In this article, we will discuss the 10 best technology stocks to buy according to billionaire Dan Loeb. If you want to skip our detailed analysis of these stocks, you can go directly to 5 Best Technology Stocks to Buy According to Billionaire Dan Loeb.
Daniel S. Loeb is the founder, CEO, and CIO of New York-based Third Point LLC. The hedge fund was established in 1995 and currently has a portfolio value of over $18.3 billion. Loeb’s fortune stands at $4 billion, according to Forbes. Loeb completed his Bachelor’s in Economics from Columbia University in 1983, where today he has a scholarship after his name for undergraduate students. He began his investing career at the private equity firm Warburg Pincus in 1984. His next job was related to securing debt financing as director of corporate development at Island Records from 1987 to 1990.
In 1991, he became the Senior Vice President of the distressed debt department at Jefferies LLC. In this position, the 59-year old gained exposure regarding selling distressed securities, analyzing bankruptcies, and trading bank debt. After that, he moved over to Citigroup Inc. (NYSE:C), where he worked as Vice President in the high-yield bond sales department briefly from 1994 to 1995.
Loeb’s investment mantra is to go long on companies that are in hot waters, replace underperforming management and bring the companies back to profitability or increase their profitability through restructuring efforts. The hedge fund focuses on generating outstanding risk-adjusted returns by taking on limited market risk. In the Q3 investor letter, Third Point stated that it had returned over 12.5% in the flagship Offshore Fund for the third quarter, in comparison to the 0.6% returns offered by S&P 500 INDEX (TR) for the same period. The hedge fund’s annualized return was revealed to be 15.5%, while the year-to-date returns were 29.5%.
Most recently, the hedge fund manager has locked horns with the management of European oil giant Royal Dutch Shell plc (NYSE:RDS-B). He is demanding the company be broken into two separate businesses. The first business comprised of the legacy oil and gas assets that give out strong returns to its shareholders, and the second business focused upon renewable energy that survives on its own. Loeb contests that the do-it-all approach is unable to attract shareholders as the Anglo-Dutch Big Oil company does not have a clear path to success with a singular focus.
Microsoft Corporation (NASDAQ:MSFT) is one of the large-cap stocks in Loeb’s portfolio. The hedge fund owns 1.6 million shares in the company, worth nearly $451 million as of Q3 2021. The investment represents 2.46% of the portfolio. Of the 867 hedge funds being tracked by Insider Monkey, 250 held a position in Microsoft Corporation (NASDAQ:MSFT) at the end of Q3, up from 238 in the preceding quarter.
Dell Technologies (NYSE:DELL) is another popular stock held by Third Point. Dan Loeb has increased his investment in Dell Technologies (NYSE:DELL) from $313.49 million in Q2 to $349.5 million in Q3.
Based on the 13F holdings for the third quarter, Dan Loeb’s Third Point owns 9 million shares in Intel Corporation (NASDAQ:INTC), representing a market value of $479.5 million. Dan Loeb has increased his investment in Intel Corporation (NASDAQ:INTC) by a total of 8 million shares, beginning from Q4 2020 to Q3 2021. The investment represents 2.61% of Dan Loeb’s portfolio.
In this article, we will be looking at the 10 best technology stocks to buy according to billionaire Dan Loeb. These 10 stocks have a cumulative holding of 22.49% in the overall portfolio. We have chosen these stocks from the Q3 portfolio of Third Point LLC. We have also analyzed data of the 867 elite funds being tracked by Insider Monkey to gauge the hedge fund sentiment.
Best Technology Stocks to Buy According to Billionaire Dan Loeb
10. Aurora Innovation, Inc. (NASDAQ:AUR)
Third Point LLC’s Stake Value: $50,963,000
Percentage of Third Point LLC’s 13F Portfolio: 0.27%
Aurora Innovation, Inc. (NASDAQ:AUR) is a company specializing in self-driving vehicle technology. Aurora Innovation, Inc. (NASDAQ:AUR) went public in May 2021 and has since experienced a meteoric rise of nearly 30% from its IPO price.
The Pittsburg, Pennsylvania-based company considers itself a self-driving technology company and is a pure-play for investors as opposed to diversified automobile players or tech giants like Tesla, Inc. (NASDAQ:TSLA) or Alphabet Inc. (NASDAQ:GOOG). Aurora Driver is the proprietary platform of Aurora Innovation, Inc. (NASDAQ:AUR) that brings together the data services, hardware, and software of a vehicle on a single page. The platform is operable on heavy-duty trucks, light commercial vehicles, and passenger vehicles. There is a significant market potential for autonomous driving in the goods delivery, ride-hailing and trucking industries.
Aurora Innovation, Inc. (NASDAQ:AUR) intends to focus on the trucking industry and plans to offer a subscription-based model to replace drivers.
