10 Best Tech Stocks to Buy According to Anand Parekh’s Alyeska Investment

In this piece, we will take a look at the ten best tech stocks to buy according to Anand Parekh’s Alyeska Investment.

Alyeska Investment is a hedge fund based out of Chicago, Illinois, the United States. It is headed by Mr. Anand Parekh, who is the firm’s chief executive officer and founder.

Mr. Parekh set up his hedge fund in 2008 and its registration with the Securities and Exchange Commission was finalized in 2010. Alyeska Investments is one of the largest hedge funds in the world. By the end of this year’s second quarter, its portfolio was worth a whopping $8.7 billion – the reasons behind which become clearer once we take a brief look at Alyeska’s investment philosophy and customer base.

Mr. Parekh is one of the many hedge fund founders who previously worked at Citadel. He worked at Citadel as the fund’s global head of equities. Before joining Citadel, the executive also worked at the investment bank Deutsche Bank until 2002. At Deutsche, Mr. Parekh worked as the bank’s head of North American credit and interest rate product restructuring, and risk management at Deutsche’s London branch. The investor is a graduate of the University of Michigan, with degrees in English and Mathematics, and is known for focusing on fundamental research as part of his stock picking process.

In today’s piece, we will focus on Alyeska Investment’s top technology stock picks. Given the popularity of the industry, some top companies likely to pique your attention include Alphabet Inc. (NASDAQ:GOOG), Adobe Inc. (NASDAQ:ADBE), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO).

Our Methodology

We took a look at Alyeska Investment’s filings with the U.S. government to gain an idea about its favorite technology stocks as of this year’s second quarter. The firms were then briefly analyzed through their financials, relevant industry developments, and hedge fund holdings gathered through Insider Monkey’s 895 hedge fund survey for Q2 2022.

Best Tech Stocks to Buy According to Anand Parekh’s Alyeska Investment

10. RingCentral, Inc. (NYSE:RNG)

Alyeska Investment’s Stake Value: $85 million

Percentage of Alyeska Investment’s 13F Portfolio: 0.97%

Number of Hedge Fund Holders: 42

RingCentral, Inc. (NYSE:RNG) is an American company that provides a software as a service (SaaS) platform that allows businesses to communicate with each other. The service includes several features such as video calls and SMS messaging. The company is headquartered in Belmont, California.

RingCentral, Inc.’s communications market is slated to grow at a compounded annual growth rate (CAGR) of 13% to stand at $69 billion by the end of 2028. The company posted 28% annual revenue growth in its third fiscal quarter, and at the same time, its subscription revenue grew by 32% annually. Credit Suisse set a $40 share price target for the company in  September 2022, stating that it is playing in a highly lucrative market.

Alyeska Capital owned 1.6 million RingCentral, Inc. shares as part of its Q2 2022 investments, allowing the fund to hold an $85 million stake in the company that represented 0.97% of its portfolio. For the same time period, 42 out of the 895 hedge funds polled by Insider Monkey had also invested in the firm.

RingCentral, Inc.’s largest investor in our database is Panayotis Takis Sparaggis’s Alkeon Capital Management which owns 3.7 million shares that are worth $193 million.

RiverPark Funds mentioned the company in its Q2 2022 investor letter. Here is what the fund said:

As the company’s revenue scales, we expect gross margin to continue to improve from its already strong 80%, while we expect the company to continue to expand its EBITDA margin from 18% in 2022, toward typical SaaS margins of 40% or higher over the next several years…” (Click Here to read the full text)

RingCentral, Inc. joins Adobe Inc., Alphabet Inc., and Take-Two Interactive Software, Inc. in the list of Alyeska Capital’s top technology stock picks for Q2 2022.

9. Akamai Technologies, Inc. (NASDAQ:AKAM)

Alyeska Investment’s Stake Value: $88 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.01%

Number of Hedge Fund Holders: 27

Akamai Technologies, Inc. (NASDAQ:AKAM) is a cloud services company that offers security solutions for infrastructure, websites, and applications. The firm also provides media delivery solutions, cybersecurity protection, and DNS infrastructure. It is headquartered in Cambridge, Massachusetts.

Mr. Parekh’s investment firm owned an $88 million stake in Akamai Technologies, Inc. by the end of the June 2022 quarter. It came in the form of 971,237 shares and it represented 1.01% of its investment portfolio. Insider Monkey studied 895 hedge fund portfolios for their Q2 2022 holdings to discover that 27 had also bought the company’s shares.

