In this article, we will be taking a look at the top 10 stock picks of Felix Wai’s Zeno Research. To skip our detailed analysis, you can go directly to see Top 5 Stock Picks of Felix Wai’s Zeno Research.
Felix Wai, based in New York, is a portfolio manager at Zeno Research, where he has been working for almost three years now. Prior to joining Zeno Research, Wai has worked at Citadel, Carlson Capital and Credit Suisse among other companies, with a career spanning more than 15 years.
Zeno Research is an investment fund managed by Felix Wai, which has a current portfolio of $115.8 million, with big investments in the technology sector, followed by the services sector. The fund tends to invest in large cap companies, with several of its companies having more than $10 billion in market cap.
Some of the famous stocks in Zeno Research’s portfolio include Spotify Technology S.A. (NYSE:SPOT), The Walt Disney Company (NYSE:DIS) and Fox Corporation (NASDAQ:FOX), though the hedge fund has significantly reduced its holding in these three companies. This would perhaps bode well for the hedge fund as tech stocks are under pressure these days. However, The Walt Disney Company (NYSE:DIS) has scored a big hit with the launch of Disney+, which already has nearly 140 million subscribers and could allow the company some fast growth, which in turn may benefit its share price.
Some of the notable stocks the fund sold in the first quarter include Twitter, Inc. (NYSE:TWTR) and Six Flags Entertainment Corporation (NYSE:SIX).
Methodology
We used Zeno Research’s Q1 portfolio and picked the top 10 stocks for this analysis.
10. Integral Ad Science Holding Corp. (NASDAQ:IAS)
Zeno Research’s Stake Value: $4.691 million
Number of Hedge Fund Holders: 15
Integral Ad Science Holding Corp. (NASDAQ:IAS) is a company that analyzes digital advertising placements and the value that they provide. Integral Ad Science Holding Corp. (NASDAQ:IAS) is well-known in developing a proprietary media quality score known as TRAQ as well as its addressing of brand risk, viewability and fraud issues.
However, Integral Ad Science Holding Corp. (NASDAQ:IAS) has seen its share price decline by more than 50% in just the past year, and a lack of profitability is one of the reasons that investors are no longer holding faith and selling off shares.
Zeno Research increased its hold in the company by 1,562% in the first quarter.
9. SeaWorld Entertainment, Inc. (NYSE:SEAS)
Zeno Research’s Stake Value: $4.935 million
Number of Hedge Fund Holders: 36
SeaWorld Entertainment, Inc. (NYSE:SEAS) is a very popular theme park chain, with shows featuring different animals including orcas, dolphins and sea lions, while also featuring thrill rides such as roller coasters. While the theme parks mainly maintain a presence in the United States, they have opened parks in the United Arab Emirates too.
SeaWorld Entertainment, Inc. (NYSE:SEAS) has been the source of significant controversy especially after the release of a documentary called Blackfish, which highlighted the company’s treatment of its star attraction: killer whales. This even led to SeaWorld Entertainment, Inc. (NYSE:SEAS) paying a settlement of $65 million to investors who said the company misled them about the documentary’s impact on the attendance in parks.
While its stock has sunk by more than 33% this year, Zeno Research has added SeaWorld Entertainment, Inc. (NYSE:SEAS) to its portfolio for the first time in the first quarter.
8. Amazon.com, Inc. (NASDAQ:AMZN)
Zeno Research’s Stake Value: $5.535 million
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is one of the notable holdings of Zeno Research as of the end of the first quarter. The stock is down 33% year to date on the back of the broader rotation of the market away from tech stocks. Amazon remains one of the most popular tech stocks among hedge funds and retail investors.
Weitz Investment Management, in its Q1 2022 investor letter, mentioned Amazon.com, Inc. (NASDAQ:AMZN). Here is what it said:
“Amazon.com’s (NASDAQ:AMZN) stock was down modestly in the quarter, but opportunistic purchases helped the position contribute positively to the Fund. Our index short positions against ETFs tracking market indexes provided helpful ballast during the first quarter drawdown but were otherwise detractors for the fiscal year. During the quarter, we covered roughly 20% of our S&P 500 short and 50% of our Nasdaq 100 short at progressively lower prices. Among our long equities, we added materially to high-conviction holdings Amazon.com.”
7. Comcast Corporation (NASDAQ:CMCSA)
Zeno Research’s Stake Value: $5.947 million
Number of Hedge Fund Holders: 78
As mentioned earlier, the top 10 stock picks of Felix Wai’s Zeno Research are focused on major cap stocks, and Comcast Corporation (NASDAQ:CMCSA) is no exception, with a market cap of nearly $178 billion. Comcast Corporation (NASDAQ:CMCSA) has been priced for disruption and recession, and its valuation makes it a great choice for medium as well as long term investors.
Meanwhile, BofA Securities has assigned Comcast Corporation (NASDAQ:CMCSA) a $44 price target, while it also maintained a “Neutral” rating on one of the biggest wireless network providers in the world. Meanwhile, JPMorgan Chase & Co. reduced their target price to $60 from $65.
Comcast Corporation (NASDAQ:CMCSA) was mentioned by Artisan Partners in its Q4 2021 investor letter. Here is what it said:
“Comcast Corporation (NASDAQ:CMCSA) is the leading broadband cable company in North America and a global content producer. Comcast and other cable companies are seeing decreased net subscriber additions as they are lapping tough comparisons from a year ago when net additions were high earlier in the pandemic. Interestingly, churn remains at record low levels—a positive metric that speaks to cable’s value proposition. For Comcast, an additional headwind is a delayed recovery in its theme parks business due to the ongoing pandemic. Additionally, increased investment in 5G by wireless competitors may be weighing on shares. However, 5G is not currently competitive with cable, and based on the economics of 5G capex, it’s unlikely to be competitive for many years, if ever. Cable continues to have a competitive advantage with respect to network speeds and reliability. High recurring revenue, pricing power and low capital intensity make for a powerful economic model that contribute to Comcast’s free cash flow generation, allowing the company to play offense with regards to capital allocation. In summary, Comcast is a well-financed business with a wide competitive moat, that trades cheaply at under 13X our estimate of normalized earnings.”
6. Equinix, Inc. (NASDAQ:EQIX)
Zeno Research’s Stake Value: $7.477 million
Number of Hedge Fund Holders: 78
Equinix, Inc. (NASDAQ:EQIX) is another internet connection and data center company, which recorded revenues of $6.64 billion in 2021. Equinix, Inc. (NASDAQ:EQIX) has a presence in more than two dozen countries maintaining more than 240 data centers.
Citigroup recently issued a “Buy” rating on the stock, while Deutsche Bank raised their target price of the stock to $785 from $780.
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Disclosure: None. Top 10 Stock Picks of Felix Wai’s Zeno Research is originally published on Insider Monkey.
