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In this article, we discuss the 10 stocks to consider in the portfolio of Mark Cuban. You can skip our comprehensive analysis of Mark Cuban's history investment philosophy, and hedge fund performance, and go directly to Mark Cuban Stock Portfolio: 5 Stocks To Consider.
Mark Cuban is an angel investor and billionaire who first rose to fame in the finance world after selling his video portal Broadcast.com to Yahoo for $5.7 billion in 1999. Cuban had founded the company just two years prior to selling it, a feat that earned him legendary status on Wall Street. In the decades since, Cuban has invested in many companies, mostly funding startups with mission statements, and also bought NBA team Dallas Mavericks. His present net worth stands at around $4.5 billion and he is ranked 247 on the Forbes 400 list of richest men in the US.
Cuban has cultivated a fan following around the world through his appearances on popular reality television series Shark Tank and an active social media presence. The investor, who was born in Pennsylvania, is 63-years-old but has an outlook on investing that seems misplaced for his age group - Cuban has been a long-term admirer of blockchain technology and growth equities and has also backed Reddit-fueled short squeeze rallies at the market. Investors eager to replicate the success of the billionaire should monitor his portfolio closely for better insight.
Some of the top stocks in the investment portfolio of Mark Cuban include Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Twitter, Inc. (NYSE:TWTR), among others discussed in detail below. Cuban has made mind-boggling returns on these stocks over the years. He has more than doubled his $1 billion investment in Amazon over the past two years and made returns of over 1,000% on Netflix. Cuban is one of the few truly self-made billionaires on Wall Street and an inspiration for many young investors globally.
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It is important to clarify that the stocks listed below were picked from the public comments that Cuban has made in the past few months. He has explicitly mentioned some of his private holdings during these public appearances while only alluding to others. However, based on a careful assessment of the comments, the stocks listed below largely align with his investment philosophy.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? 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 86 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 SPY. Our stock picks outperformed the market by more than 86 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.
Mark Cuban Stock Portfolio: Stocks To Consider
10. Live Nation Entertainment, Inc. (NYSE:LYV)
Number of Hedge Fund Holders: 40
Live Nation Entertainment, Inc. (NYSE:LYV) recently announced $450 million worth of stock offering to fund general corporate purposes. The company, which is one of the long-term holdings of Cuban, had earlier announced that it would be acquiring a 51% stake in Mexican concert promoter OCESA Entretenimiento. Jefferies analyst David Katz has a Buy rating on the stock with a price target of $103.
Cuban bought Live Nation Entertainment, Inc. (NYSE:LYV) stock when the market was at an all-time low in March 2020, scooping up shares at a bargain. This has appeared to pay off for the investor. The stock is now up 76% in the last twelve months.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Live Nation Entertainment, Inc. (NYSE:LYV) with 3 million shares worth more than $264 million.
Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Twitter, Inc. (NYSE:TWTR) are some of the elite stocks to invest in right now, in addition to Live Nation Entertainment, Inc. (NYSE:LYV).
“In 2006, we initiated our position in Live Nation, the global entertainment company that handles promotion, venue management and ticket sales for live events. Live Nation was spun out of the former Clear Channel Communications in late 2005. In our view, spinoffs often represent attractive opportunities because investors frequently undervalue the new company. We believed this was the case with Live Nation, especially given its initially small market capitalization. As well, when spinoffs are freed from their parents, they typically benefit from intensified management focus and more flexible capital allocation policies. In Live Nation’s case, the spinoff helped make possible the merger with Ticketmaster in 2010, which materially improved the business franchise. Although these factors alone might have made Live Nation a good holding for the Fund, an unexpected technology helped to boost the company’s fortunes: streaming. As the advantages of streaming convinced consumers to reduce or even eliminate their purchases of media, such as CDs and DVDs, artists began to tour more, thereby providing a tailwind to Live Nation’s operations. This accelerated growth in the company’s intrinsic value per share, which in turn generated numerous increases in our sell target for the holding, enabling us to continue to own the shares in the Fund for 14 years. We typically target a three- to five-year holding period for our equity investments, but we love opportunities like Live Nation, which achieve unanticipated intrinsic value growth.”
9. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 49
Coinbase Global, Inc. (NASDAQ:COIN) is one of the largest traders in Bitcoin, the most popular cryptocurrency. Cuban, according to his own admission, has a Bitcoin-heavy crypto portfolio, with the currency making up 60% of his total crypto holdings.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Coinbase Global, Inc. (NASDAQ:COIN) with 5.6 million shares worth more than $1.4 billion.
Coinbase Global, Inc. (NASDAQ:COIN) is the largest cryptocurrency exchange in the world in terms of value of transactions on the platform. It went public earlier this year and fetched a valuation of $86 billion at the end of the first day of trading. The stock then pulled back amid a larger slump in crypto stocks around the globe due to regulatory pressures in China. However, it has bounced back in the past few weeks, rising 32% since mid-September.
8. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders: 89
Twitter, Inc. (NYSE:TWTR) owns and runs a social networking platform. The company has recently revamped a targeted advertising algorithm ahead of a push into ecommerce, news agency Reuters reports. The move is largely seen as a part of the plan by the firm to double revenues by 2023. BMO Capital analyst Daniel Salmon has a Market Perform rating on the stock with a price target of $70.
Twitter, Inc. (NYSE:TWTR) is a long-term growth holding of Cuban and he has admitted this on multiple occasions over the past year. Cuban is also very active on the platform himself, where he has a fan following of over 8 million.
At the end of the second quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $6 billion in Twitter, Inc. (NYSE:TWTR), down from 107 in the preceding quarter worth $4.5 billion.
Along with Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX), Twitter, Inc. (NYSE:TWTR) is one of the stocks popular with the Reddit crowd.
“‘The bird has wings’—Twitter’s quarter started off somewhat ominously, with Twitter the worst performing stock in the S&P 500 following the January 6th insurrection and questions about the stickiness of the userbase after permanently suspending the account of President Trump.8 By the end of the quarter, Twitter was one of the best performers in the index after exceptionally strong fourth quarter earnings and guidance for the year and an upbeat analyst day that highlighted a rapidly evolving product roadmap placing the timeline at the center of ephemeral (fleets), long form (Revue) and voice (Spaces). The improvements to the experience makes the platform more accessible and provides more opportunity to continue growing the userbase. Importantly, Twitter also embraced what we have been calling “creative empowerment” in previewing SuperFollows and a host of features designed to help content creators and contributors monetize their own audience on Twitter itself. These developments, alongside considerable progress on the advertising platform give us growing conviction that Twitter will deliver on its largely untapped opportunity—in other words, the value creation opportunity on top of the low multiple we were able to build our position at. Elliot spoke at length about these developments on Yet Another Value Podcast with Andrew Walker and The Business Brew with Bill Brewster, which we invite you to check out.”
7. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
Amid reports of slowed subscriber growth and increasing competition, Cuban has come out in the media and outlined his bullish stance on Netflix, Inc. (NASDAQ:NFLX). In an interview to news platform CNBC, Cuban said the trends in the streaming industry favored the firm more than competitors over the long-term.
Cowen analyst John Blackledge recently raised the price target on Netflix, Inc. (NASDAQ:NFLX) stock to $750 from $650 and kept an Outperform rating, raising the long-term forecast and extended free cash flow outlook on the firm heading into 2022. The company recently beat market expectations on earnings per share by $0.63 for the third quarter. The revenue over the period was $7.4 billion, up 16% year-on-year.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in Netflix, Inc. (NASDAQ:NFLX) with 4.6 million shares worth more than $2.4 billion.
In addition to Amazon.com, Inc. (NASDAQ:AMZN) and Twitter, Inc. (NYSE:TWTR), Netflix, Inc. (NASDAQ:NFLX) is one of the stocks on the radar of retail investors.
“We purchased Netflix in March, initiating a 3% position in the Portfolio. We believe Netflix is a highly competitively advantaged company. It has recently met all our investment guardrails, and we anticipate it will remain sustainably above our guardrails over the next five years and beyond. We know Netflix for its ubiquitous streaming service and deep library of owned content. The company has made investments in this content (currently running at nearly $20 billion/year), generally keeping subscribers highly engaged and loyal to their service. The company has number one market share in 99% of markets globally, but it is our view that video streaming on-demand is still an underpenetrated space with many years of attractive growth likely ahead. The service is also relatively affordable at roughly $11/month on average globally.
We believe Netflix’s growth in content spend is beginning to moderate, which could allow margin expansion to continue for many years when paired with ongoing subscriber growth and price increases. While there is competition from the likes of Apple (Apple TV+), Amazon (Prime Video), Disney (Disney+ and Hulu), and others, we believe there can be a handful of winners in this industry. Already, we see many people subscribe to multiple streaming video services, with Netflix being their “anchor” service. That said, the barriers to entry are high, and we believe they are getting higher given the substantial amount of capital and size of the subscriber base required to maintain a competitive service for both viewers and content producers. Over the next five years, we expect Netflix’s earnings growth to be approximately 30% annualized and free cash flow to grow at an even higher rate.”
6. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) represents the largest holding in the Cuban portfolio, according to his own admission. He started buying the stock in 2019 when it was trading at around half the price it is at presently. Cuban said he bought $1 billion in the stock during the time, Since the value of the shares has almost doubled since then, it seems like the bet Cuban made on the firm has paid off handsomely.
Baird analyst Colin Sebastian earlier this month maintained an Outperform rating on Amazon.com, Inc. (NASDAQ:AMZN) stock with a price target of $4,000, noting that any pullback in the share price of the firm was a buying opportunity in the long term.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 3.8 million shares worth more than $13 billion.
Just like Netflix, Inc. (NASDAQ:NFLX) and Twitter, Inc. (NYSE:TWTR), Amazon.com, Inc. (NASDAQ:AMZN) is one of the stocks attracting the attention of investors on social media.
“Amazon (AMZN):We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment:1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is …” (Click here to see the full text)
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Disclosure. None. Mark Cuban Stock Portfolio: 10 Stocks To Consider is originally published on Insider Monkey.