In this piece, we will take a look at the top 5 stocks to invest in according to Alan Fournier’s Pennant Capital. If you want a deeper look at Mr. Fournier’s investment strategies, head on over to Top 10 Stocks to Invest in According to Alan Fournier’s Pennant Capital.
5. Amazon.com, Inc. (NASDAQ:AMZN)
Mr. Fournier’s Stake Value: $26.6 million
Percentage of Pennant Capital’s 13F Portfolio: 7.55%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is one of the world’s largest online retailers that not only functions in the electronic commerce arena but also targets other technology segments such as cloud computing.
Mr. Fournier’s Pennant Capital owns 8,100 Amazon.com, Inc. (NASDAQ:AMZN) shares that represent 7.5% of its portfolio and were worth $26.6 million as of the end of this year’s third quarter. Credit Suisse reduced the company’s price target to $4,200 in an October 2021 note, sharing concerns about increasing costs.
Amazon.com, Inc. (NASDAQ:AMZN) missed both revenue and GAAP EPS analyst estimates during its Q3, by posting $110 billion in revenue and $6.12 in earnings per share. 271 out of the 873 hedge funds polled by Insider Monkey held a stake in the company during the second quarter.
Amazon.com, Inc. (NASDAQ:AMZN) largest shareholder is Ken Fisher’s Fisher Asset Management who owned 1.9 million shares worth $6.3 billion by the end of this year’s third quarter.
In its third-quarter 2021 investor letter, Madison Funds had the following to say about Amazon.com, Inc. (NASDAQ:AMZN):
“We did add a modest new position weight to the portfolio in the quarter in Amazon.com, Inc. stock (AMZN). We acknowledge that many aspects of Amazon’s merit as an investment are well appreciated. However, our work leads us to conclude that shares are attractive. Leadership positions in both e-commerce and cloud computing provide the company with significant durable competitive advantages in industries that we think can produce above average growth over the next decade. Over the past year, AMZN shares have trailed the market as investors debate near-term growth prospects following the pandemic-induced e-commerce demand. Additionally, margins have been depressed due to Amazon’s unprecedented increases in spending to build out fulfillment and in-house logistics capabilities – Amazon will build out more square footage this year and last than it did cumulatively over the previous 10 years, more than doubling its in-house delivery capacity. We like the investments Amazon is making and believe they will further advantage the company relative to other retailers, making it nearly impossible for competitors to match the same level of delivery speed and convenience. With its large and frequently engaged customer base, Amazon has multiple mechanisms to make money, including selling advertising and enhanced subscription services. Within the cloud business, we forecast Amazon Web Services (AWS) leveraging its strengths in Infrastructure-as-a-service (IaaS) to move into higher value segments of cloud computing (such as platform-as-a-service: PaaS), allowing the company to continue outgrowing the overall IT sector with strong profitability. While Amazon shares have performed extremely well over the long-term, we think near-term concerns about whether Amazon will earn a return on its accelerated investments provide an opportunity now for investors willing to look through the investment period. Our view is that the investments likely earn strong returns and extend Amazon’s competitive advantages and above average growth.”
4. Intel Corporation (NASDAQ:INTC)
Mr. Fournier’s Stake Value: $29.7 million
Percentage of Pennant Capital’s 13F Portfolio: 8.43%
Number of Hedge Fund Holders: 78
Intel Corporation (NASDAQ:INTC) is one of the oldest semiconductor manufacturers in the world and it is the only American company capable of manufacturing chips with advanced manufacturing processes. It is known for its central computing units (CPUs) that have allowed it to become a household name.
Mr. Fournier’s Pennant Capital held 557,672 shares of Intel Corporation (NASDAQ:INTC) by the end of the third quarter. These were worth $29.7 million and represented 8.43% of the firm’s portfolio. Susquehanna increased its price target to $55 in an October 2021 analyst note, expressing approval for Intel’s execution and future market opportunities.
Intel Corporation (NASDAQ:INTC) earned $18.1 billion in non-GAAP revenue and $1.71 in non-GAAP EPS, beating analyst estimates for the EPS during its third quarter. During the previous quarter, 78 out of the 873 hedge funds surveyed by Insider Monkey held a stake in the company.
Intel Corporation (NASDAQ:INTC)’s largest investor is Ken Fisher’s Fisher Asset Management who owns a whopping 32 million shares worth $1.7 billion.
In its first-quarter 2021 investor letter, Alger mentioned Intel Corporation (NASDAQ:INTC). Here is what the fund said:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
3. General Motors Company (NYSE:GM)
Mr. Fournier’s Stake Value: $30.5 million
Percentage of Pennant Capital’s 13F Portfolio: 8.66%
Number of Hedge Fund Holders: 86
General Motors Company (NYSE:GM) is an iconic American automotive brand that is also one of the oldest companies in the world. It is more than a century old, after being founded in 1908 and is currently headquartered in Detroit, Michigan.
The company earned $26.7 billion in revenue and $1.52 in non-GAAP earnings share for its third quarter, missing analyst estimates for revenue. General Motors Company (NYSE:GM)’s price target was lowered to $78 by Morgan Stanley in a November 2021 analyst note following the earnings report, outlining that the company has tough times ahead due to higher investor and consumer interest in electric vehicles.
