In this article, we will take a detailed look at the Top 10 Stocks to Buy According to SRS Investment Management.
SRS Investment Management is a New York-based investment firm founded in 2006 by Karthik Sarma. The firm focuses on diverse investments across industries, including technology, media, telecommunications, consumer goods, and industrial sectors. It employs a research-driven approach to identify promising opportunities in global markets, leveraging its expertise to navigate complex financial landscapes.
As an investment advisory firm, SRS provides detailed insights into its business practices through its regulatory disclosures, although these are not verified by the SEC or state securities authorities. The firm emphasizes thorough due diligence when evaluating potential investments, gathering information on a company’s products, services, and market position. Its analytical approach includes engaging with industry experts, assessing supply and demand dynamics, and constructing financial models to project future performance and returns.
SRS primarily follows a global long/short equity strategy, aiming for high risk-adjusted returns while prioritizing capital preservation. The firm diversifies its investments across multiple industries and regions to mitigate risks. Its investment process involves extensive fundamental research, disciplined portfolio management, and strategic positioning in both long and short positions. This approach enables SRS to capitalize on market inefficiencies and generate sustainable returns.
Additionally, the firm runs a Focused Investment Program, targeting undervalued securities and acquiring significant positions at favorable prices. This strategy relies on active shareholder engagement, where SRS seeks positive responses from company management and stakeholders to influence corporate actions. The effectiveness of this strategy depends on how the market reacts to these initiatives and the willingness of companies to adopt changes proposed by shareholders. Through its meticulous investment approach, SRS aims to drive long-term value creation for its investors.
Karthik Sarma is an Indian billionaire hedge fund manager and the founder of SRS Investment Management, which he launched in 2006 after five years at Tiger Global Management. With a strong background in finance and investment, Sarma has also served as a director on Avis’s board since 2020, playing a key role in its strategic decisions. His educational background includes a bachelor’s degree from the Indian Institute of Technology Madras and a master’s degree from Princeton University. His professional journey began with three years at McKinsey & Co. as a consultant, where he gained experience in business strategy and financial analysis. He later joined Tiger Global Management, where he worked as a Managing Director from 2001 to 2005, honing his expertise in hedge fund management before establishing SRS Investment Management. Sarma’s ability to identify and capitalize on investment opportunities has positioned him as a highly influential figure in the hedge fund industry.
As an immigrant who moved to the United States for graduate studies, Sarma has built a reputation as a strategic investor with a disciplined approach to fund management. His experience across consulting, investment management, and corporate governance has contributed to his firm’s success. Through SRS, he continues to influence the financial landscape, focusing on long-term value creation for investors while maintaining a strong presence in key industries.
As of its latest filing for the fourth quarter of 2024, SRS Investment Management reported overseeing approximately $7 billion in 13F securities. The firm’s investment approach remains highly concentrated, with its top ten holdings accounting for 92.05% of total assets. This level of concentration suggests a high-conviction strategy, where SRS invests heavily in a select group of companies it believes offer strong long-term growth potential.
Source: Pixabay
Our Methodology
The stocks discussed below were picked from SRS Investment Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Top 10 Stocks to Buy According to SRS Investment Management
10. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders as of Q4: 101
SRS Investment Management’s Equity Stake: $178.14 Million
Spotify Technology S.A. (NYSE:SPOT), a Swedish audio streaming giant founded in 2006 by Daniel Ek and Martin Lorentzon, remains one of the dominant players in the music streaming industry. As of December 2024, the platform boasted over 675 million monthly active users (MAUs), including 263 million paying subscribers. The company’s strong performance in 2024 was highlighted by its first full year of profitability, with a net income of €1.14 billion. This milestone sent Spotify’s stock surging 13% as investors responded positively to its improving financial health and strategic expansions, making it 10th in the list of top stocks to buy according to SRS Investment Management.
