Billionaire Louis Bacon's 10 Tech Stock Picks – Yahoo Finance

This post was originally published on this site

In this article, we discuss the billionaire Louis Bacon’s 10 tech stock picks. You can skip our detailed analysis of the billionaire’s hedge fund and go directly to the Billionaire Louis Bacon’s 5 Tech Stock Picks.

Louis Moore Bacon is an American investor, philanthropist, and hedge fund manager of Moore Capital Management. The investment management firm was founded in 1989 and is focused on the global financial markets and private equity markets. In 2019, Bacon announced that he is closing Moore Capital because of the difficult trading environment, returning money to the investors. As of 2021, Moore Capital manages internal money as the billionaire announced to concentrate on his personal investments by consolidating all three funds into a single fund.

Investment Philosophy of Louis Bacon

Louis Bacon focuses on macro trading while betting on commodities and bonds through hired traders. His investment philosophy involves meticulous analysis of global political and economic events. Through this strategy, his investment management firm was able to generate profitable returns for a long time.

In 1990, when the Japanese stock market crashed, Bacon had $200 million under management, while his investment firm gained 86% during that year. From 1995 to 1999, the annual returns of Moore Capital ranged from 23% to 32%. Through 2019, the fund’s annual returns averaged 17.6%. However, in recent years, the performance of the fund remained somewhat sluggish as the assets fell to $9 billion in 2018 from $14 billion. The fund delivered a 1.9% return in 2019.

With the onset of Covid-19 in 2020, Bacon continued with his strategy of betting on bonds, which resulted in his fund generating 70% returns during that time.

As of Q2 2021, Louis Bacon’s Moore Global Investments invests heavily in the technology sector. The tech stocks exhibited tremendous growth in 2020, presented by tech-heavy NASDAQ which gained 28.5% in the past year.

Some of the famous tech stocks in Louis Bacon’s 13F portfolio as of the second quarter of 2021 are Amazon.com, Inc. (NASDAQ:AMZN), Magna International Inc. (NYSE:MGA), Affirm Holdings, Inc. (NASDAQ:AFRM), Facebook, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT).

Our Methodology:

Let’s analyze our list of the billionaire Louis Bacon’s 10 tech stock picks. For this article, we took into account Moore Global Investments’ 13F portfolio as of the second quarter.

Billionaire Louis Bacon’s 10 Tech Stock Picks

Louis Bacon of Moore Global Investments

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 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 S&P 500 ETF (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.

Billionaire Louis Bacon’s 10 Tech Stock Picks

10. Johnson Controls International plc (NYSE:JCI)

Moore Global Investments’ Stake Value: $33,911,000

Percent of Moore Global Investments 13F portfolio: 0.48%

Number of Hedge Fund Holders: 39

Johnson Controls International plc (NYSE:JCI) stands tenth on our list of the billionaire Louis Bacon’s 10 tech stock picks. It is a global diversified technology company that produces electronics and HVAC equipment. The company also offers services in control systems, energy management, and integrated facility management.

Louis Bacon’s Moore Global Investments holds 494,111 shares in Johnson Controls International plc (NYSE:JCI) as of Q2 2021, valued at $33.9 million. The company accounts for 0.48% of the hedge fund’s 13F portfolio. Recently, Johnson Controls International plc (NYSE:JCI) announced its partnership with an American biotech company Phylagen to develop innovative technology for the future of healthy buildings through microbiomes.

In September, Oppenheimer lifted its price target on Johnson Controls International plc (NYSE:JCI) to $86 and kept an ‘Outperform’ rating on the shares. The firm’s analyst Noah Kaye appreciated the company’s investments in product/digital platforms.

Of the 873 hedge funds tracked by Insider Monkey, 39 hedge funds have positions in Johnson Controls International plc (NYSE:JCI), compared with 41 in the previous quarter. These stakes are valued at over $1.27 billion. Harris Associates is the company’s leading shareholder, with shares worth $337.3 million.

Like Amazon.com, Inc. (NASDAQ:AMZN), Magna International Inc. (NYSE:MGA), Alphabet Inc. (NASDAQ:GOOG), Affirm Holdings, Inc. (NASDAQ:AFRM), Facebook, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT), Johnson Controls International plc (NYSE:JCI) is favored by investors in 2021.

9. Xilinx, Inc. (NASDAQ:XLNX)

Moore Global Investments’ Stake Value: $41,222,000

Percent of Moore Global Investments 13F portfolio: 0.58%

Number of Hedge Fund Holders: 59

Xilinx, Inc. (NASDAQ:XLNX) is an American technology company that supplies programmable logic devices and related software design tools. The company also provides related services using software-based intelligence with hardware optimization. Xilinx, Inc. (NASDAQ:XLNX) ranks ninth on our list of the billionaire Louis Bacon’s 10 tech stock picks.

