In this article, we discuss the 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital based on Q2 holdings of the fund.
Guy Spier is a Zurich-based investor. In 1988, he graduated from Oxford University with a first class degree in philosophy, politics, and economics. Guy Spier also obtained an MBA degree from Harvard Business School. He worked as a Research Associate at Braxton Associates, as President at Oxford Alumni Association of New York, and as an investor at Berkshire Hathaway. Spier also served on the boards of UN Watch, and Swiss Friends of Oxford University. He is currently the managing director of Aquamarine Capital Management.
Guy Spier started Aquamarine Capital in 1997, inspired by Warren Buffett’s investing philosophies and with financial backing from his family and friends. The hedge fund soon grew to include third-party investors. Guy Spier is a fervent Warren Buffett supporter who believes in Buffett’s value investing and capital allocation strategies.
As of the second quarter of 2021, some notable stock picks of Guy Spier’s Aquamarine Capital portfolio include Berkshire Hathaway Inc. (NYSE:BRK-A), Alibaba Group Holding Limited (NYSE:BABA), and Bank of America Corporation (NYSE:BAC).
Aquamarine Capital’s most significant investment, with 140,600 shares valued at $39.08 million, is Berkshire Hathaway Inc. (NASDAQ: BRK.A).
Based on the latest 13F holdings for the second quarter of 2021, Guy Spier’s Aquamarine Capital owns 47,500 shares in Alibaba Group Holding Limited (NYSE:BABA), worth $10.77 million. On October 1, KeyBanc analyst Hans Chung lowered his price target on Alibaba Group Holding Limited (NYSE:BABA) to $200 from $250 and kept an “Overweight” rating on the shares.
Bank of America Corporation (NYSE:BAC) is another large-cap stock in Aquamarine Capital’s portfolio, in which the fund holds 767,845 shares worth $31.66 million.
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Why should we pay attention to Guy Spier’s stock picks? 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.
With this background in mind, let’s start our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital. We used Spier’s 13F portfolio for Q2 2021 for this analysis.
Stocks to Buy in 2021 According to Guy Spier’s Aquamarine Capital
10. Daily Journal Corporation (NASDAQ:DJCO)
Spier’s Stake Value: $3,893,000
Percentage of Guy Spier’s 13F Portfolio: 1.82%
Number of Hedge Fund Holders: 3
Daily Journal Corporation (NASDAQ:DJCO), based in Los Angeles, California, is a publishing and technology firm.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $4.55 million in Daily Journal Corporation (NASDAQ:DJCO), up from 1 in the preceding quarter worth $222,000. In addition, the stock is a new arrival on Guy Spier’s portfolio, as his hedge fund bought about 11,500 shares of Daily Journal Corporation (NASDAQ:DJCO), worth $3.89 million.
Just like Berkshire Hathaway Inc. (NYSE:BRK-A), Alibaba Group Holding Limited (NYSE:BABA), and Bank of America Corporation (NYSE:BAC), Daily Journal Corporation (NASDAQ:DJCO) is one of the stocks to buy according to Guy Spier’s Aquamarine Capital.
9. Seritage Growth Properties (NYSE:SRG)
Spier’s Stake Value: $9,200,000
Percentage of Guy Spier’s 13F Portfolio: 4.31%
Number of Hedge Fund Holders: 10
Seritage Growth Properties (NYSE:SRG) is placed ninth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital. The firm is a publicly listed, self-administered, and self-managed real estate investment trust.
At the end of the second quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $122.88 million in Seritage Growth Properties (NYSE:SRG). Mohnish Pabrai is the leading shareholder of Seritage Growth Properties (NYSE:SRG) with 4.73 million shares, worth over $87.09 million.
8. Moody’s Corporation (NYSE:MCO)
Spier’s Stake Value: $9,784,000
Percentage of Guy Spier’s 13F Portfolio: 4.58%
Number of Hedge Fund Holders: 44
Moody’s Corporation (NYSE:MCO) is ranked eighth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital. It is a commercial and financial services firm based in the United States.
