We recently published a list of Top 10 Stocks to Buy According to XN Exponent Advisors LLC. 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 XN Exponent Advisors LLC.
Established in 2018 by Gaurav Kapadia, XN Exponent Advisors LLC is based in New York and manages approximately $2.53 billion in 13F securities according to its latest filing for the fourth quarter of 2024. With just 13 clients, the hedge fund maintains a concentrated portfolio, with its top ten holdings accounting for 69.02% of its total assets. XN employs a global investment strategy that spans both public and private markets, focusing on generating high risk-adjusted returns. The firm targets sectors where it has deep expertise while deliberately avoiding balance sheet-heavy industries such as financials, healthcare, energy, and materials.
The firm primarily invests in North America and Western Europe but remains open to opportunities in other regions that align with its strategic goals. XN’s investment approach is built around a long/short strategy, where it seeks to capitalize on market inefficiencies by purchasing undervalued assets and shorting overvalued ones. This method hinges on the firm’s ability to assess market opportunities accurately, though there is no guarantee of success. Market disruptions pose a significant risk, as they can result in substantial losses and may force XN to close out client positions to mitigate damage.
A key feature of XN’s approach is its flexibility. Unlike traditional investment firms bound by rigid diversification or leverage policies, XN can trade across a wide range of securities, issuers, countries, and sectors to align with its investment objectives. This adaptability enables the firm to respond quickly to shifting market conditions, reallocating client assets as necessary. While this strategy offers significant potential for high returns, it also carries inherent risks, particularly in volatile market environments. However, XN’s focus on specialized knowledge and strategic positioning aims to maximize opportunities while managing downside exposure.
Founder and Chief Executive Officer of XN, Gaurav Kapadia has nearly two decades of experience in public and private markets and has built a reputation as a visionary investor and business leader. Before launching XN, a firm whose name reflects the power of long-term compounding, Kapadia was the Co-Founder and Co-Managing Partner of Soroban Capital Partners, a globally recognized investment firm. Prior to that, he served as a Partner at TPG-Axon Capital, working in both New York and London. His extensive expertise in finance and investing is rooted in his academic background; he earned a Bachelor of Science in Economics from the Wharton School at the University of Pennsylvania in 1999.
Beyond his financial career, Kapadia is deeply committed to philanthropy and civic engagement, particularly in the arts, humanities, education, and social equity. In September 2023, the Mellon Foundation announced his election to its Board of Trustees, recognizing his dedication to supporting cultural and educational initiatives. He has been a strong proponent of the transformative power of art and the humanities, emphasizing their role in fostering positive societal change. Under the leadership of Mellon Foundation President Elizabeth Alexander, Kapadia expressed his excitement to contribute to the organization’s mission, citing its precision and ambitious vision as key reasons for his involvement.
Kapadia also serves on the Boards of Trustees for several influential institutions, including The Whitney Museum of American Art, The Trust for Governors Island, Uncommon Schools, and The Institute for Constitutional Advocacy and Protection at Georgetown University Law Center. His advocacy for education, civic engagement, and equality underscores his commitment to creating meaningful opportunities for underserved communities. Through his leadership in both finance and philanthropy, Kapadia continues to bridge the worlds of business and social impact, demonstrating how strategic investments—whether in financial markets or cultural institutions—can drive long-term positive change.
Our Methodology
The stocks discussed below were picked from XN Exponent Advisors LLC’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 1009 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
XN Exponent Advisors LLC’s Equity Stake: $168.77 Million
Stephen Fredette, President of Toast, Inc. (NYSE:TOST), recently sold a significant number of company shares, according to an SEC filing. On March 17, 2025, Fredette offloaded 118,060 shares of Class A common stock at prices between $35.00 and $35.13, totaling approximately $4.1 million. This sale comes as Toast’s stock has shown strong volatility, gaining 25% over the past six months and trading above its perceived fair value. Despite the insider transaction, the company maintains a market valuation of $19.4 billion, reflecting continued investor confidence in its growth trajectory.
Toast, Inc. (NYSE:TOST), a Boston-based provider of cloud-based restaurant management solutions, has expanded rapidly since its launch in 2020. The company offers an integrated point-of-sale (POS) system built on the Android platform, with products such as the Flex terminal, Tap payment processor, and Toast Hub. In its fourth-quarter 2024 earnings report, the company demonstrated significant financial growth. Annual recurring revenue (ARR) rose 34% year-over-year to $1.6 billion, while restaurant locations using its platform increased by 26% to approximately 134,000. Gross payment volume (GPV) surged 25% to $42.2 billion. Notably, Toast, Inc. (NYSE:TOST) reported a turnaround in profitability, with GAAP income from operations reaching $32 million, compared to a $56 million loss in the previous year. Adjusted EBITDA saw a remarkable increase to $111 million, nearly four times higher than the prior year’s $29 million.
For the full year 2024, Toast, Inc. (NYSE:TOST) continued its upward momentum, with GPV climbing 26% to $159.1 billion and gross profit from subscription services and financial technology increasing by 34% to $1.4 billion. Adjusted EBITDA rose significantly to $373 million, up from $61 million in 2023, while net cash from operating activities more than doubled to $360 million. Looking ahead to the first quarter of 2025, the company anticipates non-GAAP gross profit between $385 million and $395 million, with adjusted EBITDA projected to range from $100 million to $110 million. With a growing customer base and solid financial performance, the company is a top stock to buy according to XN Exponent Advisors LLC.
Overall, TOST ranks 5th on our list of top stocks to buy according to XN Exponent Advisors LLC. 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.