In its fourth-quarter earnings report, Spotify Technology S.A. (NYSE:SPOT) exceeded expectations in several key areas. The company generated €4.24 billion in revenue, slightly surpassing analyst predictions of €4.19 billion. MAUs came in at 675 million, beating the forecasted 664.3 million, while net income for the quarter reached €367 million (€1.81 per share), a significant turnaround from the €70 million loss in the same period the previous year. The company also recorded a 40% year-over-year increase in gross profit, though the operating income of €477 million fell slightly short of guidance. Spotify’s ability to sustain user growth and profitability underscores the effectiveness of its long-term monetization strategies.
A major driver of Spotify Technology S.A. (NYSE:SPOT)’s success has been its expanding partnerships and innovative content strategies. Additionally, user engagement initiatives like Spotify Wrapped continue to play a crucial role in driving growth, with the annual year-end feature contributing to a record-breaking 35 million net increase in MAUs during the fourth quarter.
Looking ahead, Spotify projects further growth in 2025, estimating 678 million MAUs by the first quarter, with premium subscribers making up two-thirds of new additions. The expected revenue for Q1 stands at €4.2 billion, slightly above analyst expectations of €4.17 billion. Investor confidence remains strong, with Spotify’s stock gaining approximately 39% year-to-date as of early February. With a combination of strategic expansion, strong user engagement, and profitability, Spotify appears well-positioned for sustained success in the evolving digital media landscape.
Artisan Mid Cap Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its Q4 2024 investor letter:
Among our top Q4 contributors were Atlassian, Spotify Technology S.A. (NYSE:SPOT) and Marvell Technology. Spotify is a leading global audio streaming franchise with over 600 million monthly active users. We believe its position in the supply chain is solid given a secular trend of fragmentation in the music industry and its internal product and pricing initiatives. Shares continued their year-to-date ascent after reporting strong earnings results, including strong growth in active users, premium subscribership and revenue. Importantly, the company’s profit margin is expanding nicely, and we believe it can rise further if the company increases prices, negotiates potentially better terms with labels and maintains cost discipline.”
9. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders as of Q4: 86
SRS Investment Management’s Equity Stake: $281.70 Million
United Airlines Holdings, Inc. (NASDAQ:UAL), headquartered in Chicago’s Willis Tower, operates United Airlines and continues to demonstrate strong financial performance. In the fourth quarter of 2024, the company exceeded analyst expectations with earnings per share (EPS) of $3.26, surpassing the forecasted $2.93 by 11.3%. Revenue also outperformed estimates, reaching $14.7 billion against the anticipated $14.34 billion. Despite minor fluctuations, the company’s financial health remains solid, with significant liquidity and debt reduction efforts positioning it for continued stability.
Throughout 2024, United Airlines Holdings, Inc. (NASDAQ:UAL) focused on operational improvements and financial strength, reporting a full-year EPS of $10.61, which exceeded the midpoint of its guidance range. The airline improved its pre-tax margin to 9.7% in Q4, reflecting a 3.5 percentage point increase year-over-year. Additionally, United generated $3.4 billion in free cash flow and reduced net leverage to 2.4x while maintaining $17.4 billion in liquidity at year-end. Nearly half of its fleet has been upgraded with new interiors, reinforcing its commitment to enhancing the passenger experience and differentiating itself in an increasingly competitive airline industry.
Looking forward, United Airlines Holdings, Inc. (NASDAQ:UAL) projects EPS growth of approximately 18% at the midpoint for 2025, with estimates ranging from $11.50 to $13.50. The company plans to expand its fleet significantly, taking delivery of 71 new narrowbody and 10 widebody aircraft over the year. Additionally, fleet modernization efforts will continue, with 70% of aircraft interiors expected to be upgraded by the end of 2025. These investments signal United’s focus on efficiency, customer satisfaction, and long-term growth in a rapidly evolving travel landscape.
CEO Scott Kirby emphasized that 2024 served as further proof of United Airlines Holdings, Inc. (NASDAQ:UAL)’s progress toward achieving double-digit profit margins, while CFO Mike Leskinen highlighted the company’s success in “decommoditizing air travel.” By prioritizing operational improvements, financial discipline, and enhanced customer experience, the company positions itself as a leader in the airline industry, poised for sustainable growth and profitability in the years ahead.