In September, Oppenheimer analyst Owen Lau raised his price target on Moody’s Corporation (NYSE:MCO) to $418 from $406 and maintained an “Outperform” rating on the stock.
Out of the hedge funds being tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway is a leading shareholder in Moody’s Corporation (NYSE:MCO) with 24.67 million shares worth more than $8.94 billion. Aquamarine Capital holds 27,000 shares in Moody’s Corporation (NYSE:MCO) worth over $9.78 million, representing 4.58% of their portfolio.
In addition to Berkshire Hathaway Inc. (NYSE:BRK-A), Alibaba Group Holding Limited (NYSE:BABA), and Bank of America Corporation (NYSE:BAC), Moody’s Corporation (NYSE:MCO) is one of the stocks to buy according to Guy Spier’s Aquamarine Capital.
In its second-quarter 2021 investor letter, Qualivian Investment Partners, an investment management firm, mentioned Moody’s Corporation (NYSE: MCO). Here is what the fund said:
“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional ratings business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”
7. Alibaba Group Holding Limited (NYSE:BABA)
Spier’s Stake Value: $10,772,000
Percentage of Guy Spier’s 13F Portfolio: 5.05%
Number of Hedge Fund Holders: 146
Alibaba Group Holding Limited (NYSE:BABA) is commonly known as China’s Amazon. It is a global technology conglomerate focused on e-commerce, retail, the Internet, and technology. It is placed seventh on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital.
Alibaba Group Holding Limited (NYSE:BABA) is the latest addition in Guy Spier’s hedge fund portfolio, as Aquamarine Capital bought 47,500 shares worth $10.77 million. Hedge fund sentiment increased for Alibaba Group Holding Limited (NYSE:BABA) in the second quarter. Insider Monkey’s data shows that 146 elite hedge funds held stakes in the company at the end of the second quarter, up from 135 funds a quarter earlier.
In its second-quarter 2021 investor letter, Polen Capital Management, an investment management firm, mentioned Alibaba Group Holding Limited (NYSE:BABA). Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
6. Ferrari N.V. (NYSE:RACE)
Spier’s Stake Value: $16,506,000
Percentage of Guy Spier’s 13F Portfolio: 7.74%
Number of Hedge Fund Holders: 27
Ferrari N.V. (NYSE:RACE) develops, manufactures, and distributes premium performance sports vehicles through its subsidiaries. It stands sixth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital.
On September 16, Ferrari N.V. (NYSE:RACE) was downgraded from “Outperform” to “Neutral” by Exane BNP Paribas analyst Giulio Pescatore.
At the end of the second quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $992.82 million in Ferrari N.V. (NYSE:RACE), up from 26 in the previous quarter worth $1.26 billion. In addition, Aquamarine Capital holds 80,000 shares in Ferrari N.V. (NYSE:RACE) worth $16.51 million, representing 7.74% of its investment portfolio.
In its second-quarter 2021 investor letter, Ensemble Capital, an investment management firm, mentioned Ferrari N.V. (NYSE: RACE). Here is what the fund said:
“Ferrari: After posting standout performance in 2020, beating the S&P 500 by over 20%, Ferrari’s share price performance has lagged for much of this year. The main issue this quarter was the company pushing out their medium-term financial targets due to development and production delays caused by COVID, but this only led to a 1% decline in the stock price for the full quarter. While we believe the company did a fantastic job maintaining production in light of COVID, it did not surprise us that some of their longer-term, new model introductions might be delayed by a couple of quarters. While disappointing of course, Ferrari is curating a set of extremely exclusive mechanical works of art and we are much happier seeing them take the time to do things right, rather than rushing to meet a self-imposed financial target.”
5. Micron Technology, Inc. (NASDAQ:MU)
Spier’s Stake Value: $16,996,000
Percentage of Guy Spier’s 13F Portfolio: 7.97%
Number of Hedge Fund Holders: 87
Micron Technology, Inc. (NASDAQ:MU) is a computer memory and data storage company in the United States. Its products include dynamic random-access memory, flash memory, and USB flash drives. It ranks fifth on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital.