Akamai Technologies, Inc.’s latest financial performance is far from stellar. While its revenue in the first half of this year grew by 7%, its net income dropped by a massive 24% annually. However, for a silver lining, its revenue grew by 28% and net income by 8% when compared to the pre-pandemic period.

Akamai Technologies, Inc.’s largest investor after Alyeska Investment is Israel Englander’s Millennium Management which owns 386,852 shares that are worth $35 million.

8. Workday, Inc. (NASDAQ:WDAY)

Alyeska Investment’s Stake Value: $97 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.11%

Number of Hedge Fund Holders: 71

Workday, Inc. (NASDAQ:WDAY) provides enterprise cloud applications that let its customers manage their businesses, execute other applications, maintain financial information, and generate real time financial and operational insights. The company is based in Pleasanton, California.

Workday, Inc.’s shares have taken a beating on the stock market this year, with the share price down a whopping 41% year to date. This drop comes in the wake of a sharp investor exit from technology companies in an era of high inflation and global geopolitical uncertainty. Despite this, the firm expects to bring in $10 billion in revenue this year.

For its June quarter of 2022 investments, Alyeska Capital held a $97 million stake in Workday, Inc.. This came through it holding 697,844 shares and represented 1.11% of its investment portfolio. Insider Monkey’s 895 hedge fund survey for the same time period outlined that 71 had invested in the firm.

Stephen Mandel’s Lone Pine Capital is Workday, Inc.’s largest investor. It holds a $700 million stake that comes via 5 million shares.

7. Paycom Software, Inc. (NYSE:PAYC)

Alyeska Investment’s Stake Value: $112 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.28%

Number of Hedge Fund Holders: 43

Paycom Software, Inc. (NYSE:PAYC) is a human resource software provider that allows companies to manage their employment life cycles. It provides software applications that allow firms to acquire talent by tracking job applications, managing labor attendance, and compensation and budget management. It is based out of Oklahoma City, Oklahoma.

Mr. Parekh’s investment firm owned 402,360 Paycom Software, Inc. shares as the second quarter of this year ended. This allowed it to own a $112 million stake in the firm that constituted 1.28% of its investment portfolio. Insider Monkey took a look at 895 hedge fund portfolios for their June quarter of 2022 investments to discover that 43 had also held a stake in the company.

Paycom Software, Inc.’s systems handled 5.7 million workers by the end of last year, which allowed it to command 10% of its domestic total addressable market. The firm has comfortably grown its revenue by 20% over the course of the past few years, and the firm is playing in a market that is estimated to be worth $27 billion, leaving it with plenty of room to grow.

Paycom Software, Inc.’s largest investor in our database is Greg Poole’s Echo Street Capital Management which owns 479,761 shares that are worth $134 million.

Kerrisdale Capital mentioned the company in its Q2 2022 investor letter. Here is what the fund said:

Paycom’s steady and robust growth over the past decade has come by way of taking market share from payroll industry behemoths ADP and Paychex. Paycom has been accompanied in this quest by high-tech peers Paylocity (PCTY) and closely held BambooHR, and has been buttressed by secular job growth trends in the US small and medium business sector. But Paycom is no longer a $100 million annual revenue upstart, and neither are its peers. At $1.4 billion of run-rate recurring revenue, the company is a scaled business, and combined with Paylocity, Bamboo, and other dynamic tech companies in the sector, the group’s share of the SME payroll market is north of 40%. That’s a lot more than the blue-sky implications of Paycom’s 5% market share claim, and it means that further market share gains will be a lot more difficult going forward.

6. Check Point Software Technologies Ltd. (NASDAQ:CHKP)

Alyeska Investment’s Stake Value: $124 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.4%

Number of Hedge Fund Holders: 34

Check Point Software Technologies Ltd. (NASDAQ:CHKP) is an IT security products and services provider. The firm’s service lets companies protect their internet of things (IoT) devices, cloud infrastructure, and mobiles from 5th and 6th generation cyberattacks. It is headquartered in Tel Aviv, Israel.

Check Point Software Technologies Ltd.’s latest fiscal results saw the firm grow its revenue by 9% annually, with its product and subscription revenues growing by 12% and 14% during the same time period. It also has a fortress balance sheet with a mere $25 million of debt, which is paltry compared to its cash and equivalents of $3.7 billion.