As of Q2 2021, Moore Global Investments owns 285,000 shares of Xilinx, Inc. (NASDAQ:XLNX), valued at $41.2 million. The hedge fund increased its activity in the company by 45% in the second quarter. The company now represents 0.58% of the hedge fund’s 13F portfolio. In Q2 2021, Xilinx, Inc. (NASDAQ:XLNX) posted an EPS of $0.95, beating the estimates by $0.12. The company’s revenue of $879 million beat the estimates by $23.77 million and presented a 20.9% year-over-year growth. This August, Barclays lifted its price target on Xilinx, Inc. (NASDAQ:XLNX) to $165, while keeping an ‘Equal Weight’ rating on the shares.

As of Q2 2021, 59 hedge funds tracked by Insider Monkey have positions in Xilinx, Inc. (NASDAQ:XLNX), up from 57 in the previous quarter. These stakes are valued at over $4.1 billion. Israel Englander’s Millennium Management is the company’s largest shareholder, with shares worth more than $327.6 million.

Like Amazon.com, Inc. (NASDAQ:AMZN), Magna International Inc. (NYSE:MGA), Alphabet Inc. (NASDAQ:GOOG), Affirm Holdings, Inc. (NASDAQ:AFRM), Facebook, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT), investors and analysts are also paying attention to Xilinx, Inc. (NASDAQ:XLNX) in 2021.

8. Bill.com Holdings, Inc. (NYSE:BILL)

Moore Global Investments’ Stake Value: $60,500,000

Percent of Moore Global Investments 13F portfolio: 0.85%

Number of Hedge Fund Holders: 53

Bill.com Holdings, Inc. (NYSE:BILL) stands eighth on our list of the billionaire Louise Bacon’s 10 tech stock picks. It is a technology company that provides cloud-based software for back-office financial operations mainly for small businesses.

Bill.com Holdings, Inc. (NYSE:BILL) is one of the newest acquisitions of Louis Bacon’s Moore Global Investments, as the hedge fund started building its position in the company with 330,276 shares in Q2 2021, valued at $60.5 million. The company represents 0.85% of the hedge fund’s 13F portfolio. In fiscal Q4 2021, Bill.com Holdings, Inc. (NYSE:BILL) reported revenue of $78.3 million, beating the estimates by $13.3 million and representing 85.9% growth from the prior-year quarter. In September BTIG lifted its price target on Bill.com Holdings, Inc. (NYSE:BILL) to $310 and kept a ‘Buy’ rating on the shares, highlighting the company’s $625 million deal to buy an Australian software company, Invoice2go.

As of Q2 2021, 53 hedge funds tracked by Insider Monkey have positions in Bill.com Holdings, Inc. (NYSE:BILL), up from 51 in the previous quarter. The total value of these stakes is over $2.76 billion.

Like Amazon.com, Inc. (NASDAQ:AMZN), Magna International Inc. (NYSE:MGA), Alphabet Inc. (NASDAQ:GOOG), Affirm Holdings, Inc. (NASDAQ:AFRM), Facebook, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT), Bill.com Holdings, Inc. (NYSE:BILL) is gaining investors’ attention in the tech sector.

7. Alphabet Inc. (NASDAQ:GOOG)

Moore Global Investments’ Stake Value: $62,219,000

Percent of Moore Global Investments 13F portfolio: 0.88%

Number of Hedge Fund Holders: 155

In Q2 2021, Moore Global Investments held 24,825 shares in Alphabet Inc. (NASDAQ:GOOG), valued at $62.2 million. The company represents 0.88% of the hedge fund’s 13F portfolio. Recently, Jefferies lifted its price target on Alphabet Inc. (NASDAQ:GOOG) to $3,325, while keeping a ‘Buy’ rating on the shares.

Of the 873 hedge funds tracked by Insider Monkey, 155 hedge funds have positions in Alphabet Inc. (NASDAQ:GOOG), compared with 159 in the previous quarter. These stakes are valued at over $33.7 billion. With shares worth $76.1 billion, Crake Asset Management is the company’s leading shareholder.

Mawer Investment Management mentioned Alphabet Inc. (NASDAQ:GOOG) in its second-quarter 2021 investor letter. Here is what the firm has to say:

“Many higher growth companies reported strong results amid the pick-up in broad economic activity including Alphabet. These higher growth companies tend to have increased sensitivity to a change in discount rates and were supported as long-term interest rates stabilized over the period.”

6. ServiceNow, Inc. (NYSE:NOW)

Moore Global Investments’ Stake Value: $77,246,000

Percent of Moore Global Investments 13F portfolio: 1.09%

Number of Hedge Fund Holders: 91

ServiceNow, Inc. (NYSE:NOW) is an American software and technology company that specializes in cloud-based workflow automation platforms.

