In this article, we examined Michael Pausic’s portfolio management strategy and approach to stock investing. We also reviewed the top 10 stock picks of Michael Pausic’s Foxhaven Asset Management.
Michael Pausic is the founder, portfolio manager, and analyst of Foxhaven Asset Management. After starting his career as a media and communications banker, Michael Pausic held major industry positions during the ’90s, including vice president of business development at 20th Century Fox and strategic planning director at Viacom. In 1997, he joined Maverick Capital and led the media and telecommunications team until 2013, when he left to start Foxhaven. Michael Pausic, who received an MBA from Fuqua School of Business at Duke University, seeks to achieve superior long-term absolute returns by taking a long-term approach to investing in growth companies.
As of September 2021, FoxHaven Asset Management invested more than 90% of the $3.4 billion worth of its 13F portfolio in information technology, communications, and consumer discretionary stocks. The most prominent stocks in the portfolio include Intuit Inc. (NASDAQ:INTU), Visa Inc. (NYSE:V), Coupang, Inc. (NYSE:CPNG), Pegasystems Inc. (NASDAQ:PEGA), and Hilton Worldwide Holdings Inc. (NYSE:HLT).
Michael Pausic’s Foxhaven Asset Management held the largest stakes in prominent tech stocks like Meta Platforms Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN). Foxhaven Asset Management appears to have benefited from these holdings. This is because shares of Meta Platforms Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN) have surged substantially over the past few years.
Photo by Nick Chong on Unsplash
Our Methodology
The following stock rankings are based on Michael Pausic’s Foxhaven Asset Management’s 13F portfolio as of September. Additionally, we used data tracked by Insider Monkey to determine which of these stocks are popular with other hedge funds. Furthermore, these stocks were analyzed based on recent financial numbers and analysts’ price targets.
Top 10 Stock Picks of Michael Pausic’s Foxhaven Asset Management
10. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Foxhaven Asset Management’s Stake Value: $162 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 4.69%
Number of Hedge Fund Holders: 44
Michael Pausic’s Foxhaven Asset Management has been holding a stake in Hilton Worldwide Holdings Inc. (NYSE:HLT) since 2017. As of September, Hilton Worldwide Holdings Inc. (NYSE:HLT) was ranked among the top 10 stocks of Foxhaven Asset Management. The firm lifted its stake in Hilton Worldwide Holdings Inc. (NYSE:HLT) by 31% during the September quarter to 1.23 million shares.
The stock price of Hilton Worldwide Holdings Inc. (NYSE:HLT) surged 33% in the last twelve months. The share price rally is backed by easing traveling restrictions and economic reopening. The company expects further stabilization in its financial numbers in 2022 amid its growth strategy and better traveling conditions. Hilton opened 96 new hotels in the third quarter of 2021, totaling approximately 14,700 rooms, and achieved net unit growth of 11,200 rooms.
According to data tracked by Insider Monkey, the number of long hedge funds’ positions declined by 1 to 44 at the end of September. Pershing Square’s Bill Ackman was the leading stakeholder in Hilton Worldwide Holdings Inc. (NYSE:HLT).
9. Visa Inc. (NYSE:V)
Foxhaven Asset Management’s Stake Value: $166 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 4.78%
Number of Hedge Fund Holders: 146
Foxhaven Asset Management has held a position in Visa Inc. (NYSE:V) over the last two years. Shares of Visa Inc. (NYSE:V) surged sharply in the last twelve months amid economic reopening and easing travel restrictions. Like Meta Platforms Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN), Visa Inc. (NYSE:V) is one of the popular stocks among hedge fund managers. Of the 867 funds tracked by Insider Monkey, Visa Inc. (NYSE:V) was in 146 hedge funds’ portfolios as of September.
