In this article, we discuss the top 5 stock picks of Christopher Lyle’s SCGE Management. If you want to read our detailed analysis of Lyle’s history, investment philosophy, and hedge fund performance, go directly to the Top 10 Stock Picks of Christopher Lyle’s SCGE Management.
5. Sea Limited (NYSE:SE)
SCGE Management: $718,678,000
Percentage of SCGE Management’s 13F Portfolio: 6.66%
Number of Hedge Fund Holders: 117
Sea Limited (NYSE:SE) is an online gaming firm that operates on internet and mobile platforms. Digital Entertainment, E-Commerce, and Digital Financial Services are the three segments of the company. Sea Limited (NYSE:SE)’s third quarter active users increased by 27.4% year-over-year to 729 million.
After rolling forward values following the company’s Q3 results, CLSA analyst Neel Sinha upgraded Sea Limited (NYSE:SE) to “Buy” from “Outperform” in November, with a price target of $455, up from $352. With 10.41 million shares worth $3.32 billion, Tiger Global Management is the largest shareholder of Sea Limited (NYSE:SE) as of Q3.
Overall, hedge funds are loading up on Sea Limited (NYSE:SE), as 117 out of the 867 funds tracked by Insider Monkey held stakes in the online gaming company, up from 104 funds a quarter earlier.
Tao Value, an investment management firm, in its second-quarter 2021 investor letter, mentioned Sea Limited (NYSE:SE). Here is what the fund said:
“Sea continued to execute above expectation. The gaming business continued strong momentum, recording bookings of $1.1 billion, growing 117% y-o-y. The major franchise Free Fire showed no sign of slowing down in established ASEAN & LatAm market and received positive reception from new markets like US. On e-commerce side, Shopee demonstrated early success in expanding to Brazil, by adopting a low-price category & gamification strategy. For 2021, Shopee is now top downloaded e-commerce app in Brazil, almost 2x of the second-place local leader Mercado Libre (MELI). I also see the most promising development is in its FinTech business – SeaMoney, which more than doubled its revenue in Q1 2021 from the previous quarter! With online lending products rolling out, SeaMoney is poised to grow rapidly, becoming the 3rd growth curve for Sea.”
4. DoorDash, Inc. (NYSE:DASH)
SCGE Management: $882,442,000
Percentage of SCGE Management’s 13F Portfolio: 8.18%
Number of Hedge Fund Holders: 42
DoorDash, Inc. (NYSE:DASH) is a company that designs, develops, and operates a meal delivery and logistics platform. It serves consumers based in the United States, Canada, and Australia. The hedge fund of Christopher Lyle entered the third quarter of 2021 with 4.28 million shares of DoorDash, Inc. (NYSE:DASH), worth around $882.44 million. The company has featured on Lyle’s portfolio since the fourth quarter of 2020.
In December, JPMorgan analyst Doug Anmuth lowered his price target on DoorDash, Inc. (NYSE:DASH) to $175 from $220 and kept a “Neutral” rating on the shares. The analyst forecasts slower growth as many companies face severe comparisons and work towards normalization.
DoorDash, Inc. (NYSE:DASH) saw a decrease in hedge fund sentiment in Q3 2021. The number of long hedge fund positions reduced to 42 at the end of the third quarter, compared to 45 positions in the previous quarter.3. Twilio Inc. (NYSE:TWLO)
SCGE Management: $887,948,000
Percentage of SCGE Management’s 13F Portfolio: 8.23%
Number of Hedge Fund Holders: 96
Twilio Inc. (NYSE:TWLO) is a communications software company that offers a cloud-based platform and services. Twilio Flex, messaging, programmable voice, programmable video, elastic SIP trunking, and IoT are some of the company’s offerings. As of September 30, 2021, there were 250,000 active client accounts, an increase as compared to 208,000 active client accounts as of September 30, 2020.
In December, Goldman Sachs analyst Kash Rangan initiated coverage of Twilio Inc. (NYSE:TWLO) with a “Buy” rating and a price target of $350. Out of the hedge funds tracked by Insider Monkey, Catherine D. Wood’s ARK Investment Management is the biggest shareholder of Twilio Inc. (NYSE:TWLO), with 3.25 million shares worth $1.04 million.
In the third quarter, hedge fund sentiment decreased for Twilio Inc. (NYSE:TWLO). Insider Monkey’s data shows that 96 hedge funds held stakes in the company at the end of the third quarter, down from 98 funds a quarter earlier.
RiverPark Funds, in its third-quarter 2021 investor letter, mentioned Twilio Inc. (NYSE:TWLO). Here is what the fund said:
“TWLO shares were also a top detractor for the quarter. Just like after 1Q, despite another quarterly beat in 2Q, management guidance–which we believe to be conservative–disappointed some investors. Second quarter revenue of $669 million was up 67% year over year, significantly exceeding management’s guidance of 47%-50% revenue growth. Management guided 3Q21 revenue to 50%-52% revenue growth, which was ahead of expectations, but due to continued investment also guided to a non-GAAP operating loss of $25 million-$30 million, which was below the Street’s forecast of a $12 million loss.
