In this article, we present the list of top 10 stocks to buy according to billionaire investor Chris Rokos. You can skip our comprehensive analysis of Rokos Capital Management’s history, investment philosophy, and hedge fund performance, and go directly to the Top 5 Stocks to Buy According to Billionaire Investor Chris Rokos.
Large call option positions on Microsoft Corporation (NASDAQ:MSFT), Alibaba Group Holding Limited (NYSE:BABA), and Pinterest, Inc. (NYSE:PINS) represented the largest holdings in British billionaire Chris Rokos’ 13F portfolio at the end of 2021.
The esteemed money manager raised over $1 billion from investors early this year despite a bruising 2021 that saw his hedge fund Rokos Capital Management lose 26% of its value, the fund’s worst annual performance to date. Surging inflation and rising interest rates lead to a rough year for the short-bond market, which contributed heavily to Rokos’ losses last year.
It was a sharp reversal of fortunes for Rokos and his fund, which thrived during 2020 to the tune of 44% gains, the best annual showing for the London-based fund since it was launched in 2015. Prior to launching his own fund, Rokos co-founded Brevan Howard alongside Alan Howard and was instrumental in some of that fund’s most successful years, single-handedly generating close to one-third of the fund’s substantial profits in both 2007 and 2011.
Rokos left Brevan Howard in 2012 over a financial dispute and was forced to sit on the money managing sidelines for three years due to his contractual obligations with Brevan Howard. Those issues were resolved in 2015, allowing him to launch his own fund.
With his fund’s coffers somewhat restored thanks to outside investors, Rokos, who manages about $13 billion in assets, will look for a big rebound in 2022. Rokos Capital sold off a significant number of positions during Q4 according to the fund’s 13F filing for the December 31 reporting period, 80 in total, while adding less than half as many new holdings. The value of its 13F portfolio stood at $1.66 billion, down from $4.68 billion a quarter earlier.
In this article, we’ll look at the ten stocks that Chris Rokos had the most conviction in heading into 2022, several of which were added to his portfolio during Q4.
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Our Methodology
We follow hedge funds like Rokos Capital Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns. The following list is ranked in order of the value of Rokos Capital Management’s long positions as of December 31, 2021. All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
Top 10 Stocks to Buy According to Billionaire Investor Chris Rokos
10. Paypal Holdings, Inc. (NASDAQ:PYPL)
Value of Rokos Capital’s 13F Position: $20.64 million
Number of Hedge Fund Shareholders: 112
Chris Rokos’ Rokos Capital Management opened a new position in Paypal Holdings, Inc. (NASDAQ:PYPL) during Q4, buying 108,300 shares of the digital payments provider. Hedge fund ownership of Paypal has fallen by 29% since Q3 2020.
Paypal Holdings, Inc. (NASDAQ:PYPL) shares have been battered since the middle of 2021, losing 61% of their value amid the investor selloff of tech and growth stocks. Investors were also alarmed by the company’s 48.9 million net new active accounts in 2021, which came in well below the previous guidance of 55 million despite being bolstered by the acquisition of Paidy, which contributed over 3 million of those NNAs in Q4.
While his Paypal Holdings, Inc. (NASDAQ:PYPL) stake is dwarfed by his call option positions on Microsoft Corporation (NASDAQ:MSFT), Alibaba Group Holding Limited (NYSE:BABA), and Pinterest, Inc. (NYSE:PINS), Rokos’ conviction in Paypal is certainly noteworthy given that he was selling far more stocks than buying ones in Q4.
9. Mastercard Incorporated (NYSE:MA)
Value of Rokos Capital’s 13F Position: $20.98 million
Number of Hedge Fund Shareholders: 146
Just one quarter after taking a large stake in Mastercard Incorporated (NYSE:MA), Rokos unloaded 72% of the position during Q4, leaving his fund with 57,971 shares. That was good enough to rank the stock as his ninth-largest long equity position on December 31. Billionaires Warren Buffett, Stephen Mandel, and Ken Fisher are among the other wealthy investors with large Mastercard holdings.
Mastercard Incorporated (NYSE:MA) shares are down by 3% in 2022 despite the credit card payments processor releasing very strong Q4 results in January. Mastercard grew net revenue by 27% year-over-year to $5.2 billion while its non-GAAP net income shot up by 41% to $2.3 billion. Mastercard expects cross-border travel to return to pre-pandemic levels by the end of 2022, which would further boost the company’s top and bottom lines.