In addition to Aurora Innovation, Inc. (NASDAQ:AUR), Dan Loeb’s Third Point also held stakes in Microsoft Corporation (NASDAQ:MSFT), Dell Technologies (NYSE:DELL), and Intel Corporation (NASDAQ:INTC) at the end of Q3 2021.
9. Black Knight, Inc. (NYSE:BKI)
Third Point LLC’s Stake Value: $129,600,000
Percentage of Third Point LLC’s 13F Portfolio: 0.7%
Black Knight, Inc. (NYSE:BKI) provides software, data, and analytics solutions to the mortgage and real estate industries that automate and facilitate many steps in the homeownership process.
In a research note issued on September 30 to investors, Patrick O’ Shaughnessy at Raymond James upgraded Black Knight, Inc. (NYSE:BKI) from Market Perform an Outperform with an $83 target price. The analyst sees Black Knight, Inc. (NYSE:BKI) experiencing double-digit growth in 2022 following the end of federal foreclosure in August 2021, along with cross-selling momentum in the real estate and mortgage market.
8. TE Connectivity Ltd. (NYSE:TEL)
Third Point LLC’s Stake Value: $179,758,000
Percentage of Third Point LLC’s 13F Portfolio: 0.98%
TE Connectivity Ltd. (NYSE:TEL) is a designer and manufacturer of connectivity and sensing products that act as an integral input of various industries like aerospace, automotive, consumer electronics, data communication systems, defense, energy, medical, and oil, and gas. TE Connectivity Ltd. (NYSE:TEL) claims that 247 billion products are manufactured annually with its components. Dan Loeb’s Third Point owns over 1.3 million shares in TE Connectivity Ltd. (NYSE:TEL), worth nearly $179.8 million as of Q3 2021.
In a research note issued on November 9, Shreyas Patil at Wolfe Research upgraded TE Connectivity Ltd. (NYSE:TEL) from a Peer Perform to an Outperform rating and increased the price target from $148 to $190. The analyst highlighted that TE Connectivity Ltd. (NYSE:TEL) had been appreciated for its exposure across various industries and a “best-in-class” free cash flow conversion. The company is also experiencing “sustained (and strong) organic growth.”
7. Alight, Inc. (NYSE:ALIT)
Third Point LLC’s Stake Value: $195,160,000
Percentage of Third Point LLC’s 13F Portfolio: 1.06%
Alight Inc. (NYSE:ALIT) is a provider of cloud-based benefits, HR, and payroll solutions globally. The Lincolnshire, Illinois-based company has a headcount of 15,000 employees and is serving 4,300 clients spread across 100 countries. Dan Loeb’s Third Point LLC initiated a position in Alight Inc. (NYSE:ALIT) during Q3 2021.
Overall, 42 hedge funds, out of the 867 tracked by Insider Monkey, reported owning a stake in Alight Inc. (NYSE:ALIT) at the end of Q3. The total value of the investment stood at nearly $1.28 billion.
6. Paysafe Limited (NYSE:PSFE)
Third Point LLC’s Stake Value: $305,924,000
Percentage of Third Point LLC’s 13F Portfolio: 1.66%
Paysafe Limited (NYSE:PSFE) is a provider of payment platforms through its payment processing, digital wallet, and online cash solutions services with experience of over 20 years under its belt. Paysafe Limited (NYSE:PSFE) had a transaction volume of over $100 billion in 2020. The company employs 3,400 people across 12 locations globally.
Paysafe Limited (NYSE:PSFE) reported underwhelming Q3 2021 results before the opening bell on November 11. The company reported revenues of $353.59 million, declining by 0.5% YoY and missing the consensus estimate of $370.63 million. Paysafe Limited (NYSE:PSFE) cited challenges in the digital wallet business for missing the top-line estimate. The company also provided soft guidance for Q4 and FY21. For Q4 2021, Paysafe anticipates revenue of $355 million to $365 million, compared to a consensus of $417.74 million. Meanwhile, for FY21, Paysafe Limited (NYSE:PSFE) has guided revenue of $1.53 billion to $1.55 billion as opposed to a consensus estimate of $1.55 billion.
Daniel Perlin at RBC Capital has still given the stock an Outperform rating but revised the price target from $15 to $9 on November 12 to incorporate the impact of the financial results. However, the attractive price target reflects a potential upside of 138% from the current stock price. The analyst highlighted the digital wallet segment has come under pressure due to intense competition from open banking and direct to bank applications in Europe, substituting Paysafe Limited’s (NYSE:PSFE) offering.
Apart from Paysafe Limited (NYSE:PSFE), Microsoft Corporation (NASDAQ:MSFT), and Dell Technologies (NYSE:DELL), Intel Corporation (NASDAQ:INTC) is also a part of Dan Loeb’s Q3 portfolio.
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Disclose. None. 10 Best Technology Stocks to Buy According to Billionaire Dan Loeb is originally published on Insider Monkey.