Like Michael Pausic’s Foxhaven Asset Management, L1 Capital is also optimistic about Visa Inc. (NYSE:V). Here is what L1 Capital stated about Visa Inc. (NYSE:V) in the third quarter investor letter:
“In our view, the payment network company, Visa Inc. (NYSE:V), remain very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa Inc. (NYSE:V)’s transaction volumes, however in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. Nearer term, we believe the recovery in international travel as the world gradually normalises and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
8. Pegasystems Inc. (NASDAQ:PEGA),
Foxhaven Asset Management’s Stake Value: $171 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 4.93%
Number of Hedge Fund Holders: 25
Michael Pausic’s Foxhaven Asset Management lifted its stake in Pegasystems Inc. (NASDAQ:PEGA) by 21% during the September quarter. The firm first initiated a position in Pegasystems Inc. (NASDAQ:PEGA) at the beginning of 2019. Pegasystems Inc. (NASDAQ:PEGA) is an American software company engaged in developing software for robotic process automation, customer relationship management, and business process management.
Its September quarter revenue increased 25% year over year to $895 million. Pegasystems Inc. (NASDAQ:PEGA) posted a net profit of $9.1 million compared to a loss of $44 million in the year-ago period. Moreover, its total backlog grew 23% year over year in the September quarter.
Pegasystems Inc. (NASDAQ:PEGA) was in 25 hedge funds’ portfolios as of the end of September. Bares Capital Management was the leading stakeholder in the company.
7. Coupang, Inc. (NYSE:CPNG)
Foxhaven Asset Management’s Stake Value: $255 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.37%
Number of Hedge Fund Holders: 45
Coupang, Inc. (NYSE:CPNG) was one of the top 10 stock picks of Michael Pausic’s Foxhaven Asset Management as of September. The firm first initiated a position in Coupang, Inc. (NYSE:CPNG) during the first quarter of 2021 and lifted its existing stake by almost 13% during the September quarter. The company’s share price declined by almost 50% in the last twelve months.
Coupang, Inc. (NYSE:CPNG) generated year over year revenue growth of 25% in the third quarter while its gross profit jumped by 62%. The company has also been investing significantly in marketing activities to enhance its user base. Its third-quarter advertising revenue nearly tripled year over year.
Of the 867 elite funds tracked by Insider Monkey, 45 hedge funds were bullish on Coupang, Inc. (NYSE:CPNG). Unlike large-cap stocks such as Meta Platforms Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN), Coupang, Inc. (NYSE:CPNG) is a mid-cap company founded in 2010.
6. Intuit Inc. (NASDAQ:INTU)
Foxhaven Asset Management’s Stake Value: $256 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.38%
Number of Hedge Fund Holders: 64
Michael Pausic’s Foxhaven Asset Management initiated a position in Intuit Inc. (NASDAQ:INTU) at the end of 2020 and doubled that position in the first quarter of 2021. However, Michael Pausic’s Foxhaven Asset Management slightly declined its position in the company in the following two quarters. It appears that the firm benefited from its position.
The stock price of Intuit Inc. (NASDAQ:INTU) soared by 45% in the last twelve months, thanks to a growing user base and increasing revenues. The company generated $4.2 billion in third-quarter revenue, up from $3.0 billion in the prior-year period.
The number of bullish hedge fund positions shrunk by 2 in Intuit Inc. (NASDAQ:INTU) in the September quarter. It was in 64 hedge funds’ portfolios, according to data tracked by Insider Monkey. Terry Smith’s Fundsmith LLP was the leading stakeholder in the company.
Like Meta Platforms Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN), Intuit Inc. (NASDAQ:INTU) is among the top 10 stock picks of Michael Pausic’s Foxhaven Asset Management
In the third quarter investor letter, Cooper Investors, an investment management firm, mentioned a few stocks including Intuit Inc. (NASDAQ:INTU). Here is what Cooper Investors stated:
“The other meaningful deal during the quarter was Intuit’s acquisition of Mailchimp for $12bn. Intuit has reinvented itself over the last decade and thrived with a leadership position in QuickBooks Online, the financial accounting software for small businesses (effectively the ‘Xero of the US’). We originally invested in Intuit in February 2020, excited by the QuickBooks prospects.
Management have executed exceptionally well on the opportunity set which has seen the shares double since our initial purchase. However, the company has now conducted two meaningful deals in Mailchimp and Credit Karma worth a combined US$20bn over the last 12 months. The investment proposition has shifted from a focus on QuickBooks to now being a financial and small business software conglomerate. We continue to very much admire the company, but with Intuit now trading on 50x forward earnings we no longer see such attractive latency on offer, nor the rewards for the level of execution risk and thus we have exited the position.”
