RiverPark Advisors, LLC recently published its Q4 2020 RiverPark Large Growth Fund commentary – a copy of which can be downloaded here. During the fourth quarter of 2020, the RiverPark Large Growth Fund returned 18.66% (institutional shares), compared to the total return of 12.15% by the S&P 500 Index. You should check out RiverPark’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, the fund highlighted a few stocks and Pinterest Inc. (NYSE:PINS) is one of them. Pinterest Inc. (NYSE:PINS) is a social networking service. In the last three months, Pinterest Inc. (NYSE:PINS) stock gained 3.0% and on March 19th it had a closing price of $73.01. Here is what the fund said:
“Pinterest was our next top contributor for the quarter, as the company also reported astonishing third quarter revenue growth. Revenue grew 58% to $443 million, exceeding estimates by $55 million, and the company guided to an approximately 60% sales increase for the fourth quarter (as compared to analyst estimates for 38% growth). Further, users increased by 37% year over year in the third quarter, a comparable increase to the user growth gains in 2Q. Significantly, management highlighted particularly strong growth in the highly monetizable user categories of Gen Z and those with clear purchasing intent, indicating strong momentum for future revenue growth. ARPU grew 15% year over year to $1.03 for the quarter, and still has substantial headroom to accelerate further, as PINS’ ARPU remains at a steep discount to other social media ad sites (detailed below). Profitability was also strong as adjusted EBITDA hit an all-time quarterly high of $93 million representing a record 21% margin.
Like SNAP, we believe Pinterest to be an extremely well-positioned internet platform with 442 million monthly active users, 2/3 of whom are female. The platform reaches eight out of ten moms, half of all U.S. millennials ages 18-34, and half of total internet users in the United States. These users are coming to Pinterest to get inspiration for their home, their style, or upcoming travel, which often means they are actively looking for products and services to buy. PINS’ TTM ARPU is only $3.72, significantly less than SNAP’s $9, Twitter’s $18 and Facebook’s $30, and we expect it to continue to close this gap with its peers, as the company is still in the early stages of building an advertising product suite that fully taps its extremely attractive customer demographics. More users and increasing ARPU should drive a minimum of 40% annual revenue growth over the next few years and should be accompanied by expanding gross margins (from 75% in the third quarter to 80%+) and improved adjusted EBITDA margins (from 21% last quarter to greater than 30%).”
RiverPark has been a long time Pinterest Inc. (NYSE:PINS) bull. In May 2020, we shared RiverPark’s bullish Pinterest’s thesis in this article.
In Q4 2020, the number of bullish hedge fund positions on Pinterest Inc. (NYSE:PINS) stock increased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Pinterest’s growth potential. Our calculations showed that Pinterest Inc. (NYSE:PINS) is ranked #27 among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
