In this article, we discuss 5 tech stock picks of Mario Gabelli. If you want to read our discussion on Gabelli’s history and investment philosophy, go directly to Mario Gabelli’s 2022 Portfolio: 10 Tech Stock Picks.
5. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Mario Gabelli’s Stake Value: $23,882,000
Percentage of Gabelli’s Portfolio: 0.21%
Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based diversified technology company involved in various segments such as cloud computing, e-commerce, artificial intelligence, and digital streaming.
Amazon.com, Inc. (NASDAQ:AMZN) underwent a 20-for-1 stock split earlier this month. Following the split, on June 7, Tom Forte at DA Davidson reiterated a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock and shared a split-adjusted target price of $156.25. The analyst commented that the stock split would not change the fundamentals of the company, but it will experience a positive impact in the near term as investors see lower-priced stocks as less expensive compared to higher-priced stocks. The analyst highlighted that the biggest concern for Amazon.com, Inc. (NASDAQ:AMZN) is the slow growth in the e-commerce business as it is reaching maturity. However, this is countered by the fast-growing and high-margin cloud computing and digital advertising businesses.
Miller Value Partners shared its insights on Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter. Here’s what the firm said:
“For frame of reference, Amazon (NASDAQ:AMZN) bottomed at the same valuation in the financial crisis (side note: Amazon bottomed at 4x EV/GP after the tech bubble burst)! So there’s historical precedent for the lows being in. We will see whether that holds true this time. Regardless, we think there’s significant upside over a 5-year time horizon. The one other topic I want to briefly address is our volatility. We hope to write something about the topic in more depth in the future, but we want our clients and prospective investors to understand our views on it. We think that volatility is significantly misunderstood. We believe it creates opportunities from which we can profit.”
Of the 912 hedge funds in Insider Monkey’s database, 271 funds held a stake in Amazon.com, Inc. (NASDAQ:AMZN) as of Q1 2022.
4. Match Group, Inc. (NASDAQ:MTCH)
Number of Hedge Fund Holders: 55
Mario Gabelli’s Stake Value: $1,003,000
Percentage of Gabelli’s Portfolio: 0.01%
Match Group, Inc. (NASDAQ:MTCH) is a Dallas, Texas-based corporation that owns a global portfolio of dating platforms.
On June 9, Alexandra Steiger at Goldman Sachs gave Match Group, Inc. (NASDAQ:MTCH) stock a target price of $105 with a Buy rating. The company is also improving its relations with Google after it withdrew a temporary restraining order against the tech conglomerate in exchange for some concessions. Google agreed not to remove or reject Match Group apps from Google Play Store. Moreover, Match Group, Inc.’s (NASDAQ:MTCH) app updates that offer alternatives to Google Play Billing will also be approved. The concessions from Google and the positive response by Match Group, Inc. (NASDAQ:MTCH) should be considered a step in the right direction as Match Group is looking for a better App Store environment for its offerings.
Match Group, Inc. (NASDAQ:MTCH) was discussed by Arch Capital Management in its Q4 2021 investor letter. Here’s what the firm said:
“We are long Match Group stock because it is the dominant player in online dating, giving it immense and growing power over the population of single people worldwide. This may seem like a callous way to describe the business, but it is the proper way to look at it from an investment lens.
For those that are unaware, Match Group owns every popular online dating property outside of Bumble, Badoo, and Grindr. Its apps and services include Tinder, Hinge, Match.com. BLK, Chispa, and many others…
In conjunction with this letter, we have published a report on Match Group. You can find it here: https://www.archcapitalfund.com/letters”
Match Group, Inc. (NASDAQ:MTCH) was held by 55 hedge funds as of Q1 2022.
3. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 58
Mario Gabelli’s Stake Value: $12,183,000
Percentage of Gabelli’s Portfolio: 0.11%
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a New York-based video game creation and publishing company.
On June 9, David Karnovsky at JPMorgan reinstated coverage on Take-Two Interactive Software, Inc. (NASDAQ:TTWO) with an Overweight rating and a target price of $175. The upgrade follows the completion of the restricted period after the company’s $12.7 billion acquisition of Zynga in January 2022. The analyst highlighted that the acquisition had provided Take-Two Interactive Software, Inc. (NASDAQ:TTWO) access to developers and distributors of mobile games. This would help the company progress as a leading developer of original gaming content across various distribution mediums. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) already has a strong presence in the PC and gaming console segments.
