In this article, we discuss the 5 stocks to consider in the portfolio of Pat Fallon. If you want to read our detailed analysis of these stocks, go directly to Pat Fallon Stock Portfolio: 10 Stocks To Consider.
5. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides endpoint and cloud workload protection. Major hedge funds hold large stakes in the company. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) with 7.5 million shares worth more than $1.8 billion.
Securities filings from Pat Fallon dated November 4 reveal that the lawmaker sold CrowdStrike Holdings, Inc. (NASDAQ:CRWD) stock worth somewhere between $100,000 and $250,000 on October 1 last year, disclosing the transaction in this regard on November 2.
In its Q1 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was one of them. Here is what the fund said:
“CrowdStrike provides cloud-based software used in the security of computers, servers, and mobile phones. The stock pulled back a bit during the quarter as investor sentiment shifted away from stocks with higher valuation multiples. We remain shareholders, as the protection of enterprise assets and cloud workloads from various forms of cyberattacks remains more important than ever for many enterprises, and we believe this will continue to result in a strong demand environment for CrowdStrike’s innovative products and services.”
4. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders: 94
Twitter, Inc. (NYSE:TWTR) owns and runs a social networking platform. The two latest filings by Fallon have been disclosures on purchases of Twitter, Inc. (NYSE:TWTR) stock. The lawmaker bought shares of the firm on January 19 and January 24. The former transaction was worth $1000-$15,000 while the latter was worth $50,000-$100,000.
Twitter, Inc. (NYSE:TWTR) has also witnessed a flurry of hedge fund interest in recent months. At the end of the third quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Twitter, Inc. (NYSE:TWTR), up from 89 in the preceding quarter worth $6 billion.
RGA Investment Advisors, in its Q1 2021 investor letter, mentioned Twitter, Inc. (NYSE:TWTR). Here is what the fund has to say in its letter:
“‘The bird has wings’—Twitter’s quarter started off somewhat ominously, with Twitter the worst performing stock in the S&P 500 following the January 6th insurrection and questions about the stickiness of the userbase after permanently suspending the account of President Trump.8 By the end of the quarter, Twitter was one of the best performers in the index after exceptionally strong fourth quarter earnings and guidance for the year and an upbeat analyst day that highlighted a rapidly evolving product roadmap placing the timeline at the center of ephemeral (fleets), long form (Revue) and voice (Spaces). The improvements to the experience makes the platform more accessible and provides more opportunity to continue growing the userbase. Importantly, Twitter also embraced what we have been calling “creative empowerment” in previewing SuperFollows and a host of features designed to help content creators and contributors monetize their own audience on Twitter itself. These developments, alongside considerable progress on the advertising platform give us growing conviction that Twitter will deliver on its largely untapped opportunity—in other words, the value creation opportunity on top of the low multiple we were able to build our position at. Elliot spoke at length about these developments on Yet Another Value Podcast with Andrew Walker and The Business Brew with Bill Brewster, which we invite you to check out.”
3. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 98
Block, Inc. (NYSE:SQ) is a payments technology firm. A growing number of hedge funds have turned bullish on the stock in the past few months. At the end of the third quarter of 2021, 98 hedge funds in the database of Insider Monkey held stakes worth $8 billion in Block, Inc. (NYSE:SQ), up from 94 in the preceding quarter worth $10 billion.
Block, Inc. (NYSE:SQ) has also been on the radar of Pat Fallon. The lawmaker, per filings from November last year, sold and bought new shares of Block, Inc. (NYSE:SQ) on the same day in October. The transactions, from October 4, were disclosed on November 2. The shares sold were worth between $1,000 and $15,000 while those bought were worth between $100,000 and $250,000.
In its Q1 2021 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 123
PayPal Holdings, Inc. (NASDAQ:PYPL) operates as a technology platform for digital payments. Mandatory filings from December 29 of last year reveal that Pat Fallon made two transactions related to PayPal Holdings, Inc. (NASDAQ:PYPL) stock on November 15. Both transactions involved buying shares of the company worth between $100,000 and $250,000.
As growth stocks undergo a period of correction, hedge funds have been offloading PayPal Holdings, Inc. (NASDAQ:PYPL) stock. At the end of the third quarter of 2021, 123 hedge funds in the database of Insider Monkey held stakes worth $12.8 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), compared to 143 in the preceding quarter worth $16.4 billion.
In its Q4 2020 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 242
Amazon.com, Inc. (NASDAQ:AMZN) is a diversified technology firm based in Washington. It is one of the favorite stocks in the hedge fund industry. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 3.9 million shares worth more than $12.8 billion.
Filings from early November show that Fallon sold Amazon.com, Inc. (NASDAQ:AMZN) stock worth somewhere between $1,000 and $15,000 on October 4 and October 26 last year. The transactions in this regard were disclosed on November 2.
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN):We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment:1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is …”read the entire letter here]
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