The COVID crisis has accelerated the adoption of the company’s cloud-based, integrated communications platform that allows companies in a wide range of businesses to embed digital communications capabilities (video, chat, voice, SMS, fax, and email) into their customer facing applications without needing to build back-end infrastructure and interfaces. Twilio’s total addressable market is now greater than $40 billion, which should grow by 50% over the next few years, providing a strong secular tailwind for the company. We expect the company’s gross margin to continue to expand from 54% in the second quarter toward management’s long-term goal of 60%-65%, and, as the company grows to scale, we expect its non-GAAP operating margin to expand to 25%.”
2. HubSpot, Inc. (NYSE:HUBS)
SCGE Management: $951,935,000
Percentage of SCGE Management’s 13F Portfolio: 8.83%
Number of Hedge Fund Holders: 48
HubSpot, Inc. (NYSE:HUBS) is a software company based in the United States, specializing in inbound marketing, sales, and customer care. In December, HubSpot, Inc. (NYSE:HUBS) was given a “Buy” rating and a $953 price objective by Goldman Sachs analyst Gabriela Borges.
SCGE Management began building its position in HubSpot, Inc. (NYSE:HUBS) in the first quarter of 2018, and holds 1.41 million shares in the company as of Q3 2021, valued at $951.94 million. The HubSpot, Inc. (NYSE:HUBS) stock represents 8.83% of the hedge fund’s 13F portfolio for the third quarter.
At the end of the third quarter of 2021, 48 hedge funds in the database of Insider Monkey held stakes totaling $2.86 billion in HubSpot, Inc. (NYSE:HUBS), down from 54 funds in the preceding quarter , holding stakes worth $2.67 billion in HubSpot, Inc. (NYSE:HUBS).
In its third-quarter 2021 investor letter, Artisan Partners mentioned HubSpot, Inc. (NYSE:HUBS). Here is what the fund said:
“As we set our priorities for 2022, diversity is an area of focus. We think a reasonable place for us to start is at the boardroom level. Studies have shown board diversity can meaningfully impact how companies make decisions, deploy capital and ensure management’s actions align with the interests of all stakeholders. Additional benefits include increased creativity and innovation, a reduced potential for groupthink and entrenchment and more openness to a wider variety of value creation strategies such as R&D and/or risk management. Research has also shown diversity correlates with better financial performance.
Today’s corporate boardrooms and leadership teams do not always align with the gender and ethnic makeup of the broader workforce, which has evolved significantly over the past several decades, and we believe this is an opportunity for US domiciled companies. Today’s US civilian labor force consists of approximately 50% women (vs. 29% in 1950) and 20% ethnic minorities (vs. 12% in 1980). Meanwhile, according to 2021 data provided by an ISS ESG review of 45,643 director roles, 21% of board members were female and 14% were non-white. While progress has been made in recent decades, it has been slow, and we believe it is important for companies to remain focused on closing this gap.
Two holdings we believe are particularly forward leaning in this area and have already or are starting to disclose gender and ethnicity metrics (which includes) HubSpot. Both companies’ boards are at least 40% female, and their public disclosures include varying degrees of gender, ethnicity and age metrics across different levels of the organization and how they have trended historically. We believe this level of transparency is important. It not only provides relevant stakeholders with a baseline to measure against over time, but it also provides more transparency into who the company is hiring, who is present and who is getting promoted.”
1. Shopify Inc. (NYSE:SHOP)
SCGE Management: $1,212,067,000
Percentage of SCGE Management’s 13F Portfolio: 11.24%
Number of Hedge Fund Holders: 73
Shopify Inc. (NYSE:SHOP) is a popular e-commerce platform for small and medium-sized enterprises. In December, Evercore ISI analyst Mark Mahaney upgraded Shopify Inc. (NYSE:SHOP) to “Outperform” from “In Line” with a price target of $1,770.
In the third quarter of 2021, SCGE Management owned 894,000 shares in Shopify Inc. (NYSE:SHOP), worth $1.21 billion. The stock represents 11.24% of the Q3 investment portfolio of the hedge fund.
As of the end of the third quarter, 73 hedge funds in Insider Monkey’s database of 867 elite funds held stakes in Shopify Inc. (NYSE:SHOP), as compared to 85 funds in the second quarter.
ClearBridge Investments, in its second-quarter 2021 investor letter mentioned Shopify Inc. (NYSE:SHOP). Here is what the fund said:
“Shopify (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”
You can also take a peek at Legendary Value Investor Seth Klarman’s Portfolio: Top 10 Stock Picks and Billionaire Ken Griffin’s Portfolio: Top 10 Stock Picks
