In this article, we will take a look at top stocks to buy according to Rob Koehn’s Ivy Lane Capital. You can skip our detailed analysis of Rob Koehn’s history, investment strategy, and hedge fund performance, and go directly to see the 5 Top Stocks to Buy Today According to Rob Koehn’s Ivy Lane Capital.
Robert Koehn is a Managing Member and Chief Investment Officer of Ivy Lane Capital, an investment advisory firm. He started his career as an Associate in the investment banking department of First Union Capital Markets. Before founding Ivy Lane, he served as the general partner of two private equity firms: Trivest Partners, L.P. and Redan Capital Management, L.P.
Investment Philosophy of Robert Koehn
Rob Koehn’s investment philosophy involves maximizing and enhancing the long-term investment performance by condensing the portfolio in a limited number of companies. He prefers to invest in large-cap stocks that would generate profitable returns and reduce the risks for a small portfolio. Moreover, his fund invests in companies considering their asset value, capital structure, and free cash flow generation.
In Q2 2021, the major portion of Ivy Lane’s 13F portfolio is variegated across three sectors: technology, financial, and services. Technology remained the heaviest sector, accounting for 66.3% of the total portfolio.
The largest investments of Ivy Lane include Alphabet Inc. (NASDAQ: GOOG) and Microsoft Corporation (NASDAQ: MSFT). The hedge fund did not change its stake in both companies in the second quarter. Ivy Lane started building its position in EchoStar Corporation (NASDAQ: SATS), with shares worth over $4.8 million and the company represents 5.2% of the hedge fund’s technology sector. Other than that, Ivy Lane strengthened its stake in Avalara, Inc. (NYSE: AVLR) and eBay Inc. (NASDAQ: EBAY) by 18% and 19%, respectively.
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Our Methodology
Let’s analyze the list of top stocks to buy according to Rob Koehn’s Ivy Lane Capital. These are the top 10 stocks picks of Ivy Lane as of the second quarter.
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Top Stocks to Buy Today According to Rob Koehn’s Ivy Lane Capital
9. Visa Inc. (NYSE: V)
Value: $3,507,000
Percentage of Ivy Lane’s 13F Portfolio: 2.48%
Number of Hedge Fund Holders: 162
Visa Inc. (NYSE: V) stands ninth on our list of the top stocks to buy according to Rob Koehn’s Ivy Lane Capital. It is a financial services company that also facilitates the transfer of electronic funds throughout the world. The transactions are carried through Visa-branded credit cards, prepaid cards, and debit cards.
In Q2, Ivy Lane reduced its stake in Visa Inc. (NYSE: V) by 40%. The hedge fund now holds 15,000 shares in the company, valued at $3.5 million. Visa Inc. (NYSE: V) accounts for 2.48% of the hedge fund’s portfolio. Like Microsoft Corporation (NASDAQ: MSFT), UBS also included Visa Inc. (NYSE: V) in its ‘overweight stock’ list with an active weight measure of 0.29% in the UBS metric. In Q2, Visa Inc. (NYSE: V) posted an EPS of $1.49, beating the consensus by $0.14. In August, JPMorgan raised its price target on Visa Inc. (NYSE: V) to $267, with an ‘Overweight’ rating on the shares. The stock gained 9.83% in the past year.
Of the 873 hedge funds tracked by Insider Monkey, 162 funds have positions in Visa Inc. (NYSE: V) in Q2, worth over $27.6 billion. Like Alphabet Inc. (NASDAQ: GOOG), Microsoft Corporation (NASDAQ: MSFT), BlackRock, Inc. (NYSE: BLK), Twitter, Inc. (NYSE: TWTR), Avalara, Inc. (NYSE: AVLR), and eBay Inc. (NASDAQ: EBAY), Visa Inc. (NYSE: V) is one of the top stocks to buy according to Rob Koehn’s Ivy Lane Capital.
ClearBridge Investments released its Q1 2021 investor letter and mentioned Visa Inc. (NYSE: V) in it. Here is what the firm has to say:
“To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Visa.”
8. EchoStar Corporation (NASDAQ: SATS)
Value: $4,858,000
Percentage of Ivy Lane’s 13F Portfolio: 3.43%
Number of Hedge Fund Holders: 26
EchoStar Corporation (NASDAQ: SATS) is an American satellite communication and internet services company. It provides solutions in satellite broadband communications to broadcast organizations, U.S. government, and military service providers.
