In this article, we will discuss the top 5 stock picks of Ryan Frick and Oliver Evans’ Dorsal Capital Management. If you want to read our detailed analysis of the hedge fund’s investment philosophy, you can go directly to the Top 10 Stock Picks of Ryan Frick and Oliver Evans’ Dorsal Capital Management.
5. Zillow Group, Inc. (NASDAQ:Z)
Dorsal Capital Management’s Stake Value: $130,007,000
Percentage of Dorsal Capital Management’s 13F Portfolio: 6.35%
Zillow Group, Inc. (NASDAQ:Z) offers digital real estate buying, selling, and financing services across the US through its website and mobile application. The Seattle, Washington-based corporation became part of Dorsal Capital Management’s holdings back in 2016 for a couple of quarters. However, the hedge fund initiated a long position again in Zillow Group, Inc. (NASDAQ:Z) stock in Q4 2020.
In an update released to investors on December 3, Brent Thill at Jefferies gave a price target of $115 on Zillow Group, Inc. (NASDAQ:Z) with a Buy rating.
Asset management firm Baron Funds mentioned Zillow Group, Inc. (NASDAQ:Z) in its Q3 2021 investor letter. Here’s what the firm said:
“Underperformance of our investments in Communication Services and Financials detracted the most from relative results. Weakness in Communication Services again came from Zillow Group, Inc., which operates real estate websites, a mortgage marketplace, and a home-buying business. Zillow was the third largest detractor due to concerns about negative impacts on the housing market from higher interest rates as well as execution risks in the company’s home-buying business.
Zillow Group, Inc. operates leading U.S. real estate sites, a mortgage marketplace, and a home-buying business. Shares were down due to concerns around rising interest rates and the potential knock-on effects to the housing market. Our channel checks have indicated that the housing market remains robust. Even if demand were to soften, Zillow’s offering could become even more valuable as it delivers high-quality buyer and seller leads. Longer term, we believe Zillow has an ample runway for growth given its strong management team and large customer base.”
4. Microsoft Corporation (NASDAQ:MSFT)
Dorsal Capital Management’s Stake Value: $155,056,000
Percentage of Dorsal Capital Management’s 13F Portfolio: 7.57%
Microsoft Corporation (NASDAQ:MSFT) is a developer and producer of consumer electronics, computers, software, and related services. Dorsal Capital Management initiated a position in Microsoft Corporation (NASDAQ:MSFT) back in the third quarter of 2012.
Steve Koenig at SMBC started coverage on Microsoft Corporation (NASDAQ:MSFT) with a price target of $410 and an Outperform rating in an update to investors on December 21. The analyst thinks that Microsoft Corporation (NASDAQ:MSFT) is working successfully in shifting its customers towards cloud offerings and is in a position to benefit from the significant secular trends in the software industry. The analyst sees Microsoft’s Azure in close distance to Amazon Web Services (AWS) and forecasts Microsoft’s cloud computing services to surpass Amazon’s in the public cloud market by 2025.
Baron Funds shared its stance on Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter. Here’s what it had to say:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue beating Street estimates by 4.5%, an acceleration in Commercial Cloud revenue to 31% constant-currency growth, a four-point improvement in Commercial Cloud gross margins (to 70% from 66%), and GAAP earnings up 42%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by TAM expansion across its disruptive cloud product portfolio, as more companies look to transform and digitize their businesses, as well as strong operating leverage as its cloud products gain scale.”
3. Alphabet Inc. (NASDAQ:GOOG)
Dorsal Capital Management’s Stake Value: $189,820,000
Percentage of Dorsal Capital Management’s 13F Portfolio: 9.27%
Alphabet Inc. (NASDAQ:GOOG) is the principal of Google and other subsidiaries related to artificial intelligence, autonomous driving, cloud computing, hardware, etc.
Tech investor, Founder, and Portfolio Manager at Satori Fund, Dan Niles considers Alphabet Inc. (NASDAQ:GOOG) as one of his top picks for 2022. He thinks that Alphabet Inc. (NASDAQ:GOOG) stock offers growth at a reasonable valuation.
Alphabet Inc’s YouTube and the Walt Disney Company (NYSE:DIS) reached an agreement on December 19 to continue the access to Disney-owned channels on YouTube TV. The previous contract between the two media giants expired on December 18 that resulting in a blackout of Disney channels for four million subscribers of YouTube TV. For the inconvenience, YouTube TV granted a $15 discount on monthly bills to active users of YouTube TV.
Alphabet Inc. (NASDAQ:GOOG) was mentioned in the Q3 2021 investor letter of RiverPark Funds. Here’s what the investment management firm had to say about the company:
“Internet services leader Alphabet was also a top contributor for the quarter, hitting its all-time high on September 1. Fundamentals at the company remain stellar—the company reported its highest quarter ever for sales and profit in late July. The company reported second-quarter revenue of $62 billion, an increase of 62% year over year, which, when combined with strong expense controls, led to a tripling of operating income to $19 billion. The company experienced strong revenue growth across all its segments—Google Services (mostly Advertising) grew 63%, Google Cloud grew 54% and Other Bets grew 30%.
