We recently published a list of Top 10 Stocks to Buy According to Durable Capital Partners. In this article, we are going to take a look at where Toast, Inc. (NYSE:TOST) stands against other top stocks to buy according to Durable Capital Partners.
Durable Capital Partners is a Maryland-based hedge fund management firm founded in the second quarter of 2019 by Henry Ellenbogen. The firm primarily follows a long-term equity investment strategy, with a focus on early-stage and durable growth in small- and mid-cap equities across public markets. Ellenbogen, who serves as the Managing Partner and Chief Investment Officer, leads the firm’s investment approach.
Ellenbogen established Durable Capital Partners in 2019 and currently holds the roles of Managing Partner and Chief Investment Officer. Before founding Durable, he spent nearly two decades at T. Rowe Price Associates, Inc., where he served as Vice President and Chief Investment Officer for U.S. Equity Growth. During his tenure, he led the U.S. Small-Cap Growth Equity Strategy and managed the New Horizons Fund. Additionally, he was an active member of the U.S. Equity Steering Committee and the Corporate Governance Committee for U.S. Equity.
Between 2001 and 2019, Ellenbogen spearheaded private market investments in several high-profile companies. His leadership at the New Horizons Fund contributed to its recognition with multiple industry awards. Notably, the fund received Investor’s Business Daily’s Best Mutual Funds Award in 2018 across categories such as U.S. Diversified Equity Funds, Growth Funds, and Small-Cap Funds. Additionally, it earned the Thomson Reuters Lipper Fund Award for Best Small-Cap Growth Fund over a ten-year period (2017), a five-year period (2016), and both five- and ten-year periods (2013). Prior to his investment career, Ellenbogen served as Chief of Staff for U.S. Representative Peter Deutsch and gained experience as a Summer Associate at Goldman Sachs.
Academically, he graduated magna cum laude from Harvard College with a degree in History and Science. He later earned a J.D. from Harvard Law School and an MBA from Harvard Business School, where he was recognized as a Baker Scholar. Additionally, he has taught as an adjunct professor at New York University’s Graduate School of Politics. Ellenbogen is a member of the Barron’s Roundtable and contributes to the Investment Committee of the Smithsonian Institution. He also serves as Chairman of the Board for The Posse Foundation.
According to its most recent 13F filing for the fourth quarter of 2024, Durable Capital Partners reported $12.26 billion in managed 13F securities, with its top 10 holdings accounting for 47.59% of its portfolio.
Our Methodology
The stocks discussed below were picked from Durable Capital Partners’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from over 1,000 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An aerial shot of a computer server station, highlighting the company’s focus on cloud-based technology.
Toast, Inc. (NYSE:TOST)
Number of Hedge Fund Holders as of Q4: 63
Durable Capital Partners’ Equity Stake: $562.94 Million
Toast, Inc. (NYSE:TOST), headquartered in Boston, Massachusetts, is a cloud-based restaurant management software company offering an integrated point-of-sale (POS) system designed for the food service industry. Operating on the Android platform, the company’s comprehensive management system includes devices such as the Flex terminal, Tap payment processor, Toast Hub, and receipt printer. Since its launch in March 2020, the company has expanded rapidly, serving a growing number of restaurant locations with its digital solutions tailored to streamline operations and enhance efficiency.
For the fourth quarter of 2024, Toast, Inc. (NYSE:TOST) reported strong financial performance, marking a record-breaking year for the company. As of December 31, 2024, annual recurring revenue (ARR) reached $1.6 billion, reflecting a 34% year-over-year increase. The total number of locations utilizing its platform grew by 26% to approximately 134,000, while gross payment volume (GPV) surged 25% to $42.2 billion. The company’s GAAP income from operations stood at $32 million for the quarter, a significant improvement from a $56 million loss in the prior year. Similarly, GAAP net income rose to $33 million, compared to a net loss of $36 million in the same period of 2023. Adjusted EBITDA soared to $111 million, nearly quadrupling from $29 million in the previous year’s quarter, demonstrating robust profitability.
For the full year 2024, Toast, Inc. (NYSE:TOST) maintained strong growth momentum, with GPV increasing 26% to $159.1 billion. The company’s subscription services and financial technology gross profit rose 34% to $1.4 billion and adjusted EBITDA jumped to $373 million from $61 million in 2023. Net cash from operating activities more than doubled to $360 million, while free cash flow surged to $306 million. Looking ahead to the first quarter of 2025, Toast anticipates continued strong performance, projecting non-GAAP gross profit between $385 million and $395 million and adjusted EBITDA in the range of $100 million to $110 million. With its expanding customer base and consistent financial improvements, Toast, Inc. (NYSE:TOST) is well-positioned for sustained growth in the restaurant technology sector.
Overall, TOST ranks 5th on our list of top stocks to buy according to Durable Capital Partners. While we acknowledge the potential for TOST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TOST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
