Investment management company Worm Capital recently published its Second Quarter Investment Letter 2022, which can be downloaded here. The fund generated -16.42% return for the Long/Short equity growth strategy and -11.79% for Long-Only equity in June. Since its inception, the fund is able to generate 17.71% overall return for Long/Short equity and 25.95% for Long-Only equity. To have a glimpse of its finest picks for 2022, check out the top 5 holdings of the fund.
In the Q2, 2022 investor letter Worm’s Capital discussed its core holding Spotify Technology S.A. (NYSE:SPOT). Spotify Technology S.A. (NYSE:SPOT) is a Swedish company that provides audio streaming and media services. Founded in 2006, the company has a market capitalization of $21.39 billion. The one-month return of Spotify Technology S.A. (NYSE:SPOT) is 4.42% while its 12-month return is 53.88%. The stock closed at $111.65 per share on July 22, 2022.
Here is what the fund specifically observed about Spotify Technology S.A. (NYSE:SPOT):
“At its June investor event, Spotify reiterated its long-term goal of reaching 1 billion users by 2030, driving $100 billion in revenue with 20% operating margins. We believe these goals are not only achievable but could prove to be conservative in the long run. The company is building what it is calling “The Spotify Machine,” a sort of reinforcement feedback loop of growth, new users, new creators, and new high-margin monetization opportunities.
We believe Spotify’s business model will work best at truly global scale, and we believe the company is still in the early days of growth. To be clear, we don’t expect the company to generate excessive profits in the short-term as we believe the company should reinvest all available capital into growth and territory expansion. It’s also worth noting that Spotify is free cash flow positive and has a strong balance sheet—this reduces the likelihood of further share dilution and lowers near-term risk as shareholders.
As investors, we tend to look at our portfolio as one might look at a group of bananas: Some are yellow and ripe and ready to eat now, and others are green and will take some time to ripen. Spotify is a green banana…” (Click here to see the full text)
Photo by Heidi Fin on Unsplash
Although Worm Capital is invested in Spotify Technology S.A. (NYSE:SPOT), the stock isn’t in the list of 30 Most Popular Stocks Among Hedge Funds. We can see Spotify Technology S.A. (NYSE:SPOT) in 49 hedge fund portfolios at the end of the first quarter of 2022, compared to 53 in Q4, 2021. Spotify Technology S.A. (NYSE:SPOT) shares lost 29.89% of their value over the last 52 weeks.
We have published another article later this month on Spotify Technology S.A. (NYSE:SPOT) and shared another hedge funds views on the company. You can check our hedge fund investor letters 2022 Q2 page for other investor letters from hedge funds and well known investors.
Disclosure: None. This article is originally published at Insider Monkey.