With its continued strength across its core Search and YouTube franchises and emerging strength in its still small Cloud business, we continue to view Alphabet as among the best-positioned secular growth franchises. Additionally, despite its strong performance this year, GOOG shares trade at a compelling 20x our 2022 EPS estimate (which includes earnings drags from losses in its Other Bets and Google Cloud segments, which lost a combined $2 billion last quarter), only a slight premium to the market.”
2. Snap Inc. (NYSE:SNAP)
Dorsal Capital Management’s Stake Value: $190,215,000
Percentage of Dorsal Capital Management’s 13F Portfolio: 9.29%
Snap Inc. (NYSE:SNAP) is a camera and social media company founded in 2011 by Evan Spiegel and Bobby Murphy. Based out of Santa Monica, California, Snap Inc. (NYSE:SNAP) has products and services like Snapchat, Spectacles, and Bitmoji under its wings. Snap has been a part of Dorsal Capital Management’s portfolio since Q1 2020. According to Insider Monkey’s database comprising 867 hedge funds, 78 of them have a stake in Snap Inc. (NYSE:SNAP) with a combined value of $6.74 billion as of Q3 2021. The number of hedge funds having a stake in Snap Inc. has increased by 14 on a sequential basis.
On December 10, Thomas Champion at Piper Sandler gave the stock an Overweight rating with a $72 price target. The analyst pointed out the headwinds in the form of Apple’s Identifier for Advertisers reducing the revenue growth projections of Snap Inc. from 50% YoY to 30% YoY in the next few quarters. Although Snap Inc. (NYSE:SNAP) is facing challenges related to targeting and measurement, the issues are being seen as temporary in nature. The analyst has highlighted the “long track of superior revenue growth” as a positive and sees its valuation as attractive to go long as the company returns to post-pandemic normalization.
Jefferies Group shared its stance on Snap Inc. (NYSE:SNAP) in its Q3 2021 investor letter. Here’s what the investment management firm had to say about the company:
“We believe SNAP may be one of the best positioned virtual platforms in the development of the Metaverse. In order to better understand SNAP’s leadership position, we examine the significance of four key product areas; 1) the camera and augmented reality, 2) virtual avatars, 3) the Snap Map, and 4) hardware.
Camera and Augmented Reality: SNAP distinguishes itself from its peers by building products that leverage camera and AR technology as the principal drivers of engagement and user generated content. Currently, SNAP has 290M+ DAUs who create on average 5B snaps per day, open the app on average 30 times per day, and regularly use AR lenses to communicate with friends and brands (200M+ DAUs using AR). As we mentioned in the “Virtual Platforms” section of this report, the Metaverse is enabled by platforms that provide the “picks and shovels for content creation, the ongoing maintenance of live experiences, user interface, and social interactions”. We believe SNAP is beginning to successfully democratize its AR tool sets through its recently launched Lens Studio and Camera Kit. We highlight that the Lens Studio enables a community of 200K+ creators to build their own AR experiences using their own machine learning models. The Camera Kit makes the tools from the Lens Studio interoperable with partner apps like Zoom, the MLB, and Disney. In our view, SNAP is one of few platforms making AR technology easily accessible both inside and outside its App, which should support the company’s AR leadership for years to come…” (Click here to see the full text)
1. Liberty Broadband Corporation (NASDAQ:LBRDA)
Dorsal Capital Management’s Stake Value: $315,178,000
Percentage of Dorsal Capital Management’s 13F Portfolio: 15.4%
Liberty Broadband Corporation (NASDAQ:LBRDA) is an owner and operator of various communication businesses. The Englewood, Colorado-based entity is a holding company and has a 26% stake in Charter Communications, Inc. (NASDAQ:CHTR) and completely owns GCI and Skyhook.
In a note to investors issued on December 15, Jeffrey Wlodarczak at Pivotal Research gave Liberty Broadband Corporation (NASDAQ:LBRDA) a Buy rating with a price target of $212. The price target is derived through the sum-of-the-parts valuation of Charter Communications and other segments.
Alphyn Capital Management mentioned Liberty Broadband Corporation (NASDAQ:LBRDA) in its Q1 2021 investor letter. Here’s what the investment management firm said:
“Liberty Broadband completed its merger with GCI, thereby collapsing one layer of the double discount to Charter Communications, presenting a good opportunity to trim that position as well.”
You can also take a peek at the Top 10 Stock Picks of Gordon Malin’s Mountain Road Advisors and 10 Best Gold Stocks To Buy Right Now.
