In this article, we discuss the top 5 stock picks of Eduardo Costa’s Calixto Global Investors. If you want to read our detailed analysis of Costa’s investment philosophy and performance, go directly to Top 9 Stock Picks of Eduardo Costa’s Calixto Global Investors.
5. Alibaba Group Holding Limited (NYSE:BABA)
Calixto Global Investors’ Stake Value: $9,924,000
Percentage of Calixto Global Investors’ 13F Portfolio: 9.92%
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) operates online marketplaces for retail and wholesale trading. A financial technology unit of Alibaba Group Holding Limited (NYSE: BABA), Ant Group, announced intentions to use its cross-border payment service Alipay+ to let four Asian e-wallets enter South Korea on September 26 as travel restrictions loosen throughout Asia. Calixto Global Investors added Alibaba Group Holding Limited (NYSE:BABA) to its portfolio in the second quarter by buying 87,300 shares.
Leo Chiang, an analyst at Deutsche Bank, maintained a “Buy” recommendation on Alibaba Group Holding Limited (NYSE:BABA) on August 8 after the company’s June quarter net income and adjusted net margins topped forecasts. He also increased his price target from $155 to $160.
According to Insider Monkey’s data, 106 hedge funds were bullish on Alibaba Group Holding Limited (NYSE:BABA) at the end of Q2 2022, compared to 100 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of Alibaba Group Holding Limited (NYSE:BABA), with 14.48 million shares worth $1.65 billion.
In its Q2 2022 investor letter, Artisan Partners mentioned Alibaba Group (NYSE:BABA). Here is what the fund had to say:
“Alibaba rose 4% during the quarter. We would love to say the share price performance was due to strong operational performance. Unfortunately, that was not the case. The most recent earnings results showed its core e-business still had not returned to growth, primarily due to the difficult retail environment caused by the government’s zero-COVID policy. Alibaba also appears to be losing market share due to its product mix tilted toward apparel and cosmetics, categories currently stalled in this environment. The share price performance this quarter was largely a function of exogenous items—specifically, government actions in the form of stimulus to support the economy and less regulations.
Despite the poor recent results, Alibaba remains a powerful economic engine. It is a global leader in e-commerce and cloud computing, both of which should grow nicely over time. Management has started taking actions to improve profitability, which has been burdened by significant investment in loss-making business ventures. The financial results should improve significantly when China’s economy starts to recover from COVID-19 outbreaks. The shares are incredibly cheap and have some of the highest upside potential in the portfolio. Even embedding significant losses from new ventures, we estimate they are trading at 11X-12X unlevered earnings. In our view, the shares could double, and they still would not be expensive.”
4. Smartsheet Inc. (NYSE:SMAR)
Calixto Global Investors’ Stake Value: $11,404,000
Percentage of Calixto Global Investors’ 13F Portfolio: 11.4%
Number of Hedge Fund Holders: 48
Smartsheet Inc. (NYSE:SMAR) is a cloud-based corporate platform enabling teams and organizations to plan, collect, manage, automate, and report data. After visiting Smartsheet’s Engage 2022 annual user conference, RBC Capital analyst Rishi Jaluria reiterated a ‘Sector Perform’ rating and a $32 price objective on Smartsheet Inc. (NYSE:SMAR) on September 26. He was more optimistic about Smartsheet’s go-to-market strategy and competitive positioning after consulting with 12 clients and investors.
Smartsheet Inc. (NYSE:SMAR) stock represents 11.4% of Calixto Global Investors’ second-quarter portfolio, with the hedge fund holding 362,843 shares worth $11.40 million. Smartsheet Inc. (NYSE:SMAR) has featured in Calixto Global Investors’ portfolio since the fourth quarter of 2019.
By the end of the second quarter, Smartsheet Inc. (NYSE:SMAR) was part of 48 hedge fund portfolios. The consolidated stakes these funds had in the company were worth $838.14 million, down from $1.35 billion the prior quarter. North Peak Capital is the most significant stakeholder of Smartsheet Inc. (NYSE:SMAR), with a $123.47 million position in the company.
Alger, an investment management firm, mentioned Smartsheet Inc. (NYSE:SMAR) in its Q4 2021 investor letter. Here is what the fund said:
“Smartsheet provides a cloud based-based platform for work management that lets employees plan and manage their work using grids, projects, cards and calendars. It enhances enterprise productivity and as such is a Positive Dynamic Change beneficiary of corporate America’s rapid digitization. We believe even as employees return to the office, demand for work management software is persistent and durable. The strong value proposition was evident in Smartsheet’s recent quarter as revenue growth and billings accelerated relative to recent periods driven by an increased mix toward upmarket enterprise level customers. Additionally, management provided guidance for next fiscal year of 37% to 40% billings growth versus a 26% consensus expectation.”
