Should You Still Keep Your Shopify (SHOP) Stake?

Davis Funds, an investment management firm, published its “Davis New York Venture Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. For the full year of 2021, Davis New York Venture Fund returned 12.5%.  Although the earnings of the fund’s portfolio companies have grown 1% per year faster than the benchmark S&P 500 Index, they can currently be purchased at a 52% discount to the index. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Davis New York Venture Fund, in its Q4 2021 investor letter, mentioned Shopify Inc. (NYSE:SHOP) and discussed its stance on the firm. Founded in 2004, Shopify Inc. (NYSE:SHOP) is an Ottawa, Canada-based multinational e-commerce company with an $81.3 billion market capitalization, and is currently spearheaded by its CEO, Tobias Lütke. Shopify Inc. (NYSE:SHOP) delivered a -52.27% return since the beginning of the year, while its 12-month returns are down by -41.15%. The stock closed at $657.38 per share on March 17, 2022.

Here is what Davis New York Venture Fund has to say about Shopify Inc. (NYSE:SHOP) in its Q4 2021 investor letter:

“While the above discussion of broad investment categories provides useful context, we always emphasize the old adage that investing is the art of the specific. With this in mind, an example may be helpful. Tesla, Nvidia and Shopify are three of the hottest momentum stocks in today’s market, each having compounded at triple-digit-rates over the last three years. Combined, these three have a market capitalization of roughly $2.3 trillion. In other words, should an investor happen to have a couple of trillion dollars lying around, one investment option, which we will call the Market Darlings portfolio, would be to buy 100% of these three remarkable growth companies and live off their current and future earnings.”

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Our calculations show that Shopify Inc. (NYSE:SHOP) ranks 30th on our list of the 30 Most Popular Stocks Among Hedge Funds. Shopify Inc. (NYSE:SHOP) was in 86 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 73 funds in the previous quarter. Shopify Inc. (NYSE:SHOP) delivered a -50.46% return in the past 3 months.

In February 2022, we also shared another hedge fund’s views on Shopify Inc. (NYSE:SHOP) in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.