5. Twilio Inc. (NYSE:TWLO)
Foxhaven Asset Management’s Stake Value: $272 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.38%
Number of Hedge Fund Holders: 96
Michael Pausic’s Foxhaven Asset Management held a huge position in Twilio Inc. (NYSE:TWLO) since 2017. Its shares remained under pressure in 2021. Despite that, shares of cloud communication as a service company are up more than 500% in the past five years.
In the third quarter investor letter, RiverPark Funds, an investment management firm, mentioned a few stocks including Twilio. Here is what RiverPark Funds stated:
“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%.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Foxhaven Asset Management’s Stake Value: $278 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 8.02%
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ:AMZN) is the long-running stock holding of Michael Pausic’s Foxhaven Asset Management. The firm first initiated a position in the company in 2013. It was the fourth-largest stock holding of Foxhaven as of the end of September. Share of Amazon.com surged sharply in the past year amid people’s move towards online platforms.
In the third quarter investor letter, ClearBridge Investments, an investment management firm, expressed confidence in Amazon’s growth potential. Here is what ClearBridge said:
“While Amazon.com and Facebook, the Strategy’s overweights in the mega cap group, underperformed both their FAAMG peers and the benchmark in the third quarter, we maintain conviction in these names because they have the highest growth profiles. Amazon is projected to grow earnings per share at 19% next year and Facebook at 13%, while Apple is expected to see only breakeven earnings in 2022 (Exhibit 1). Amazon is spending at an elevated level right now, but the underlying demand trends are healthy, and we believe that once the rate of spending moderates, returns will improve.”
3. Mercadolibre, Inc. (NYSE:MELI)
Foxhaven Asset Management’s Stake Value: $279 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 8.05%
Number of Hedge Fund Holders: 68
The dip of more than 16% in Mercadolibre Inc (NYSE:MELI) stock price over the last 12 months could be an attractive buying opportunity for new investors. The e-commerce and online auctions platform is a member of Foxhaven Asset Management since the beginning of 2018.
In the third quarter investor letter, LRT Capital Management, an investment management firm, said that Mercadolibre is trading at attractive valuations. Here is what LRT Capital Management said:
“Mercadolibre, Inc. (MELI) – the LatAm eCommerce, shipping, and payments company, is now trading at a very attractive valuation – its lowest P/S ratio ever. The concerns here have to do with the recession in Brazil and slowing economic growth throughout the region.”
2. Atlassian Corporation PLC (NASDAQ:TEAM)
Foxhaven Asset Management’s Stake Value: $349 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 10.05%
Number of Hedge Fund Holders: 60
Atlassian Corporation PLC (NASDAQ:TEAM) generated nearly 30% stock price gain for shareholders in the past twelve months. The Australian software company is the second-largest stockholding of Foxhaven Asset Management as of September, according to data tracked by Insider Monkey.
ClearBridge Investments, an investment management firm, praised Atlassian’s performance in the third quarter investor letter. Here is what ClearBridge Investments stated:
“The ClearBridge Mid Cap Growth Strategy delivered positive absolute performance and outperformed the benchmark in the third quarter, with the primary differentiator being stock selection among our IT holdings. The tech names in the portfolio gained 10.1% for the quarter compared to a 2.2% gain for tech in the benchmark. Most of the heavy lifting was done by enterprise software holdings that are helping businesses analyze activity and execute more efficiently, such as Atlassian. The leading contributors to absolute returns during the third quarter included Atlassian.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Foxhaven Asset Management’s Stake Value: $436 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 12.57%
Number of Hedge Fund Holders: 248
Meta Platforms, Inc. (NASDAQ:FB) was the largest stock holding of Michael Pausic’s Foxhaven Asset Management as of September. Its stock price soared more than 20% in the past twelve months. The company continues to generate double-digit revenue and earnings growth.
Facebook is the second most popular stock among 867 hedge funds tracked by Insider Monkey. Facebook Inc (NASDAQ:FB) was in 248 hedge funds’ portfolios at the end of September.
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