Light Street Capital Returned 46% in 2023: Top 5 Picks

In this piece, we will take a look at Light Street Capital returned 46% in 2023: top 5 picks. If you wish to read our detailed overview of Kacher’s history, investment philosophy and hedge fund performance, go directly to Light Street Capital Returned 46% in 2023: Top 15 Picks.

5. Microsoft Corporation (NASDAQ:MSFT)

Light Street Capital’s Equity Stake: $20.19 Million
Number of Hedge fund Holders: 306

Redmond, Washington-based Microsoft Corporation (NASDAQ:MSFT) is a software company  specializing in developing software services, devices, and solutions worldwide. Microsoft Corporation (NASDAQ:MSFT) is best known for its Office software suite and Microsoft Viva. Its empire also includes operations around cloud computing via Microsoft Azure and the multibillion-dollar gaming sector through the Xbox console.

Microsoft Corporation (NASDAQ:MSFT) was one of the stocks that stands out as Light Street Capital returned 46% in 2023. The stock was up by 54% as it benefited from its investments in artificial intelligence through OpenAI. The hedge fund increased its stakes in Microsoft Corporation (NASDAQ:MSFT) by 4% in Q3 2023 to $20.19 million.

306 out of the 910 hedge funds in Insider Monkey’s database had bought Microsoft Corporation (NASDAQ:MSFT)’s shares as of the end of Q3 2023. In Q4 2023, Catherine D. Wood’s ARK Investment Management was one of the notable investor of Microsoft Corporation (NASDAQ:MSFT) via its $21.93 million investment.

Polen Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter. Here is what the fund said:

“The largest relative detractors in the quarter were Illumina, Airbnb, and Microsoft Corporation (NASDAQ:MSFT). Microsoft’s business continues to grow well, albeit at slower rates than in the previous few years. That said, it was a relative detractor to the Portfolio because our 7% average weighting for both the quarter and the year were significantly lower than the 12% benchmark weighting in the Russell 1000 Growth. Microsoft shares appreciated a benchmark-beating 19% in 4Q and 58% in 2023)….. (Click here to read full text).”

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4. Meta Platforms, Inc. (NASDAQ:META) 

Light Street Capital’s Equity Stake: $21 Million
Number of Hedge Fund Holders: 234

Meta Platforms, Inc. (NASDAQ:META) is a communication services company that offers an array of apps that connect people with family and friends. Meta Platforms, Inc. (NASDAQ:META) is best known for its Facebook app, which generates advertising revenues running into billions of dollars. It also owns and operates Instagram, another popular photo-sharing app.

Light Street Capital returned 46% in 2023 as Meta Platform fortunes improved in 2023, depicted by Meta Platforms, Inc. (NASDAQ:META) rallying by about 194%. The rally came at the back of increased spending on the company’s flagship networking apps. Nevertheless, the hedge fund reduced its holdings in the stock by 31% in Q3 2023 to $21 Million

234 out of the 910 hedge funds part of Insider Monkey’s database had bought Meta Platforms, Inc. (NASDAQ:META)’s shares as of the end of Q3 2023. In Q4 2023, ARK Investment Management was a prominent investor through its $109.50 million investment.

In its Q3 2023 investor letter, Weitz Investment Management, an asset management firm, mentioned Meta Platforms, Inc. (NASDAQ:META). Here is what the fund said:

“As for other quarterly contributors, Alphabet, Inc., (GOOG) and Meta Platforms, Inc. (NASDAQ:META) added to their exceptional year-to-date returns. Meta Platforms and Alphabet were the true year-to-date standouts. After steep declines in 2022, both stocks rebounded sharply due to a combination of solid fundamentals, disciplined operational execution, and improved sentiment. Despite outsized gains and attention, we think both Alphabet and Meta remain undervalued.”

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3. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Light Street Capital’s Equity Stake: $23.14 Million
Number of Hedge Fund Holders: 110

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the stocks that affirm Light Street Capital’s holdings in the technology sector. It operates as a semiconductor company offering microprocessors and graphics processing units. Advanced Micro Devices, Inc. (NASDAQ:AMD) estimates $2 billion in sales in 2024 as it works on a chip competing against Nvidia in the AI market.

Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) exploded 125% in 2023 as the company benefited from the artificial intelligence frenzy. Light Street Capital increased its stakes in the semiconductor company by 33% in Q3 2023 to $23.14 million. As of the end of the third quarter of 2023, 110 hedge funds tracked by Insider Monkey had stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD).

White Falcon Capital Management made the following comment about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:

“It is important to note that the returns depicted above actually originated in the market turmoil of 2022 and were only realized in 2023. We assess that about 75% of the returns in 2023 were derived from just 35% of the portfolio. Notably, the technology companies we acquired in 2022 – Advanced Micro Devices, Inc. (NASDAQ:AMD), Amazon, Docebo, NU, Rover – performed exceptionally well. In hindsight, the decision to allocate to technology stocks appears straightforward; but it actually demanded courage and conviction to buy and add to these stocks during the fear and uncertainty of the 2022 bear market.

The top 5 positions in the portfolio were: Precious Metals royalty basket, Nu Holdings, AMD Amazon.com and Converge Technology Services. AMD has worked out great for us but we must admit that it has gotten expensive. AI was not part of our original investment thesis and AMD is a great reminder of how one can get ‘lucky’ investing in quality businesses run by competent management teams (ditto for Amazon).”

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2. Gitlab Inc (NASDAQ:GTLB)

Light Street Capital’s Equity Stake: $36.98 Million
Number of Hedge Fund Holders: 42

Gitlab Inc (NASDAQ:GTLB) is the second largest holding in Light Street Capital’s portfolio, offering exposure to the technology sector. The company develops software for the software development life cycle.

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1. Nvidia Corp (NASDAQ:NVDA)

Light Street Capital’s Equity Stake: $47.20 Million
Number of Hedge Fund Holders: 180

Light Street Capital returned 46% in 2023 as it benefited from its investment in Nvidia Corp (NASDAQ:NVDA), a stock that exploded amid the artificial intelligence boom. The tech giant delivered record-breaking revenues and earnings amid solid product demand to power AI innovations and tools.

After rallying by more than 230% in 2023, Nvidia Corp (NASDAQ:NVDA) continues to hit all-time highs owing to its dominant position in the market for advanced AI chips. Light Street Capital has been buying and selling shares in Nvidia Corp (NASDAQ:NVDA) since Q4 2022. The hedge fund increased its stakes by 9% in Q3 2023 to $47.20 million, accounting for 13.89% of the portfolio.

As of the end of the September quarter, 180 hedge funds tracked by Insider Monkey had stakes in NVIDIA Corp (NASDAQ:NVDA), up from 175 in the preceding quarter.

Here is what Polen Capital said about NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:

“Apple and NVIDIA Corporation (NASDAQ:NVDA) alone drove over 1,100 basis points of the Russell 1000 Growth Index’s 42% return, so not owning them was a meaningful headwind to our relative return in 2023. NVIDIA shares rocketed higher by well over 200% in 2023 although they slightly underperformed our Portfolio and the Russell 1000 Growth in the fourth quarter. Generative AI has been a huge boon for NVIDIA as the use of LLMs like ChatGPT and others requires tremendous processing power that, today, is mostly provided by NVIDIA’s GPUs. All large cloud service providers, AI factories, and many large consumer internet companies are laying the foundation for generative AI by deploying NVIDIA GPUs and other parallel processing chips to be able to do large scale generative AI either for internal use (i.e., Meta) or as a service for others (i.e., AI factories) or both (cloud service providers such as Amazon, Microsoft, and Google)….. (Click here to read full text).”

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