As of Q2 2021, Louis Bacon’s Moore Global Investments owns 140,562 shares in ServiceNow, Inc. (NYSE:NOW), worth over $77.2 million. The hedge fund increased its stake by 84% in the company, which accounts for 1.09% of the fund’s 13F portfolio. In Q2 2021, ServiceNow, Inc. (NYSE:NOW) posted an EPS of $1.42, beating the estimates by $0.21. The company’s revenue for the quarter stood at $1.4 billion, showcasing a 29.6% year-over-year growth. Recently, Summit Insights initiated its coverage on ServiceNow, Inc. (NYSE:NOW) with a ‘Buy’ rating and a $750 price target.

As of Q2 2021, 91 hedge funds tracked by Insider Monkey have positions in ServiceNow, Inc. (NYSE:NOW), down from 98 in the previous quarter. These stakes are valued at over $7.01 billion.

Like Amazon.com, Inc. (NASDAQ:AMZN), Magna International Inc. (NYSE:MGA), Alphabet Inc. (NASDAQ:GOOG), Affirm Holdings, Inc. (NASDAQ:AFRM), Facebook, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT), ServiceNow, Inc. (NYSE:NOW) is one of the Louis Bacon’s favorite tech stocks.

Palm Capital mentioned ServiceNow, Inc. (NYSE:NOW) in its first-quarter 2021 investor letter. Here is what the firm has to say:

“ServiceNow provides software solutions to structure and automate various task and processes for large businesses. The company began in 2004 with a solution to help businesses manage the IT services they offer employees and customers. Unlike the existing solutions in the market, ServiceNow’s offering was built using modern architecture that was flexible, modular, and user-friendly. And it left the incumbents – large companies such as BMC, IBM and MicroFocus – playing catch up.

As the company grew to dominate this market, it saw the opportunity to expand its offering to include the broader task of IT Operations Management – or the monitoring and control of an entire business’s IT infrastructure. And over time its success in improving productivity and user experience in IT resulted in customers asking the company to expand its offering into other business workflows including HR Management and Customer Services – which it has since done.

All ServiceNow’s applications (including those built by customers and third parties) are built on its ‘Now’ platform. This allows the company and its customers to innovate and deploy new solutions quickly. And it helps ServiceNow gather a large amount of data to gain insights into and use machine learning to build solutions to meet customer needs in other areas. Crucially, this platform can interface with other SaaS and legacy software services used by its customers. Not only does this allow an IT department to manage all the myriad software services used by a business from a single point of control, it also reduces the operational disruption risk for those transitioning from legacy software systems to the cloud.

Aside from the ease of use of ServiceNow’s offerings, the other factor driving its growth is that its ‘land and expand’ strategy starts in the IT department of customers – the very department whose task it is to recommend other software solutions for businesses. It is therefore no surprise that more than 75% of ServiceNow’s customers use more than one of its products and 80% of its new business is from existing clients.

The company now serves almost 400 of The Fortune 500 companies and counts 6,900 of the largest enterprises globally as customers. Since listing in 2012, its sales have grown 18-fold from $0.2b to $4.5b – yet another illustration of the pace with which the internet enables businesses to grow and the pace at which digitization is occurring.

Importantly, ServiceNow has a strong switching cost advantage. IT Operations Management is mission critical as businesses cannot afford to risk the failure of IT equipment or software given the growing dependence on digital systems. Furthermore, these services tend to have long lifecycles as change involves an investment of time and money as well as operational disruption. And this lock-in is strengthened as customers build more and more solutions on the Now platform. As evidence of the switching cost advantages, ServiceNow’s retention rates – the percentage of existing customers who are still customers a year later – have never fallen below 97% since listing.

ServiceNow has a long runway of growth ahead. Not only are its existing markets growing in the high single digits as businesses digitize, it is disrupting its existing markets and entering new markets as it develops new products. Furthermore, its customers are also upgrading to premium versions of products. Management estimate that its total addressable market is in the hundreds of billions. Our conservative estimates point to a number comfortably north of $100b. This is significant relative to its current revenue and given the superiority of its products and entrenchment with its customers’ businesses.

What is remarkable about ServiceNow is that it is able to sustain such strong growth while still generating high free cashflow margins – currently above 20%. And these margins will only expand over time as its operating expenses of product development, distribution and marketing decline as a percentage of sales. For example, its marketing spend is currently 40% of sales but according to our calculations, this is yielding returns well above 300%.

ServiceNow is run by a highly rated management team. Its founder is still Chairman. And while its CEO and CFO have recently changed, the new CEO, Bill McDermott left enterprise software titan, SAP, to join the company. Furthermore, the company has substantial management depth.

The company has a net cash position of $1.5b on its balance sheet and generated $1b of free cashflow in 2020 that we expect to grow above 20% per annum over the next five years. Based on the price we paid for the business, we expect to earn more than 8% per annum in US$ from our investment and it is the type of business we would like to own for a long time.”

Click to continue reading and see the Billionaire Louis Bacon’s 5 Tech Stock Picks.

Suggested articles:

Disclosure. None. Billionaire Louis Bacon’s 10 Tech Stock Picks is originally published on Insider Monkey.

This post was originally published on *this site*