Patient Capital Management stated the following regarding United Airlines Holdings, Inc. (NASDAQ:UAL) in its Q4 2024 investor letter:
“United Airlines Holdings, Inc. (NASDAQ:UAL) had a strong fourth quarter, gaining 70.2% in the period. The company benefitted from continued strong demand that surprised the market as well as the initiation of a buyback program, the first since COVID. There continues to be strong travel demand from both retail and business travelers. According to the International Air Transport Association (IATA), global air passenger travel is still below the pre-COVID implied trend path despite reaching a new all-time high this year. United’s focus on the customer over the last few years has led to strong improvement in net promoter scores (NPS) which should continue to flow through the model via better TRASM (total revenue per available seat mile) and higher cash flows and earnings. As of today, United alone accounts for ~30% of the overall industry’s profits. We expect this market share to grow and be defensible as we transition to an environment where customer service becomes the differentiating factor, and scale provides unparalleled ability to reinvest in the customer experience.”
8. Atlassian Corporation (NASDAQ:TEAM)
Number of Hedge Fund Holders as of Q4: 75
SRS Investment Management’s Equity Stake: $317.76 Million
Atlassian Corporation (NASDAQ:TEAM), an Australian software company specializing in collaboration tools for software development and project management, continues to strengthen its position in the enterprise software market. In its second-quarter fiscal year 2025 earnings report, the company highlighted the growing demand for its platform, particularly among enterprises seeking enhanced collaboration solutions. CEO Mike Cannon-Brookes emphasized Atlassian’s commitment to integrating AI throughout its cloud platform, positioning it as a key driver of innovation and efficiency. CFO Joe Binz credited strong enterprise sales execution for exceeding revenue expectations, with subscription revenue growing 30% year-over-year, reinforcing confidence in the company’s strategic focus on AI, enterprise expansion, and its “System of Work” framework.
Financially, Atlassian Corporation (NASDAQ:TEAM) reported a total revenue of $1.29 billion for Q2 FY2025, marking a 21% increase from the same period in FY2024. Despite this growth, the company posted an operating loss of $57.5 million, slightly widening from the $49.1 million loss recorded a year earlier. However, net loss improved significantly, narrowing to $38.2 million from $84.5 million in the previous year, reflecting better cost management and efficiency gains. Net loss per diluted share stood at $0.15, an improvement from $0.33 in the Q2 fiscal year 2024. Additionally, the company maintained a strong balance sheet, with cash, cash equivalents, and marketable securities totaling $2.5 billion, ensuring financial flexibility for continued investments.
Looking ahead, Atlassian Corporation (NASDAQ:TEAM) projects continued revenue growth in the third quarter of FY2025, with expected total revenue between $1.34 billion and $1.35 billion. Cloud revenue is forecasted to grow by approximately 23.5% year-over-year, while Data Center revenue is expected to increase by 7.0%. Marketplace and other revenue segments are anticipated to remain flat. The company also expects a gross margin of approximately 82%, indicating strong profitability at the operational level. The operating margin is projected at -3.0%, reflecting Atlassian’s ongoing efforts to balance investment in growth with financial discipline. The company’s focus on enterprise adoption, AI integration, and scalable collaboration tools positions it well for sustained long-term growth, making it eighth in the list of top stocks to buy according to SRS Investment Management.
7. Burlington Stores, Inc. (NYSE:BURL)
Number of Hedge Fund Holders as of Q4: 52
SRS Investment Management’s Equity Stake: $362.15 Million
Burlington Stores, Inc. (NYSE:BURL), a leading off-price retailer, delivered strong financial results for the fourth quarter and fiscal year 2024, exceeding expectations in several key areas. The company reported a 6% increase in comparable store sales for Q4, outperforming its guidance range of 0% to 2%. Total sales for the quarter grew by 10%, reflecting strong consumer demand and effective inventory management. Burlington’s gross margin improved to 42.9%, an increase of 30 basis points from the previous year, while its adjusted EBIT margin expanded by 10 basis points to 11.1%. Adjusted earnings per share (EPS) reached $4.13, marking a 12% year-over-year increase, demonstrating the retailer’s ability to drive profitability while maintaining its value-oriented strategy.