In Q2, Ivy Lane owns 200,000 shares in EchoStar Corporation (NASDAQ: SATS), worth over $4.85 million. The company is the latest acquisition of the hedge fund and represents 3.43% of its 13F portfolio. In Q2, EchoStar Corporation (NASDAQ: SATS) posted a GAAP EPS of $0.41, beating the consensus by $0.34. The revenue also presented an 8.8% year-over-year growth at $499.8 million. In May, Raymond James lifted its price target on EchoStar Corporation (NASDAQ: SATS) to $63, with a ‘Strong Buy’ rating on the shares. Since the beginning of the year, the stock has delivered a 23.2% return to shareholders.
As of Q2 2021, 26 hedge funds have positions in EchoStar Corporation (NASDAQ: SATS), worth $246.5 million. Like Alphabet Inc. (NASDAQ: GOOG), Microsoft Corporation (NASDAQ: MSFT), Twitter, Inc. (NYSE: TWTR), Avalara, Inc. (NYSE: AVLR), and eBay Inc. (NASDAQ: EBAY), EchoStar Corporation (NASDAQ: SATS) is one of the top stocks to buy according to Rob Koehn’s Ivy Lane Capital.
7. The Charles Schwab Corporation (NYSE: SCHW)
Value: $11,940,000
Percentage of Ivy Lane’s 13F Portfolio: 8.44%
Number of Hedge Fund Holders: 72
The Charles Schwab Corporation (NYSE: SCHW) is an American financial services company that offers services in commercial banking and wealth management. Along with this, the company also offers an electronic trading platform for both retail and institutional clients.
Robert Koehn’s Ivy Lane Capital holds 164,000 shares in The Charles Schwab Corporation (NYSE: SCHW), worth over $11.9 million in Q2. The company accounts for 8.44% of the fund’s 13F portfolio. In July, The Charles Schwab Corporation (NYSE: SCHW) reported total client assets of $7.64 trillion, presenting a 79% year-over-year growth. For Q2 2021, the company posted an EPS of $0.84, beating the consensus by $0.01. In July, Deutsche Bank lifted its price target on The Charles Schwab Corporation (NYSE: SCHW) to $92, with a ‘Buy’ rating on the shares. The firm believes that the company has an upside potential versus estimates due to its strong net interest margin outlook. The Charles Schwab Corporation (NYSE: SCHW) gained 111.3% in the past year.
As of Q2 2021, 72 hedge funds tracked by Insider Monkey have positions in The Charles Schwab Corporation (NYSE: SCHW), worth over $4.85 billion.
Like Alphabet Inc. (NASDAQ: GOOG), Microsoft Corporation (NASDAQ: MSFT), Twitter, Inc. (NYSE: TWTR), Avalara, Inc. (NYSE: AVLR), and eBay Inc. (NASDAQ: EBAY), The Charles Schwab Corporation (NYSE: SCHW) is one of the top stocks to buy according to Rob Koehn’s Ivy Lane Capital.
Lakehouse Capital, an investment management firm, releases its Q2 2021 investor letter and mentioned The Charles Schwab Corporation (NYSE: SCHW) in it. Here is what the firm has to say:
“Charles Schwab is not a household name in Australia but it is in the US where it is the largest discount broker with more than 32 million brokerage accounts, 2 million corporate retirement plans, and total client assets of US$7.4 trillion. Schwab’s shares performed extremely well during the year thanks to a confluence of factors including a strong stock market with the S&P 500 up 39% year-on-year, the company’s recent merger with industry heavyweight TD Ameritrade, and expectations that interest rate income would grow as the US economy gained steam.
Two other important contributors to Schwab’s year, which were a mix of cyclical and structural, were an increase in net new accounts and increased trading activity. We view these as cyclical in the sense that markets are performing very well and that retail investors have been bored and emboldened during the American lockdowns, however, also structural because Schwab’s shift to $0 commissions on equity trades has permanently reduced a barrier to trading for investors with smaller accounts. We also note that, while brokerage activity is cyclical, the average brokerage account itself is very sticky — we estimate normalised annual retention rates for accounts of better than 93% — and that the average client assets per account grow over time thanks to asset growth and clients collectively being net savers.
