A protégé of the legendary Julian Robertson, David Goel founded Matrix Capital Management in 1999 together with Paul Ferri. Goel also has stints at General Atlantic and Morgan Stanley under his belt, while Ferri had previously worked at various venture capitalist companies. Matrix Capital uses fundamental analysis to evaluate stocks and identify long-term investment opportunities. Goel and his team invest mainly in the technology, telecommunications and consumer staples sectors. At the end of the third quarter, the fund managed roughly $2.38 billion worth of equity investments, 57% of which came from the technology sector.
To evaluate a fund manager’s ability to pick stocks, Insider Monkey analyzes their equity positions in companies that have a market cap of $1 billion or more. According to this metric, Matrix Capital Management’s picks had weighted average returns of 11.69% in the third quarter from 15 stocks that qualified under the above-mentioned criteria. This article analyzes some of the fund’s largest equity positions at the end of the third quarter, including Pandora Media Inc (NYSE:P), New Relic Inc (NYSE:NEWR), American Tower Corp (NYSE:AMT), and Constellation Brands, Inc. (NYSE:STZ).
First up is Pandora Media Inc (NYSE:P), a stock that was recently added to Matrix Capital Management’s portfolio. During the third quarter, the fund’s management made no change to its position, continuing to hold 22.7 million shares, worth approximately $326 million at the end of September. Pandora Media Inc (NYSE:P) extended its recent rally into the third quarter, having advanced by 15.1% between July and September.
Heading into the third quarter of 2016, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 31% from the first quarter. More specifically, Matrix Capital Management was the largest shareholder of Pandora Media, followed by Eminence Capital, which amassed a stake valued at $146.8 million. Corvex Capital, Water Street Capital, and Crosslink Capital also held valuable positions in the company.
A provider of software analytics products, New Relic Inc (NYSE:NEWR) is another top bet, which Matrix Capital Management has held since the end of 2014. According to its latest 13F filing, the fund held 4.85 million shares of it at the end of the third quarter, unchanged from the previous quarter. At the end of September, the position was valued at $185 million. The third quarter was a great time to be an investor in New Relic Inc (NYSE:NEWR), as the stock returned 30.4% during the period.
Heading into the quarter, a total of 16 of the hedge funds followed by Insider Monkey held long positions in this stock, up by 60% from one quarter earlier. Again, the largest stake in New Relic Inc (NYSE:NEWR) was held by Matrix Capital Management, followed by Whale Rock Capital Management with a $20.4 million position. Other investors bullish on the company included Passport Capital, Polar Capital, and Nokota Management.
We’ll check out two more of the fund’s stock picks on the next page.