In this piece, we will take a look at the top 5 stock picks of Joel Ramin’s 12 West Capital. If you want a more detailed analysis of Mr. Ramin, his fund, and investment philosophy, head on over to the Top 10 Stock Picks of Joel Ramin’s 12 West Capital.
5. Roblox Corporation (NYSE:RBLX)
Mr. Ramin’s Stake Value: $163 million
Percentage of Mr. Ramin’s 13F Portfolio: 6.83%
Number of Hedge Fund Holders: 49
Roblox Corporation (NYSE:RBLX) is an American entertainment provider that is headquartered in San Mateo, California. It offers its users a 3D (three-dimensional) virtual environment where they can interact with each other and a platform that allows developers to build content and applications.
In its third quarter 2021 earnings report, Roblox Corporation (NYSE:RBLX) reported $509 million in revenue and -$0.13 in GAAP EPS, beating analyst estimates for EPS. Truist reduced the company’s share price target to $92 in October 2021 sharing that the firm was cautious about gaming curbs in China.
Mr. Ramin’s 12 West Capital held 1.8 million shares of Roblox Corporation (NYSE:RBLX) during the second quarter of this year, in a stake worth $163 million and 6.83% of its portfolio. During the same time, 49 of the 873 hedge funds polled by Insider Monkey had holdings in the entertainment company.
Roblox Corporation (NYSE:RBLX)’s largest shareholder is Chase Coleman and Feroz Dewan’s Tiger Global Management LLC who owns $2.4 billion of equity through 27 million shares.
In its third quarter 2021 investor letter, investment management firm Tao Value had the following to say about Roblox Corporation (NYSE:RBLX):
“Roblox is a new position of “Mindful Compounder” category and is a new breed of business that is hard to define at this point. It started with gaming but has the potential to evolve to a new being for human society. Roblox management calls it “human co-experience” and many practitioners call it “metaverse”.
Tao
The company made many “drastic and rational” decisions which shows deep mindfulness – an important trait I look for. The first thing caught my attention is management’s attitude towards security, privacy & trust. Different than Facebook, Roblox took trust and security seriously very early on. So serious that they actually report “Infrastructure and Trust & Safety“ as an accounting item in its operating expense breakdown, indicating that they see the trust & safety is an integral part of the infrastructure of the virtual world. Roblox didn’t just say it, but also did so. For example, Roblox doesn’t have voice chat functionality, which is a key engagement feature and is almost a standard setup for almost all gaming platforms. Yet it is also a feature that is very hard to moderate in real time with old day technologies and can be abused heavily. Roblox made a conscious decision to put security/trust before product stickiness and deferred the audio chat until recently (Roblox recently rolled out an alpha test moderated by AI-based technologies).
Roblox, as any other large social platforms (which becomes the human society itself), will unavoidably have the dark side of the humanity. One Wired article revealed the story about “How ‘Roblox’ Became a Playground for Virtual Fascists”. Yet it is how the platform sees and treats the problem matters. In Roblox’ case, it seems to me that they have a very strong stand on their responsibility (to be the trustee of its users). According to this article, a Roblox spokesperson said the company reviews “every single image, audio file, and video before it is uploaded.” Accordingly, Roblox disclosed that it has 3600 people (albeit outsourced) working on trust and safety, compared to only 1200 full time employees…”
