We recently published a list of Billionaire Daniel Sundheim’s Top 15 Stock Picks Heading Into 2025. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other Billionaire Daniel Sundheim’s stock picks heading into 2025.
D1 Capital Partners might be one of the youngest hedge funds but it is one with a solid track record in a highly competitive landscape. Founded in 2018, the hedge fund successfully navigated the downturn triggered by the COVID-19 pandemic thanks to an aggressive investment strategy that revolves around fundamental research.
Daniel Sundheim is the brainchild, having started the hedge fund with $5 billion seed capital. As the founder and chief investment officer, he propelled the hedge fund to prominence in 2020 with a 54% gain in one of the most unpredictable years in the investment world. The stellar performance that continued into 2021 came as the value hedge fund focused on private equity and emerging startups that accounted for 50% of the portfolio.
READ ALSO: Billionaire David Tepper’s Top 10 Stock Picks Heading into 2025 and 10 Best Stocks to Buy for the Long-Term According to Charles Akre.
Nevertheless, Sundheim had one of the worst years of his career in 2022 as the overall equity markets came under pressure amid heightened inflation. As the S&P 500 fell 19.4%, D1 Capital ended up underperforming, going down by 30.5%. However, the hedge fund bounced back to winning ways in 2023, gaining more than 19% as it marked down some of its private investments.
Sundheim’s knack for investing started while he was an undergraduate at the Wharton School University of Pennsylvania. While in college, he invested and traded tech stocks. He went on to gain valuable investing experience while working as an analyst at Bear Stearns.
“Certain people are born to do certain things, and Dan was born to deploy capital,” said Dris Upitis, a former portfolio manager at Viking with Sundheim.
D1 Capital Partners’ edge stems from an investment strategy that revolves around fundamental research to uncover undervalued investment opportunities. Additionally, the hedge fund engages in diversification as one of the ways of spreading the risk and shrugging the pitfalls of volatility in specific sectors.
While controlling about $5.2 billion in portfolio value, Sundheim invests close to a third of its capital in private market bets. Industrial services and consumer stocks also account for the most significant share of the hedge fund’s portfolio. It also has substantial exposure to tech stocks from which it is benefiting from the artificial intelligence frenzy.
According to Sundheim, public companies are the best way to tap into the AI frenzy. Likewise, the investment officer expects artificial intelligence, unlike other technological advances, to be felt across all sectors. Companies investing billions of dollars into talent and AI projects are doing so without expecting short-term returns and are focused on long-term returns.
As the chief investment officer, Sundheim leverages long/short equity strategies using equity derivatives, convertibles, and fixed-income instruments to generate value in the markets. D1 Capital Partners is already up by more than 30% for the year, affirming the effectiveness of Sundheim’s investment strategy. The stellar performance has primarily been driven by gains in the industrial and consumer stocks which are benefiting from a resilient US economy.
Billionaire Daniel Sundheim’s top 15 stock picks heading into 2025 consist of stocks poised to benefit from a resilient US economy as interest rates come down.
Our Methodology
To compile the list of billionaire Daniel Sundheim’s Top 15 Stock Picks for 2025, we reviewed D1 Capital Partners’ investment portfolio. We identified the hedge fund’s fifteen largest holdings and analyzed their potential for long-term investment. Finally, we ranked these stocks in ascending order based on D1 Capital Partners’ stakes in each one.
At Insider Monkey, we are obsessed with 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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
D1 Capital Partners’ Equity Stake: $225.69 Million
Number of Hedge Fund Holders as of Q3 2024: 286
Amazon.com, Inc. (NASDAQ:AMZN) is an internet retail giant that sells consumer products, advertising, and subscription services through online and physical stores. The company has generated billions of dollars in revenues from its e-commerce and cloud computing dominance.
The stock is up by about 51% year to date, benefiting from robust financial results and growing optimism about its growth prospects. Despite being a huge company with sales of $575 billion over the last 12 months, Amazon.com, Inc. (NASDAQ:AMZN) is still in a phase of robust growth. The company boasts of several growth engines. Amazon is the main beneficiary as shopping trends shift to online, given its robust logistics and supply networks supporting same-day and next-day deliveries. The company’s e-commerce platform accounts for almost 40% of all online sales in the United States.
In addition to e-commerce, Amazon.com, Inc. (NASDAQ:AMZN) is also a player in cloud computing, with Amazon Web Services affirming its growth prospects. Corporate interest in shifting IT capabilities to the adaptable and affordable off-premises computing environment should benefit AWS. Additionally, many of its clients view AWS as a mission-critical partner due to the necessity of integrating artificial intelligence tools.
Additionally, Amazon.com, Inc. (NASDAQ:AMZN) is already leveraging the technology to enhance its e-commerce operations by improving customers’ shopping experience. It’s also using the technology to enhance its cloud solutions, strengthening its competitive edge. AWS has already reached the $110 billion annualized revenue run rate and is still growing.
Patient Capital Opportunity Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) moved higher throughout the second quarter as AI demand helped to reaccelerate growth in their AWS business. It looks as though the cloud business is finally past the customer cost optimization period with customers restarting their cloud migrations as well as expanding spend on AI projects. Despite the top and bottom-line improvement seen in the first quarter, the company is significantly underearning its long-term potential as it continues to reinvest aggressively in the business. With 80% of global retail sales still being done in physical stores and 85% of global IT spending still on-premises, we see a long-run way for the dominant player in the cloud, retail, and increasingly logistics and advertising space.”
Overall, AMZN ranks 6th on our list of Billionaire Daniel Sundheim’s stock picks heading into 2025. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.