inc. (NYSE:TMO) is positioned to outperform in 2022.
At the end of the second quarter of 2021, 87 hedge funds in Insider Monkey’s database of elite funds reported owning stakes in Thermo Fisher Scientific Inc. (NYSE:TMO), up from 79 in the preceding quarter.
Here is what ClearBridge Investments has to say about Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q2 2021 investor letter:
“Two additional names in the health care sector in the quarter, partially funded with a sale, made strong contributions and helped push our relative exposure to the sector from underweight to overweight. We added Thermo Fisher Scientific to increase our exposure to health care tools, which has been an attractive and core segment within health care. Thermo Fisher’s instruments are used to monitor and protect air, water, and food quality, and the company has strong long-term fundamentals, a top-tier management team and a diversified business.”
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Echo Street Capital’s Stake Value: $474,927,000
Percentage of Echo Street Capital’s 13F Portfolio: 3.65%
Number of Hedge Fund Holders: 143
PayPal Holdings, Inc. (NASDAQ:PYPL) is a top stock pick of Greg Poole, as of June this year. The financial technology company enables electronic transfer of funds in many countries around the world. Echo Street Capital Management owns 1.62 million shares in PayPal Holdings, Inc. (NASDAQ:PYPL), amounting to $474.9 million, representing 3.65% of the firm’s portfolio for Q2.
SMBC Nikko analyst Andrew Bauch on November 3 kept an Underperform rating on PayPal Holdings, Inc. (NASDAQ:PYPL), with a $200 price target. He believes that the organic growth potential of the company is insufficient, and PayPal Holdings, Inc. (NASDAQ:PYPL)’s representatives were overly optimistic about the growth in their reports.
PayPal Holdings, Inc. (NASDAQ:PYPL) is a popular stock with the smart money. At the end of June, 143 out of the 873 hedge funds tracked by Insider Monkey were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL).
Here is what Alger has to say about PayPal Holdings Inc. (NASDAQ:PYPL) in its Q3 2021 investor letter:
“PayPal Holdings, Inc. was among top detractors from performance. PayPal is a pure play on e-commerce and electronic payments which is driving the company’s high unit volume growth. As a digital payments company, it is helping to facilitate the shift to a cashless society. The coronavirus pandemic has significantly accelerated the adoption of e-commerce and the utilization of digital payments platforms. In our view, PayPal is currently positioned to benefit the strength in e-commerce trends, including increasing net new active users and increased engagement per user. PayPal also has launched a service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account. PayPal’s vision is to become a Super App that integrates payments, commerce and financial services, as well as crypto capabilities. After outperforming earlier in the year, the performance of PayPal shares weakened in the third quarter with the company facing potentially higher transaction expenses and credit losses. The higher transaction expenses are driven by a shift by consumers to the higher cost travel and entertainment categories which skew toward less profitable credit transactions.”
1. Microsoft Corporation (NASDAQ:MSFT)
Echo Street Capital’s Stake Value: $543,852,000
Percentage of Echo Street Capital’s 13F Portfolio: 4.18%
Number of Hedge Fund Holders: 238
Microsoft Corporation (NASDAQ:MSFT) is the largest holding of Echo Street Capital Management, which makes it the top stock pick of Greg Poole at the end of June this year.
Microsoft Corporation (NASDAQ:MSFT) announced Q3 earnings on October 26. The EPS for the quarter was $2.27, beating estimates by $0.19. The actual revenue for Microsoft Corporation (NASDAQ:MSFT) was $45.32 billion, also exceeding estimated revenue by $1.33 billion.
Deutsche Bank analyst Brad Zelnick on November 1 initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with a Buy rating and a $390 price target. The analyst believes that Microsoft Corporation (NASDAQ:MSFT) is one of the strongest software stocks covered by Deutsche Bank, and will successfully seize the public cloud opportunity, which is estimated to be valued at $127 billion in 2021.
Here is what Alger has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter:
“Microsoft Corporation was among the top contributors to performance during the third quarter. Microsoft is a Positive Dynamic Change beneficiary of corporate America’s transformative digitization. Microsoft’s enterprise cloud product, Azure, is rapidly growing and accruing market share. Microsoft reported that Azure grew 51% in the second quarter. This high unit volume growth is a primary driver of the company’s higher share price, but the company’s strong operating execution has enabled margin expansion that has also helped to increase forward earnings estimates. We believe Microsoft’s subscription-based software offerings and cloud computing services have a durable growth profile because they enhance customers’ growth initiatives and help them to diminish costs. Additionally, investors appreciate Microsoft’s strong free cash flow generation and its return of cash to shareholders in the form of dividends and share repurchases.”
You can also take a look at Tech Stock Portfolio: 10 Tech Stock Picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management and Top 10 Stocks to Buy According to Jeff Ubben’s ValueAct Capital.