Mr. Fournier’s investment firm held 579,000 General Motors Company (NYSE:GM) shares that were worth $30.5 million and represented 8.6% of its portfolio by the end of the third quarter of this year. A survey of 873 hedge funds conducted by Insider Monkey in the prior quarter revealed that 86 had holdings in the company.
General Motors Company (NYSE:GM)’s largest investor is Warren Buffett’s Berkshire Hathaway, which owns 60 million shares worth $3 billion.
Investment management firm Miller Value Partners in its third quarter 2021 investor letter mentioned General Motors Company (NYSE:GM) and outlined that:
“Another name we’ve recently purchased and have grown incredibly excited about: General Motors (GM). GM is interesting on many levels. We see it as an attractive investment opportunity and it might be a microcosm of current markets, both past and prospective.
Tesla trounced GM over the last decade. Tesla rose 15,797% crushing GM’s 238% increase, which lagged the S&P 500’s 365%. Tesla came out of nowhere creating what many said was the best car ever made. A decade ago, no one saw that coming, including GM. GM’s historical strength led to arrogance. It completely dismissed the threat of any newcomer…” (Click here to see the full text)
2. Micron Technology, Inc. (NASDAQ:MU)
Mr. Fournier’s Stake Value: $46.2 million
Percentage of Pennant Capital’s 13F Portfolio: 13.1%
Number of Hedge Fund Holders: 87
Micron Technology, Inc. (NASDAQ:MU) is an American computing firm that sells its memory and storage products for different computing devices all over the world. It was founded in 1978 in an era of growing semiconductor firms in the U.S. and it is headquartered in Boise, Idaho.
Mr. Fournier’s Pennant Capital Management held 651,400 Micron Technology, Inc. (NASDAQ:MU) shares by the end of this year’s third quarter. These were worth $46.2 million and represented 13.1% of the firm’s portfolio. Micron Technology, Inc. (NASDAQ:MU) reported $8.2 billion in revenue and a non-GAAP EPS of $2.42 for its fourth fiscal quarter, beating analyst estimates on both counts.
Investment bank Goldman Sachs lowered Micron Technology, Inc. (NASDAQ:MU) price target to $88 in October 2021, citing demand and product uncertainty. Out of the 873 hedge funds surveyed by Insider Monkey for the second quarter, 87 had held a stake in Micron Technology, Inc. (NASDAQ:MU).
In its first quarter 2021 investor letter, Bonsai Partners mentioned Micron Technology, Inc. (NASDAQ:MU) and said that:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
1. DISH Network Corporation (NASDAQ:DISH)
Mr. Fournier’s Stake Value: $64.8 million
Percentage of Pennant Capital’s 13F Portfolio: 18.39%
Number of Hedge Fund Holders: 51
DISH Network Corporation (NASDAQ:DISH) is an American pay-for-television services provider. It is an iconic brand that is known for its satellite dishes that beam down entertainment to users’ locations from space.
Mr. Fournier’s Pennant Capital held 1.4 million DISH Network Corporation (NASDAQ:DISH) shares by the end of Q3 this year. These were worth $64.8 million and represented 18.39% of Pennant Capital’s portfolio. Additionally, 51 of the 873 hedge funds polled by Insider Monkey during the second quarter held a stake in DISH Network Corporation (NASDAQ:DISH).
In a November 2021 analyst note, Deutsche Bank lowered DISH Network Corporation (NASDAQ:DISH)’s price target to $71, outlining the company’s assumed $4 billion spectrum purchase as the reason. DISH Network Corporation (NASDAQ:DISH) reported $4.4 billion in revenue and $0.88 in GAAP EPS for its third quarter, beating analyst estimates for none.
DISH Network Corporation (NASDAQ:DISH)’s largest stakeholder is Boykin Curry’s Eagle Capital Management, which owns 18 million shares that are worth $799 million.
In its second quarter 2021 investor letter, ClearBridge Investments had the following to say about DISH Network Corporation (NASDAQ:DISH):
“Portfolio holdings in the communication services and financials sectors also made strong contributions. Dish Network continues to make progress on the buildout of its greenfield 5G network, with Las Vegas slated to become the first market launched later this year. The company gained credibility, and its stock reacted favorably, after it announced a partnership with Amazon to deploy a 5G cloud-native network using AWS’s cloud infrastructure. While the stock has been volatile in recent quarters, we continue to feel confident in Dish’s long-term prospects, which include competing as a fourth U.S. wireless carrier. Charter Communications has been executing well and benefiting from the growth in residential broadband, which has been accelerated by COVID-19 and should see further support from the Biden Administration’s infrastructure bill, which earmarks $65 billion for broadband buildout. In addition, we expect the company to continue to grow its wireless business, leveraging its mobile virtual network operator (MVNO) relationship with Verizon. The company continues to generate strong and growing free cash flow and deploys it toward consistent and material share buybacks.”
You can also take a peek at the 10 Best Stocks to Buy According to Billionaire Mario Gabelli and 10 Dividend Stocks in Warren Buffett’s Latest Portfolio.
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