In this article, we discussed the 10 best tech stocks to buy now according to billionaire Laffont. Click to skip ahead to see 5 Best Tech Stocks To Buy Now According To Billionaire Laffont.
While Phillipe Laffont’s Coatue Management posted a 65% return on his flagship fund last year amid bets on tech stocks, Julian Robertson’s tiger cub saw pressure on most of his holdings during the first quarter of 2021. Tech stocks have lost their attractiveness over the last two months as 2020 bull-run have pushed their valuations to record levels. Meanwhile, economic reopening and wider availability of coronavirus vaccines have shifted investors' focus towards value stocks that are likely to benefit from economic recovery. The US Federal Reserve expects gross domestic product growth in the range of 6.5% this year compared to the previous forecast for 4.2% GDP growth.
Dow Jones Industrial index jumped more than 2500 points year to date and the broader market S&P 500 index recently hit a new all-time high. However, the tech-heavy Nasdaq index has been struggling since it breached a record 14000 level early in February. Investors profit-taking strategy along with rising Treasury yields have strongly hit last year's high flyers like Tesla (NASDAQ: TSLA), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Facebook (NASDAQ: FB), and many others. The market observers believe that growth stocks are likely to bounce back strongly after a short correction. Wedbush analyst Dan Ives said:
"The momentum names in tech are down anywhere from 15% to 25%+ and in our opinion, this sell-off is way overdone given the $2 trillion of digital transformation spending on the horizon coupled by a massive M&A spree set for the next few years in the tech space,"
Billionaire Laffont is also bullish over the future fundamentals of tech stocks. Information technology stocks represent a 31% weighting in the tiger cub’s portfolio while growth stocks from consumer discretionary and communication sectors weighted around 28% and 26%, respectively.
Moreover, the tiger cub has raised his stake in companies that are likely to benefit from economic reopening. For instance, he raised his position in Walt Disney (NYSE: DIS) by 17% in the fourth quarter, making it the largest stock holding of Coatue Management 13F position. Walt Disney weighted around 7.50% of the overall portfolio at the end of Q4.
At the end of the fourth quarter of 2020, Coatue Management held a position in 76 stocks, and its 13F portfolio market value stood around $26.73 billion. The firm initiated brand new positions in 17 stocks and added to its 26 existing positions. On the other hand, Coatue Management sold out 14 stocks and reduced positions in 20 stocks.
Phillipe Laffont was born in Belgium and grew up in France. He came to the US with the intent of working in asset management. Laffont worked as an analyst for Julian Robertson's Tiger Management. He left Julian Robertson in 1999 and founded Coatue Management with $45 million in initial capital. Phillipe Laffont’s Coatue Management uses a fundamental approach with both long/ short strategies.
While Phillipe Laffont’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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.
Let’s now begin our countdown of the 10 best tech stocks to buy now according to billionaire Laffont:
10. Amazon.com, Inc. (NASDAQ: AMZN)
The world's largest e-commerce giant Amazon.com (NASDAQ: AMZN) generated robust returns for investors during the pandemic year on the back of a strong revenue growth trend. Its December quarter revenue hit the $125 billion mark for the first time in history, thanks to pandemic-driven demand. However, investors' profit-taking and a wider tech market correction have shed 5.5% of Amazon’s stock value this year. Amazon could be an attractive pick for new investors as the company anticipates extending the double-digit revenue growth momentum into 2021.
Mairs & Power, an investment management firm, stated in a fourth-quarter investor letter that Amazon’s rising margins and advertising business are among the biggest catalysts for 2021. Here is what Mairs & Power stated:
“We did acquire AMZN in the fourth quarter. But not owning it till then cost the Fund in performance relative to the S&P 500 TR Index. We had held off taking a position in Amazon largely due to concerns about the company’s slim margins. But in 2020, we saw its core margins nearly double as more consumers shopped online, which in turn led to greater utilization and route density within Amazon’s delivery network. In addition, Amazon’s advertising business, which represents a small portion of its overall sales, has been growing quickly. Advertising could become a third leg of growth for the company along with e-commerce and Amazon Web Services. In short, Amazon checks all of our boxes — it has a strong management team, great growth prospects, and a strong competitive advantage. And last year, we initiated our position at an intriguing valuation.”