3. Nexstar Media Group, Inc. (NASDAQ:NXST)
Calixto Global Investors’ Stake Value: $14,507,000
Percentage of Calixto Global Investors’ 13F Portfolio: 14.51%
Number of Hedge Fund Holders: 33
Nexstar Media Group, Inc. (NASDAQ:NXST) operates in the television broadcasting and digital media industries. Nexstar Media Group, Inc. (NASDAQ:NXST) was in 33 hedge fund portfolios at the end of the second quarter of 2022, compared to 39 in the previous quarter.
Nexstar Media Group, Inc. (NASDAQ:NXST) was raised to ‘Buy’ from ‘Neutral’ by Rosenblatt analyst Barton Crockett on September 6, with a price objective of $246, up from $181. His viewpoint on TV stations has been altered by cord-cutting hedges, mix-driven ad resiliency, and new income streams from next-generation transmission technology. These might support the industry leader, Nexstar Media Group, Inc. (NASDAQ:NXST), to expand even in difficult times.
During the second quarter, Calixto Global Investors sold 39% of its stake in Nexstar Media Group, Inc. (NASDAQ:NXST). The hedge fund first initiated a position in Nexstar Media Group, Inc. (NASDAQ:NXST) in 2016. Cardinal Capital is the most significant stakeholder of Nexstar Media Group, Inc. (NASDAQ:NXST), with 1.05 million shares worth $171.21 million.
Richie Capital Group published its first-quarter 2022 investor letter and mentioned Nexstar Media Group, Inc. (NASDAQ:NXST). Here is what the fund said:
“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
2. Five9, Inc. (NASDAQ:FIVN)
Calixto Global Investors’ Stake Value: $21,928,000
Percentage of Calixto Global Investors’ 13F Portfolio: 21.93%
Number of Hedge Fund Holders: 51
Five9, Inc. (NASDAQ:FIVN) delivers cloud-native contact center software to help with digital sales, customer support, and marketing. On September 20, Five9, Inc. (NASDAQ:FIVN) introduced Five9 Service Cloud Voice for Partner Telephony, the most recent version of its Salesforce, Inc. (NYSE:CRM) interface.
On September 23, Credit Suisse analyst Fred Lee initiated coverage of Five9, Inc. (NASDAQ:FIVN), assigning the stock a ‘Neutral’ rating and a $90 price target. He saw Five9, Inc. (NASDAQ:FIVN) as profiting from shifts to more digital channels because of its AI and automation technologies in the Intelligent Cloud Contact Center.
Christopher Lyle’s SCGE Management is Five9, Inc. (NASDAQ:FIVN)’s most notable stakeholder, with a $140.21 million position in the company. In addition, the number of hedge funds tracked by Insider Monkey owning stakes in Five9, Inc. (NASDAQ:FIVN) fell to 51 in the second quarter from 52 in the preceding quarter. Those stakes held a consolidated value of $1.52 billion, down from $2.12 billion.
Securities filings reveal that Calixto Global Investors owned 240,596 shares of Five9, Inc. (NASDAQ:FIVN) at the end of June 2022, worth $21.93 million and representing 21.93% of the fund’s portfolio. Eduardo Costa’s Calixto Global Investors has kept a stake in Five9, Inc. (NASDAQ:FIVN) since the second quarter of 2020.
1. ZTO Express (Cayman) Inc. (NYSE:ZTO)
Calixto Global Investors’ Stake Value: $22,131,000
Percentage of Calixto Global Investors’ 13F Portfolio: 22.13%
Number of Hedge Fund Holders: 17
ZTO Express (Cayman) Inc. (NYSE:ZTO) is a Chinese firm that provides express delivery and other value-added logistics services. On August 25, Morgan Stanley analyst Qianlei Fan labeled ZTO Express (Cayman) Inc. (NYSE:ZTO) as a “Research Tactical Idea” after the stock’s decline. However, over the next 60 days, he expects the share price to increase in absolute terms. Accordingly, he assigned ZTO shares an ‘Overweight’ rating and a $38.80 price target.
Kerr Neilson’s Platinum Asset Management is the biggest shareholder of ZTO Express (Cayman) Inc. (NYSE:ZTO), with 15.32 million shares worth $420.60 million. According to Insider Monkey’s data, 17 hedge funds were long ZTO Express (Cayman) Inc. (NYSE:ZTO) at the end of the second quarter of 2022, with aggregate stakes valued at about $789.82 million.
ZTO Express (Cayman) Inc. (NYSE:ZTO) stands first on the list of top stock picks of Eduardo Costa’s Calixto Global Investors. Costa’s fund holds a $22.13 million position in ZTO Express (Cayman) Inc. (NYSE:ZTO), which accounts for 22.13% of the total Q2 13F investments.
You can also take a peek at Top 10 Stock Picks of Roberto Mignone’s Bridger Management and Top 10 Stock Picks of John Hempton’s Bronte Capital.