For the full year 2024, Burlington Stores, Inc. (NYSE:BURL) achieved an 11% increase in total sales, reinforcing its position as a high-growth retailer in the off-price segment. Operating margins expanded by 100 basis points, reflecting improved cost efficiency and disciplined expense management. The company aggressively expanded its store footprint, opening 147 new locations and adding 101 net new stores, further solidifying its presence across 40 states and Puerto Rico. Effective inventory management played a crucial role in Burlington Stores, Inc. (NYSE:BURL)’s success, with comparable store inventories down 3% year-over-year, leading to faster inventory turnover and a fresher product assortment for customers.
Burlington Stores, Inc. (NYSE:BURL) ended the fourth quarter with a strong financial position, holding $995 million in cash and $1.8 billion in total liquidity, providing ample flexibility for continued investment. The company repurchased $61 million in shares during the quarter, with $263 million remaining under its current repurchase authorization. Looking ahead to 2025, Burlington expects a total sales growth of 6% to 8% and comparable store sales growth between 0% and 2%, reflecting a more normalized post-pandemic retail environment. Adjusted EPS is projected to be in the range of $8.70 to $9.30, supported by continued margin expansion and strategic investments in growth. Capital expenditures for 2025 are expected to reach approximately $950 million, emphasizing the company’s commitment to store expansion, supply chain enhancements, and technology investments.
6. PDD Holdings Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders as of Q4: 85
SRS Investment Management’s Equity Stake: $394.20 Million
PDD Holdings Inc. (NASDAQ:PDD), a parent company of Pinduoduo and Temu, reported a strong financial performance for the fourth quarter of 2024, though results were mixed compared to market expectations. The company posted earnings per share (EPS) of 20.15 RMB, exceeding the forecasted 19.84 RMB, but revenue fell short at 110.6 billion RMB, missing the expected 115.15 billion RMB. Despite this, it remains committed to long-term growth over short-term financial targets, with a strategic focus on enhancing its merchant ecosystem, expanding logistics support in remote areas, and improving product quality. Following the earnings release, the stock declined by 3.44% in premarket trading, reflecting investor concerns over the revenue miss.
For the full year 2024, PDD Holdings Inc. (NASDAQ:PDD) reported a remarkable 59% year-over-year increase in revenue, reaching 393.8 billion RMB. The company’s strong fundamentals were highlighted by an industry-leading gross profit margin of 62.06% and significant cash reserves of 331.6 billion RMB as of December 31, 2024. In the fourth quarter alone, revenue grew by 24% year-over-year, supported by an operating profit of 28 billion RMB, maintaining a solid 24% margin. With a full-year net income of 122.3 billion RMB, PDD remains well-positioned to navigate the evolving e-commerce landscape while continuing to invest in its platform and expansion initiatives.
PDD Holdings Inc. (NASDAQ:PDD)’s focus extends beyond financial performance as it prioritizes ecosystem development and merchant support. Moving forward, the company is expected to leverage its vast resources to enhance logistical efficiency, optimize merchant engagement, and expand internationally. With a solid financial foundation and a clear strategic direction, PDD Holdings remains a formidable player in the global e-commerce industry. As SRS Investment Management holds a stake of over $394 million in the company, it is sixth on the list of top stocks to buy according to the hedge fund.
GreenWood Investors stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q4 2024 investor letter:
“Aside from transitory foreign exchange translation losses (as opposed to trading losses), the two other notable detractors from our portfolio were MEI Pharma and PDD Holdings Inc. (NASDAQ:PDD) in 2024.
PDD Holdings founder Colin Huang is who inspired us to “run 3x faster,” as the relentless corporate culture of PDD has built an e-commerce company with roughly the same GMV (gross merchandise value) of Amazon in one-third the time it took Amazon to build itself. Shares reacted negatively when the company decided to reinvest its record margins into even faster growth and creating a healthier supplier ecosystem. As it looks set to create a second Amazon with its international site Temu, we are highly attracted to the opportunity. Sales are growing 4x faster than Amazon’s, yet shares are priced at less than a quarter of the Amazon earnings multiple.