9. Global Payments Inc. (NYSE: GPN)
Shares of payment technology provider Global Payments Inc. (NYSE: GPN) are in the red so far this year after a rally of more than 70% in the pandemic year. It is ranked ninth in the list of 10 best tech stocks to buy now according to billionaire Laffont. Coatue Management first initiated a position in GPN during the second quarter of 2019 and it is currently representing 2.75% of the 13F portfolio.
GPN shareholders have witnessed a decrease in hedge fund interest recently. It was in 55 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to the all-time high for this statistic of 68.
8. Peloton Interactive, Inc. (NASDAQ: PTON)
The online interactive fitness products provider Peloton Interactive, Inc. (NASDAQ: PTON) is offering a good buying opportunity for investors after a 28% stock price selloff in 2021. Shares of Peloton soared close to 400% in 2020 due to users move to online platforms amid social distancing policies. It is among the 10 best tech stocks to buy now according to billionaire Laffont. Coatue Management first bought Peloton shares in Q4 of 2019.
Artisan Partners Limited Partnership, a high value-added investment management firm, stated in the fourth quarter investor letter that post-pandemic dynamics could reduce demand for Peloton. Here is what Artisan Partners Limited Partnership said,
“Among our top individual contributors in Q4 was Peloton Interactive. Peloton Interactive’s growth has accelerated during the pandemic as consumers replace in-person gym workouts with the company’s connected bikes and online classes. This has increased the Peloton’s brand awareness, decreased its need for advertising spend and quickly proved out its high-margin, recurring revenue business model. While some of this demand may soften as consumers face more workout options post-pandemic, we believe Peloton is very early in its profit cycle. The pandemic has introduced more people to the convenience of at-home connected fitness, Peloton’s scale and network advantages have been strengthened, and, with the launch of a new lower-priced treadmill in 2021, the company will be poised to address a much larger category than stationary bikes.”
7. Netflix Inc (NASDAQ: NFLX)
Shares of Netflix (NASDAQ: NFLX) are in the red so far this year. Investors’ concerns over post-pandemic user growth negatively impacted NFLX's share price this year. The company posted massive user and revenue growth last year due to lockdowns and staying-at-home policies. It is ranked seventh in the list of 10 best tech stocks to buy now according to billionaire Laffont.
Miller Value Partners, which returned 35.4% for the fourth quarter, highlighted a few stocks including Netflix in the Q4 investor letter. Here is what Miller Value Partners stated:
“Lastly, we added a small position to Netflix after the disappointment following 3Q results. Overall, it’s getting more difficult to find investment opportunities in the very high growth areas that meet our standards for attractive value. On the other hand, we continue to find opportunities in more value-oriented areas of the market. We would expect the portfolio to migrate in this direction.”
6. CrowdStrike Holdings, Inc. (NASDAQ: CRWD)
Tiger cub Laffont's strategy of buying CrowdStrike Holdings, Inc. (NASDAQ: CRWD) at the beginning of 2020 helped in generating big gains. It is currently representing 3.14% of Phillipe Laffont’s portfolio and ranked sixth in the list of 10 best tech stocks to buy now according to billionaire Laffont.
Other hedge funds are also bullish over the future fundamentals of CrowdStrike. The number of long hedge fund bets went up by 21 lately. CrowdStrike was in 92 hedge funds’ portfolios at the end of December compared to the all-time high for this statistic of 78. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high.
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Disclosure: None. 10 Best Tech Stocks To Buy Now According To Billionaire Laffont is originally published on Insider Monkey.