Alyeska Investment held a $124 million stake in Check Point Software Technologies Ltd. as this year’s second quarter ended. This came through the fund owning one million shares of the company and it represented 1.4% of its investment portfolio. Insider Monkey surveyed 895 hedge funds for this year’s second quarter to discover that 34 had also invested in the company.

Out of these, John Overdeck and David Siegel’s Two Sigma Advisors is Check Point Software Technologies Ltd.’s largest investor. It owns 1.2 million shares that are worth $152 million.

Along with Alphabet Inc., Take-Two Interactive Software, Inc., and Adobe Inc., Check Point Software Technologies Ltd. is a top Anand Parekh technology stock.

5. Twilio Inc. (NYSE:TWLO)

Alyeska Investment’s Stake Value: $124 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.42%

Number of Hedge Fund Holders: 64

Twilio Inc. (NYSE:TWLO) provides a cloud communications platform for software developers. This allows them to access a programming interface that allows for consumer engagement and embedding different capabilities. The firm is based in San Francisco, California.

Alyeska Investment owned a $124 million stake in Twilio Inc. as this year’s June quarter ended. The stake represented 1.42% of the firm’s investment portfolio. Insider Monkey’s Q2 2022 survey of 895 hedge funds saw 64 investors in the firm.

Amidst the turbulent economic times that are plaguing the technology industry lately, Twilio Inc. announced in September this year that it is laying off 11% of its employees in order to maintain profitability and profit margins. Piper Sandler reduced the company’s share price target to $113 from $122 in September 2022, as it stated that the firm has several near term catalysts but it should be wary of a slowdown in customer marketing.

Twilio Inc.’s largest investor in our database is Catherine D. Wood’s ARK Investment Management which owns 5.5 million shares that are worth $586 million.

RiverPark Funds mentioned the company in its Q2 2022 investor letter. Here is what the fund said:

We forecast 30% annual revenue growth through 2027, with EBITDA margins approaching the company’s long-term model guidance of 27% to generate $11.49 of EPS. At its current stock price, TWLO trades at about 5x this 2027 EPS projection (and trades at only 3x our 2030 EPS estimate). We project that the company will generate nearly 65% of its current enterprise value in excess free cash over the next five years and all of its current enterprise value in excess cash by the end of the decade…” (Click Here to read the full text)

4. Alphabet Inc. (NASDAQ:GOOG)

Alyeska Investment’s Stake Value: $129 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.48%

Number of Hedge Fund Holders: 153

Alphabet Inc. is one of the largest technology firms in the world that is primarily known for its search engine Google. The company also has a host of other technologies and products in its portfolio, such as autonomous driving, cloud computing, and productivity applications.

Alphabet Inc. announced earlier this month that it had decided to wind down its Stadia gaming service – a decision that left developers surprised as they complained that the company had not provided them with a warning. In a nice pivot to environmentally friendly technologies, the firm announced in September 2022 that it is introducing a new platform that will allow its users to search for environmentally friendly hotels and airplane tickets for their vacations.

Mr. Parekh’s investment firm owned 59,573 Alphabet Inc. shares as part of its second quarter of 2022 investment portfolio which let it own a $129 million stake in the company. For the same time period, 153 out of the 895 hedge funds polled by Insider Monkey had also invested in the company.

Alphabet Inc.’s largest investor in our database is Chris Hohn’s TCI Fund Management which owns 2.4 million shares that are worth $5.4 billion.

“The largest adds were Alphabet, the parent of Google, and Meta, formerly called Facebook. Alphabet came into the portfolio at the last rebalance after Q1 2022, but was increased again as valuation improved with a decline in enterprise value despite rising free cash flow estimates. Figure 13 plots the indexed change in Alphabet’s enterprise value and free cash flow estimates since the start of the year and the overall result looks very similar to the lines for Apple on the previous page. In conjunction with the stability in cash flows highlighted earlier, this makes Alphabet look very appealing. In contrast to Alphabet, Figure 14 shows the same indexed enterprise value and rolling next-twelve-month consensus estimate for free cash flow for Amazon, and highlights how Amazon’s performance has largely followed downward revisions in its estimated profitability.”

3. Adobe Inc. (NASDAQ:ADBE)

Alyeska Investment’s Stake Value: $147 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.68%

Number of Hedge Fund Holders: 92

Adobe Inc. is a technology company that enables its customers to develop content and manage customer experiences. The firm deals directly with enterprise customers and it is based in San Jose, California.