Weitz Investment Management, Inc. downplayed the risk to Mastercard Incorporated that could be posed by new fintech companies, having this to say about the matter in its Q4 2021 investor letter:
“Reports to investors usually focus on the winners that prove the worthiness of the managers. It’s possible that we’ve been guilty of that on occasion, despite our best efforts to accurately convey what has worked and what hasn’t. This time, though, we are going to celebrate the great businesses we own that “went nowhere” in 2021. In a generally expensive market facing potentially strong headwinds in 2022, we find it very encouraging to own a number of proven winners whose stocks have been “resting” for the last year or so. They will not necessarily save us from markdowns during broad-based corrections, but they are companies that we believe can survive and grow business value through almost anything. They are the kinds of businesses that allow us to sleep well at night and not be tempted to sell at the wrong time. Here are some examples:
Established payments companies have been out of favor recently. Cross-border payments have been depressed with COVID disrupting international travel. These types of payments are particularly lucrative for Mastercard and their absence has impacted earnings. Further, we believe investors have overestimated the negative competitive impact of new fintech companies that have emerged over the past few years. Many of these “disrupters” depend on the Mastercard “rails” over which electronic payments travel, and these wily incumbents have a way of acquiring, copying or otherwise competing with upstarts.”
8. Adobe Inc. (NASDAQ:ADBE)
Value of Rokos Capital’s 13F Position: $25.08 million
Number of Hedge Fund Shareholders: 95
Chris Rokos’ hedge fund initiated a new position in Adobe Inc. (NASDAQ:ADBE) during Q4, buying 44,200 shares of the productivity and creativity software developer. Hedge fund ownership of Adobe fell by 14% in 2021.
One of the 5 Jim Cramer Stocks to Buy in Q1 2022, Adobe Inc. (NASDAQ:ADBE) shares have been battered by the selloff of tech and growth stocks like so many others in recent months, sliding by 31% since the end of November. CNBC’s Cramer called Adobe Inc. (NASDAQ:ADBE) “one of the greatest stock performers of our era” in September, and called shares’ modest pullback at the time “a buying opportunity that we don’t deserve.”
Adobe shouldn’t be overly affected by rising interest rates, which could hurt less established growth stocks that have a greater reliance on debt to fuel their growth than Adobe, which generates plenty of free cash flow. While Adobe’s revenue growth isn’t as impressive as other growth stocks, it’s no slouch either, coming in at an annual average of 41% over the past three years.
7. Analog Devices, Inc. (NASDAQ:ADI)
Value of Rokos Capital’s 13F Position: $25.29 million
Number of Hedge Fund Shareholders: 74
Rokos also opened a new stake in integrated circuits manufacturer Analog Devices, Inc. (NASDAQ:ADI) during Q4, snapping up 144,366 shares. He’s one of several money managers that added ADI to their portfolios in 2021, as hedge fund ownership of the stock jumped by 37%.
Analog Devices, Inc. (NASDAQ:ADI) delivered record revenue for the fourth straight quarter in its fiscal 2022 first quarter, pulling in $2.68 billion. That rising revenue didn’t come at the cost of operational excellence either, as the company also hit record highs in EPS at $1.94, adjusted gross margin, and operating margin.
With Analog Devices, Inc. (NASDAQ:ADI)’s profit reaching new highs, the company raised its quarterly dividend by 10% to $0.76 in the middle of February, which helped lift ADI shares’ dividend yield to 1.90% as of March 1.
6. NVIDIA Corporation (NASDAQ:NVDA)
Value of Rokos Capital’s 13F Position: $26.38 million
Number of Hedge Fund Shareholders: 111
Closing out the first half of the list is NVIDIA Corporation (NASDAQ:NVDA), which Rokos Capital Management bought 89,285 shares of during the fourth quarter, taking a new position in the graphics processing unit manufacturer. Rokos wasn’t the only fund snatching up Nvidia shares, as hedge fund ownership jumped by 26% during Q4 to a record high.
NVIDIA Corporation (NASDAQ:NVDA) grew its revenue by 61% year-over-year during its fiscal 2022 ended January 31, with the company’s gaming unit enjoying an identical 61% revenue spike to $12.5 billion. Nvidia’s data center segment has also been a strong growth driver, with revenue rising by 58% year-over-year to $10.6 billion in fiscal 2022. That company-wide growth was in spite of supply chain issues that has left Nvidia with a huge backlog of outstanding inventory purchase and long-term supply obligations, which ballooned to $9 billion at the end of its fiscal 2022 compared to just $2.5 billion a year earlier.
Rokos’ NVIDIA Corporation (NASDAQ:NVDA) holding may not be nearly as large as his call option positions on Microsoft Corporation (NASDAQ:MSFT), Alibaba Group Holding Limited (NYSE:BABA), and Pinterest, Inc. (NYSE:PINS), but it’s a stock he was buying in Q4 when he was otherwise selling off so many others. Check out the other stocks Chris Rokos was buying in Q4 in the second half of this article.
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Disclosure: None. Top 10 Stocks to Buy According to Billionaire Investor Chris Rokos is originally published at Insider Monkey.