In its Q4 2021 investor letter, Arch Capital Management discussed its stance on Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Here’s what the firm said:
“Take-Two Interactive is an American video game publisher of franchises like Grand Theft Auto (GTA), Red Dead Redemption (RDR), and NBA 2K. It is currently one of the larger positions in the fund at an 8.3% allocation.
We are bullish on Take-Two because we believe the company has competitive advantages that will keep its franchises relevant for many years. First, its games have distinct network effects that keep it insulated from competitors. Multiplayer online games are only fun if others are also playing them, creating a winner-take-all effect that has specifically benefited GTA and NBA 2K over the last decade.
On top of network effects, Take-Two has decades of developmental expertise and over 5,000 developers across its divisions, giving it semi-strong economies of scale that insulate it from most competitors. Yes, large competitors like Microsoft or any mega-cap company could invest the dollars to get to this developer count, but it is impossible for a smaller studio to make games as immersive and at as quick of a pace as Take-Two does for its customers. They just don’t have the scale…” (Click here to see the full text)
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was held by 58 hedge funds as of Q1 2022.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Mario Gabelli’s Stake Value: $36,268,000
Percentage of Gabelli’s Portfolio: 0.32%
Apple Inc. (NASDAQ:AAPL) is a Cupertino, California-based tech giant involved in consumer electronics, digital streaming, and other tech-related services.
Apple Inc. (NASDAQ:AAPL) is looking for avenues to maintain an annual revenue growth of 10%, which means that the company needs to increase its sales by $40 billion annually. During the annual World Wide Developer Conference (WWDC), Apple Inc. (NASDAQ:AAPL) touched upon various developments to take the company forward. Apple Inc. (NASDAQ:AAPL) is considering augmented reality as the next big idea and is working on launching its AR/VR glasses. The company’s entry into the financial sector through the introduction of Apple Pay Later is also a step in a new direction.
Apple Inc. (NASDAQ:AAPL) was discussed in the Q4 2021 investor letter of ClearBridge Investments. Here’s what the firm said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
Apple Inc. (NASDAQ:AAPL) was held by 131 hedge funds as of Q1 2022.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Mario Gabelli’s Stake Value: $46,602,000
Percentage of Gabelli’s Portfolio: 0.42%
Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based diversified tech giant involved in the production of consumer electronics, personal computers, and software. The company also owns the renowned professional networking platform LinkedIn.
In a research note issued on June 10, Raimo Lenschow at Barclays gave Microsoft Corporation (NASDAQ:MSFT) stock an Overweight rating with a price target of $335. The analyst thinks that the investors are too focused on the outlook of Microsoft’s cloud computing service, Azure. Lenschow stated that there are other ongoing themes that can yield an upside potential on the stock. Microsoft Corporation (NASDAQ:MSFT) has a revenue base of $200 billion and intends to grow it by double digits moving forward. Earlier this month, the company provided a guidance update for Q4 FY22 and reduced its EPS and revenue estimates due to unfavorable foreign exchange rate movement during the quarter ending June 30.
Here’s what Polen Capital said about Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter:
“Microsoft’s business is firing on all cylinders and continue to enjoy an acceleration in their respective fundamentals because of the increase in digitization around the world. Nearly every company today is searching for ways to become more digital, and both Microsoft and Accenture are positioned to provide many of the solutions these companies seek. This inflection in fundamentals was not lost on the market, and each business’s stock performed exceptionally well in 2021. In fact, they represented two of the three top absolute performers for the Global Growth Portfolio last year. As a result, their respective stocks are currently more fully priced. As such, we lowered Microsoft from our largest position within the Portfolio. We maintain high conviction in Microsoft and plan to own it for many years, but recognize the increase in its prices.”
As of Q1 2022, 259 funds held a stake in Microsoft Corporation (NASDAQ:MSFT).
You can also take a peek at the 10 Value Stocks Hedge Funds Like in 2022 and 10 Value Stocks in Seth Klarman’s Latest Portfolio.