As part of its Q2 2022 holdings, Alyeska Investment owned a $147 million stake in Adobe Inc.. This made up 1.68% of the firm’s investment portfolio. Insider Monkey’s second quarter of 2022 survey of 895 hedge funds revealed that 92 had also invested in the company.

Adobe Inc. has managed to grow its revenue consistently for the past ten years and its operating income for the last six years. Additionally, it is one of the strongest firms in the industry in terms of free cash flow to revenue margin, with the latest figure showing that out of every $100 in revenue, the firm generates $41.50 in free cash flow.

Adobe Inc.’s largest investor is Ken Fisher’s Fisher Asset Management which owns 6.1 million shares that are worth $2.2 billion.

Polen Capital mentioned the company in its Q2 2022 investor letter. Here is what the fund said:

We expect the company to continue to grow earnings at a highteens or better rate for the foreseeable future on the back of robust secular growth tailwinds in digital content creation and consumption. Adobe’s tools are the de facto standards for various applications such as graphics and video editing. In addition, Adobe stands to be a leader in providing tools for creators to develop aspects of the immersive internet (metaverse) as that develops as well.

2. Atlassian Corporation Plc (NASDAQ:TEAM)

Alyeska Investment’s Stake Value: $150 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.72%

Number of Hedge Fund Holders: 66

Atlassian Corporation Plc (NASDAQ:TEAM) develops and sells a host of software products such as workflow, strategic product management, content collaboration, and centralized administration. The firm is headquartered in Sydney, Australia.

Atlassian Corporation Plc’s latest fiscal quarter saw the firm grow its revenue by 40% and at the same time, the firm also posted a strong gross margin of 82% – as it benefited from being a software company with low costs of product development. Mizuho kept a $360 price target for the company in September 2022, stating that the firm will benefit from recent price increases.

Alyeska Investment owned 803,823 Atlassian Corporation Plc shares as this year’s second quarter came to an end. This let it own a $150 million stake in the company. Insider Monkey’s 895 hedge fund survey for the same time period saw 66 investors in the firm.

Atlassian Corporation Plc’s largest investor is Henry Ellenbogen’s Durable Capital Partners which owns 2.5 million shares that are worth $485 million.

Artisan Partners mentioned the company in its Q2 2022 investor letter. Here is what the fund said:

“Atlassian Corporation Plc (NASDAQ:TEAM) is a leading provider of innovative, customizable team-collaboration software tools for over 200,000 customers. Despite positive fundamental momentum—the company recently reported 30% revenue growth and 28% trailing twelve months FCF margins—shares traded lower during Q2 as investors rotated out of high-growth stocks with elevated multiples. The company’s highly efficient sales and marketing capability, combined with substantial R&D investment, points to sustained long-term revenue and FCF growth. Meanwhile, we recognize a recession would likely have an impact on Atlassian via slowing growth metrics. However, we believe its low priced, mission critical cloud tools would prove relatively resilient in this scenario. For these reasons and shares trading at a very attractive valuation for a business with highly recurring revenues, strong revenue growth prospects and attractive margins, we added to our position.”

1. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

Alyeska Investment’s Stake Value: $169 million

Percentage of Alyeska Investment’s 13F Portfolio: 1.93%

Number of Hedge Fund Holders: 66

Take-Two Interactive Software, Inc. is one of the largest video game development firms in the world. It has several development brands in its portfolio, with the most famous one of these being Rockstar Games which is renowned for the video game Grand Theft Auto.

For its Q2 2022 investments, Mr. Parekh’s hedge fund owned a $169 million stake in Take-Two Interactive Software, Inc. which represented 1.93% of its investment portfolio. Insider Monkey surveyed 895 hedge fund holdings for their June quarter of 2022 investments to discover that 66 had bought a stake in the game developer.

Take-Two Interactive Software, Inc.’s GTA franchise is one of the most well recognized brands in the world, and it is expected that the company will further build on this by integrating a metaverse in the platform. To date, GTA V has sold 170 million units, becoming one of the most successful gaming brands in the world.

Take-Two Interactive Software, Inc.’s largest investor in our database is Andreas Halvorsen’s Viking Global which owns 1.9 million shares that are worth $245 million.

Suggested Articles:

• 12 Best Food Stocks To Buy Now
• 14 Best Clean Energy Stocks to Invest In
• 10 Best Machine Learning Stocks to Invest In

This article is originally published at Insider Monkey.