PDD is a perfect example of why we want to look outside of the “Big Ten” companies that are nearly a third of global market indices. We would not want to compete with the demanding corporate culture of PDD and Temu. Its operating model is relentless at identifying efficiency throughout the manufacturing and selling supply chain. Not only is it a mor formidable competitor than Amazon, and growing much faster, but the valuation is 4x more attractive than Amazon’s…” (Click here to read the full text)
5. Planet Fitness, Inc. (NYSE:PLNT)
Number of Hedge Fund Holders as of Q4: 41
SRS Investment Management’s Equity Stake: $464.90 Million
Planet Fitness, Inc. (NYSE:PLNT), one of the largest fitness club franchises, reported strong financial results for the fourth quarter of 2024. Total revenue increased by 19.4% year-over-year to $340.5 million, driven by a 5.5% rise in system-wide same-club sales. System-wide sales grew to $1.2 billion from $1.1 billion in the previous year. Net income attributable to Planet Fitness rose to $47.1 million, or $0.56 per diluted share, compared to $35.3 million, or $0.41 per diluted share, in the corresponding quarter of the previous year. Adjusted net income also saw an increase to $59.7 million, or $0.70 per diluted share, while adjusted EBITDA climbed to $130.8 million. The company expanded its footprint with 86 new club openings, bringing the total to 2,722 locations by year-end.
As of December 31, 2024, Planet Fitness, Inc. (NYSE:PLNT) maintained a strong financial position with cash and marketable securities totaling $529.5 million, including cash and equivalents of $293.2 million. The company’s continued expansion efforts were evident, with franchisee-owned clubs accounting for the majority of new openings.
For the fiscal year 2025, Planet Fitness, Inc. (NYSE:PLNT) projects revenue growth of around 10%, supported by system-wide same-club sales growth in the 5% to 6% range. Adjusted EBITDA is also expected to rise by approximately 10%, while adjusted net income is forecasted to increase by 8% to 9%. Additionally, adjusted net income per share is anticipated to grow by 11% to 12%, factoring in expected share repurchases. With a solid financial outlook and a commitment to expansion, Planet Fitness remains well-positioned for continued success in the fitness industry.
As of Q4 2024, SRS Investment Management held more than 4.7 million shares in Planet Fitness, Inc. (NYSE:PLNT), valued at over $464 million. Insider Monkey’s database indicated that 41 hedge funds out of the 1,009 hedge funds held stakes in the company at the end of Q4 2024, with a value of nearly $1.79 billion, as opposed to 34 funds in Q3.
Vulcan Value Partners stated the following regarding Planet Fitness, Inc. (NYSE:PLNT) in its Q2 2024 investor letter:
“Planet Fitness, Inc. (NYSE:PLNT) pioneered the “high value, low price” (HVLP) gym model and operates over 2,500 gyms globally with 18.7 million members. Their straightforward, no-frills approach offers excellent value, appealing to a diverse and casual fitness demographic. Members enjoy a clean environment, regularly updated equipment, and accessible pricing starting at $10 per month, with their premium “Black Card” membership providing extensive benefits and access to all locations. Planet Fitness captured roughly 90% of U.S. gym membership growth from 2011-2019. The company’s dominant scale coupled with high advertising spend drives powerful growth, and the company plans to double its number of U.S. locations. Planet Fitness demonstrates robust same-store sales growth, high EBIT margins, strong returns on capital, and excellent free cash flow conversion.”
4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders as of Q4: 262
SRS Investment Management’s Equity Stake: $495.33 Million
Meta Platforms, Inc. (NASDAQ:META) delivered a strong financial performance in 2024, generating $164.5 billion in revenue, a 22% increase over 2023. The company reported a total profit of $62.4 billion, reflecting a significant 59% year-over-year surge despite rising expenses. Meta’s family of apps—including Facebook, Messenger, Instagram, and WhatsApp—accounted for $162.4 billion in revenue, up from $133 billion the previous year. The company’s workforce also grew by 10%, reaching 74,067 employees by the end of 2024, underscoring its ongoing expansion efforts.