Schwab makes for an excellent natural hedge for the Fund as Schwab tends to perform well when interest rates increase, which is generally negative for the rest of the portfolio. And the position did its job for us by increasing during a rising interest rate environment, enabling us to harvest much of our gains from Schwab and redeploy them to shares of other growth companies that had gotten cheaper in response to higher rates. We’re mindful of the run in the shares and the cyclical nature of the business but comfortable keeping a small position for now given Schwab’s natural hedging dynamics, extremely loyal customers, and an industry-leading position in a growing market.”
6. eBay Inc. (NASDAQ: EBAY)
Value: $13,410,000
Percentage of Ivy Lane’s 13F Portfolio: 9.48%
Number of Hedge Fund Holders: 39
eBay Inc. (NASDAQ: EBAY) is an American multinational e-commerce company that connects buyers and sellers in over 190 markets globally. The company’s operations also include off-platform businesses in Japan, Turkey, and South Korea.
In Q2, Ivy Lane Capital increased its activity in eBay Inc. (NASDAQ: EBAY) by 19%. The hedge fund owns 191,000 shares in the company, worth over $13.4 million. eBay Inc. (NASDAQ: EBAY) accounts for 9.48% of Ivy Lane’s 13F portfolio. In Q2 2021, eBay Inc. (NASDAQ: EBAY) posted an EPS of $0.99, beating the estimates by $0.04. The company’s revenue also presented a 14% year-over-year growth at $2.7 billion. After strong second-quarter earnings, Wall Street analysts presented a positive outlook for the company. Recently, Benchmark lifted its price target on eBay Inc. (NASDAQ: EBAY) to $85, with a ‘Buy’ rating on the shares.
Of the 873 hedge funds tracked by Insider Monkey, 39 hedge funds have positions in eBay Inc. (NASDAQ: EBAY) as of Q2, worth over $3.12 billion.
Like Alphabet Inc. (NASDAQ: GOOG), Microsoft Corporation (NASDAQ: MSFT), Twitter, Inc. (NYSE: TWTR), and Avalara, Inc. (NYSE: AVLR), eBay Inc. (NASDAQ: EBAY) is one of the top stocks to buy according to Rob Koehn’s Ivy Lane Capital.
Steel City Capital published its Q4 2020 investor letter and mentioned eBay Inc. (NASDAQ: EBAY) in it. Here is what the firm has to say:
“eBay (Long): EBAY continues to be a core holding in the Partnership’s long book despite not having any “sexy” attributes or unknown catalysts. I like EBAY because it checks the boxes of being both capital light and priced as a value stock (low multiple of free cash flow), factors which are attractive in a potentially inflationary environment.
In 3Q’20 the company printed $2.6 billion of revenue vs. guidance of $2.4 billion (a $200 million beat) while full year revenue guidance was taken up by $400 million, implying 4Q’20 would be higher by $200 million as well. Free cash flow from continuing ops was guided to $2.3 billion for the full year, slightly above the $2.0 billion the business regularly generated before getting a Covid/stimulus related boost.
EBAY will have about $4.6 billion of cash on hand at year end5 and should receive another $2.0 billion in after-tax proceeds this quarter related to the sale of its Classifieds portfolio6 . Additionally, the company will receive 540 million shares from Adevinta which are currently valued at ~$8.3 billion, and also holds a warrant to purchase a 5.0% stake in payment processor Adyen which was last valued at ~$775 million. Additional asset sales are also not out of the question7 . Backing everything out at today’s market cap of $38.2 billion gives a clean market cap for the core marketplace of $22.6 billion. At a minimum, I expect $2.0 billion of free cash flow in FY’21, with the potential for a higher figure to the extent the incoming administration is successful in cutting additional stimulus checks. By FY’22, free cash flow should ramp to $2.3 billion after incorporating a full year’s contribution from the managed payments initiative. This values EBAY at 9.6x free cash flow, or 11.7x excluding stock-based comp.”
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Disclosure. None. Top Stocks to Buy Today According to Rob Koehn’s Ivy Lane Capital is originally published on Insider Monkey.
