In this article, we discuss MicroStrategy Incorporated (MSTR) and 4 other tech stocks that hedge funds were right about. If you want to read about some more tech stocks that hedge funds were right about, go directly to Hedge Funds were Right About MicroStrategy Incorporated (MSTR) and 9 Other Tech Stocks.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders in Q1 2022: 80
Number of Hedge Fund Holders in Q4 2021: 91
Tesla, Inc. (NASDAQ:TSLA) markets electric vehicles and clean energy solutions. On June 16, the company revealed that it was increasing the prices of all Tesla car models in the US in light of surging inflation and supply chain issues that led to a massive increase in the prices of raw materials. Tesla has paused hiring across the globe after lockdowns in China affected production and also cut about 10% of jobs. Tesla chief Musk has warned of a recession as well, indicating that the company is planning for further pain ahead.
On June 14, Morgan Stanley analyst Adam Jonas maintained an Overweight rating on Tesla, Inc. (NASDAQ:TSLA) stock with a price target of $1,300, noting that the firm had a history of making up lost ground with accelerated deliveries towards the back end of the year.
At the end of the first quarter of 2022, 80 hedge funds in the database of Insider Monkey held stakes worth $11 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 91 in the previous quarter worth $12 billion.
Here is what Grantham Mayo Van Otterloo & Co. LLC has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla, Inc. (NASDAQ:TSLA). At its Battery Day last year, Tesla, Inc. (NASDAQ:TSLA) projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
4. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders in Q1 2022: 84
Number of Hedge Fund Holders in Q4 2021: 96
Block, Inc. (NYSE:SQ) provides payments services. In early June, the company announced that it was working with tech giant Apple to bring the Tap to Pay feature to Block sellers later this year. An early access program is already underway in this regard. The announcement led to a 7% jump in the share price of the firm. The announcement also indicated that the company plans on becoming a partner rather than a competitor of Apple.
On May 23, Deutsche Bank analyst Bryan Keane maintained a Buy rating on Block, Inc. (NYSE:SQ) stock and lowered the price target to $155 from $180, citing “lower peer group valuations” for the target drop.
At the end of the first quarter of 2022, 84 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Block, Inc. (NYSE:SQ), compared to 96 in the preceding quarter worth $5.9 billion.
In its Q1 2022 investor letter, Farrer Wealth Advisors, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:
“Block, Inc. (NYSE:SQ) (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, Inc. (NYSE:SQ), the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”
3. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders in Q1 2022: 100
Number of Hedge Fund Holders in Q4 2021: 110
PayPal Holdings, Inc. (NASDAQ:PYPL) is a digital payments firm. On June 7, the company announced that it was opening up the PayPal network to let users transfer cryptocurrencies from the network to other wallets and exchanges. Some of the coins compatible for this include bitcoin, Ethereum, bitcoin cash, and litecoin. The company plans to roll out the feature to all eligible customers in the US in the coming weeks.
On May 2, Mizuho analyst Dan Dolev maintained a Buy rating on PayPal Holdings, Inc. (NASDAQ:PYPL) stock and lowered the price target to $120 from $175, noting that “disappointing execution” was one of the reasons behind the target decrease.
At the end of the first quarter of 2022, 100 hedge funds in the database of Insider Monkey held stakes worth $6.2 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), compared to 110 in the preceding quarter worth $19.9 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
“PayPal Holdings, Inc. (NASDAQ:PYPL) enables digital payments for consumers and merchants worldwide. Shares fell on disappointing 2022 guidance that called for 15% to 17% revenue growth but flat EPS growth due to higher credit costs and a higher tax rate. Management also tempered user growth expectations due to a strategic shift toward improving engagement of existing users and away from less-productive new user acquisition. Despite reduced earnings expectations, we believe the share price decline is overdone given PayPal’s growth opportunities and competitive advantages. We reduced PayPal Holdings, Inc. (NASDAQ:PYPL).as it became clear that strong growth trends during the early part of the pandemic were not persisting in a more normal environment.”
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders in Q1 2022: 136
Number of Hedge Fund Holders in Q4 2021: 144
Mastercard Incorporated (NYSE:MA) is a technology firm with core interests in transaction processing services. On June 9, the company announced that it was bringing the payments network it owned to digital services such as non-fungible tokens and web3.0. The firm is partnering with NFT companies like X, Candy Digital, The Sandbox, and Mintable for the purpose. The announcement could act as a growth catalyst for the NFT industry since the Mastercard network comprises close to 3 billion cards.
On May 17, Goldman Sachs analyst Will Nance initiated coverage of Mastercard Incorporated (NYSE:MA) stock with a Buy rating and a price target of $460, noting that the outlook on the payments sector was turning constructive after a choppy start to the year.
Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE:MA) with 5.8 million shares worth more than $2 billion.
In its Q1 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE:MA) was one of them. Here is what the fund said:
“We added to both Visa and Mastercard Incorporated (NYSE:MA) during the final quarters of 2021, based on the belief that both businesses were trading at attractive prices and poised to deliver, double-digit returns over the next three to five years. Cross-border transactions–a highly profitable business segment for both companies–represent roughly 10% of Visa and Mastercard’s volumes and 25% of their gross revenues, so lockdowns have severely impacted this segment due to stifled travel. While it was impossible to know when people would begin traveling again, we accepted this reality with the belief that travel would eventually return. Both companies have commented that as soon as a country or geography reopens, cross-border volumes reignite, amplifying each business’s growth and profitability. We think these near- term headwinds have created an attractive long-term investment opportunity.”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders in Q1 2022: 200
Number of Hedge Fund Holders in Q4 2021: 224
Meta Platforms, Inc. (NASDAQ:META) is a tech firm that owns and runs social media platforms. On June 16, the company was among a group of around 30 tech giants that pledged to upgrade their platforms to fight fake news after the European Union tightened laws around online content that could result in big fines for these firms. Under the new guidelines, companies failing to meet certain standards in news distribution would be faced with fines of as much as 6% of their global turnover, per news agency Reuters.
On June 8, Piper Sandler analyst Thomas Champion maintained a Neutral rating on Meta Platforms, Inc. (NASDAQ:META) stock with a price target of $220, noting that the firm faced headwinds from further privacy issues and TikTok competition.
At the end of the first quarter of 2022, 224 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 248 in the preceding quarter worth $31 billion.
In its Q4 2021 investor letter, Boyar Value Group, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (NASDAQ:META) (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
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