The fourth quarter contributed 29.4% of Meta Platforms, Inc. (NASDAQ:META)’s full-year revenue, totaling $48.4 billion, with profits exceeding $20.8 billion for the period. The company’s virtual and augmented reality division, however, posted a $5 billion operating loss despite generating nearly $1.1 billion in revenue. Meta’s Q4 revenue growth of 21% year-over-year surpassed analyst expectations, and earnings per share (EPS) soared 50% to $8.02, far exceeding the forecasted $6.76. Investor interest in the company remained high, with hedge fund holdings increasing to approximately $59.4 billion, reflecting confidence in Meta’s strategic investments in AI and digital advertising.
Despite its strong fundamentals, Meta Platforms, Inc. (NASDAQ:META)’s stock has experienced volatility, heading for a fifth consecutive negative week—matching its longest losing streak since October 2022. Since its record close on February 14, Meta’s share price has declined by 20%, reflecting market fluctuations. However, with continued innovation in AI and advertising technology, the company remains well-positioned for long-term growth and industry leadership, making it a compelling investment for institutional and retail investors alike.
Investor confidence in Meta Platforms, Inc. (NASDAQ:META) remains high, driven by increasing institutional backing and growing hedge fund interest. By the end of Q4 2024, 262 hedge funds had invested in the company, with total holdings rising to approximately $59.4 billion—up from 235 funds in the previous quarter, according to Insider Monkey’s database. Meta’s strong financial performance, continued advancements in AI, and dominance in digital advertising reinforce its long-term growth potential.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
3. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders as of Q4: 44
SRS Investment Management’s Equity Stake: $794 Million
Snap Inc. (NYSE:SNAP), a parent company of Snapchat, Spectacles, and Bitmoji, reported strong fourth-quarter earnings, surpassing Wall Street expectations. The company posted adjusted earnings per share of $0.16, exceeding the forecasted $0.14. Snap’s global daily active users reached 453 million, outperforming projections of 451.1 million. Revenue was reported as $1.56 billion, slightly above the expected $1.55 billion and a 14% year-over-year increase from $1.36 billion, while the company reported a net income of $9.1 million—an improvement from the $248 million net loss recorded in the previous year’s fourth quarter.
For the first quarter of 2025, Snap Inc. (NYSE:SNAP) expects revenue between $1.32 billion and $1.36 billion, with the midpoint surpassing analyst estimates of $1.33 billion. However, adjusted earnings are projected to range between $40 million and $75 million, falling short of the anticipated $78.5 million due to planned investments. The company cited increased hiring, legal expenses, and a seasonal shift in marketing costs as reasons for an 11% to 12% rise in adjusted operating expenses. Despite this, Snap Inc. (NYSE:SNAP) remains optimistic about scaling its business, leveraging improvements in its ad platform, and strengthening go-to-market strategies, particularly among small and medium-sized enterprises.
Looking ahead to 2025, Snap Inc. (NYSE:SNAP) plans to continue investing in its growth while working toward profitability. The company emphasized its commitment to long-term financial progress and strategic expansion. Additionally, Snap pledged $5 million to support communities and employees affected by the recent Los Angeles wildfires, with plans for further contributions in the future. This corporate responsibility initiative reflects the company’s broader mission to support both its stakeholders and the wider community.
As of Q4 2024, SRS Investment Management held more than 73 million shares in Snap Inc. (NYSE:SNAP), valued at almost $794 million. Hedge fund interest in the company also increased, with 44 out of 1,009 funds tracked by Insider Monkey holding positions worth nearly $1.44 billion by the end of the quarter, up from 34 funds in Q3.
2. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Holders as of Q4: 35
SRS Investment Management’s Equity Stake: $1.38 Billion
Avis Budget Group, Inc. (NASDAQ:CAR) is the parent company of major car rental brands like Avis, Budget, Zipcar, and Payless. The company reported a significant fourth-quarter loss, missing analyst expectations for both earnings and revenue. Avis posted a net loss of nearly $2 billion for the quarter, with an adjusted loss per share of $55.66, far below the expected -$1.02. Revenue came in at $2.71 billion, slightly under the forecasted $2.73 billion. Following the earnings announcement, the company’s stock declined by 1.6%.
The massive loss was primarily due to the company’s strategic decision to accelerate fleet rotations within its Americas segment. This move resulted in a one-time non-cash impairment charge of $2.3 billion, along with other non-cash-related charges totaling $180 million. Despite these financial setbacks, CEO Joe Ferraro remains optimistic, citing strong travel demand and emphasizing the company’s ability to generate at least $1 billion in adjusted EBITDA for 2025.
In a leadership shift, Avis Budget Group, Inc. (NASDAQ:CAR) announced that Ferraro will step down as CEO and transition into a Board Advisor role on June 30, 2025, concluding his 45-year tenure with the company. Brian Choi, currently serving as Chief Transformation Officer, will assume the CEO position on July 1, 2025. This transition marks a new phase for the company as it looks to navigate future market conditions and improve financial performance.
For the full year 2024, Avis Budget Group, Inc. (NASDAQ:CAR) reported total revenues of $11.8 billion but recorded a net loss of $1.8 billion. The company’s liquidity position remained strong at approximately $1.1 billion in cash and marketable securities, with an additional $2.8 billion in fleet funding capacity. Moving forward, Avis Budget Group aims to leverage its strong brand positioning and sustained travel demand to drive long-term profitability.
Despite the significant one-time impairment charges impacting short-term financials, Avis Budget Group, Inc. (NASDAQ:CAR) remains a strong investment opportunity due to its solid revenue growth, strong liquidity position, and continued demand for travel services, making it a top stock to buy according to SRS Investment Management.
1. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders as of Q4: 144
SRS Investment Management’s Equity Stake: $1.8 Billion
Netflix, Inc. (NASDAQ:NFLX) reported a record-breaking fourth-quarter performance in 2024, with revenue surging 16% to $10.25 billion and earnings per share doubling to $4.27. The company added 18.91 million new subscribers, bringing its total user base to 301.63 million. With projections of a 13% revenue increase in 2025, Netflix is leveraging its strong content library and strategic pricing adjustments to sustain growth. Over the past decade, its revenue has expanded by 609%, and its market capitalization now exceeds $400 billion, making it a compelling long-term investment option.
Investor confidence remains high, as reflected in Netflix, Inc. (NASDAQ:NFLX)’s stock price, which jumped 18% following its impressive Q4 results. J.P. Morgan reaffirmed a bullish stance with a $1,150 price target, while Bernstein set an even higher $1,200 target. The company’s focus on cost discipline, including a crackdown on password sharing and selective content investments, helped improve operating margins from 21% in 2023 to 27% in 2024. Free cash flow reached $6.9 billion in 2024 and is expected to grow to $8 billion in 2025. Netflix’s decision to prioritize regional content and one-off events over costly sports broadcasting rights has further optimized returns on investment.
Despite a temporary market downturn in March 2025 that pushed shares down to $860, Netflix, Inc. (NASDAQ:NFLX)’s long-term outlook remains strong. The company continues to repurchase stock as a means of returning value to shareholders, even without paying dividends. Analysts highlight the company’s massive global subscriber base, disciplined financial management, and strategic content approach as key factors positioning it for sustained success in the competitive streaming industry.
Insider Monkey’s database indicated that, out of the 1,009 hedge funds it tracks, 144 hedge funds held stakes in Netflix, Inc. (NASDAQ:NFLX) at the end of Q4 2024 with a combined value of nearly $19.61 billion, as opposed to 121 funds in Q3.
Overall, Netflix, Inc. (NASDAQ:NFLX) ranks first on our list of top 10 stocks to buy according to SRS Investment Management. While we acknowledge the potential for NFLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks to Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