On September 29, Wedbush analyst Matt Bryson lowered his price target on Micron Technology, Inc. (NASDAQ:MU) to $85 from $105 and maintained a “Neutral” rating on the shares post fourth-quarter results.
Arrowstreet Capital is the most significant shareholder of Micron Technology, Inc. (NASDAQ:MU) with 14.86 million, worth $1.26 billion. The hedge fund chaired by Guy Spier holds 200,000 shares in Micron Technology, Inc. (NASDAQ:MU) worth $17 million.
In its first-quarter 2021 investor letter, Bonsai Partners mentioned Micron Technology, Inc. (NASDAQ:MU). Here is what the fund said:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
4. Mastercard Incorporated (NYSE:MA)
Spier’s Stake Value: $24,005,000
Percentage of Guy Spier’s 13F Portfolio: 11.26%
Number of Hedge Fund Holders: 156
In September, Mastercard Incorporated (NYSE:MA) announced a quarterly dividend of $0.44 per share, in line with the previous. In August, JPMorgan analyst Tien-Tsin Huang raised his price target on Mastercard Incorporated (NYSE:MA) to $430 from $427 and reiterated an “Overweight” rating on the shares.
Aquamarine Capital holds 65,750 shares in Mastercard Incorporated (NYSE:MA) worth $24.01 million, representing 11.26% of its portfolio. At the end of the second quarter of 2021, 156 hedge funds in the database of Insider Monkey held stakes worth $17.10 billion in Mastercard Incorporated (NYSE:MA), up from 151 the preceding quarter worth $1.71 billion.
Qualivian Investment Partners, in its second-quarter 2021 investor letter, mentioned Mastercard Incorporated (NYSE:MA). Here is what the fund has to say in its letter:
“Mastercard: Q2 revenue and EPS beat consensus estimates by 3.7% and 12% respectively. Operating margins also beat consensus by +240 bps. Gross domestic volume growth of +38.3% (+32.8% in constant currency) was buttressed by continued e-commerce strength and better in-store performance, while purchase volumes grew 41.8% (35.5% in constant currency). Cross border performance was strong, but durability remains uncertain given uncertainty arising from the Delta variant and its impact on travel and tourism. We believe Mastercard has a robust runway for growth given further travel recovery, new/existing partnerships, traction in digital payments, and ongoing economic recovery.”
3. Bank of America Corporation (NYSE: BAC)
Spier’s Stake Value: $31,658,000
Percentage of Guy Spier’s 13F Portfolio: 14.85%
Number of Hedge Fund Holders: 87
On October 11, Jefferies analyst Ken Usdin raised his price target on Bank of America Corporation (NYSE:BAC) to $48 from $41 and reiterated a “Hold” rating on the shares.
In the second quarter of 2021, Aquamarine Capital owned 767,845 shares in Bank of America Corporation (NYSE:BAC) worth $31.66 million. This represented 14.85% of the investment portfolio of Aquamarine Capital. Legendary investor and billionaire Warren Buffett’s Berkshire Hathaway is the most significant stakeholder in Bank of America Corporation (NYSE:BAC) out of the 873 hedge funds tracked by Insider Monkey at the end of the second quarter. The Oracle of Omaha owns 1.01 billion shares of the company worth $41.65 billion.
In its first-quarter 2021 investor letter, ClearBridge Investments, an investment management firm, mentioned Bank of America Corporation (NYSE:BAC). Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
2. American Express Company (NYSE:AXP)
Spier’s Stake Value: $34,698,000
Percentage of Guy Spier’s 13F Portfolio: 16.27%
Number of Hedge Fund Holders: 52
On October 16, BofA analyst Mihir Bhatia upgraded American Express Company (NYSE:AXP) to “Neutral” from “Underperform” and gave a price target of $169. In September, American Express Company (NYSE:AXP) declared a quarterly dividend of $0.43 per share, in line with the previous.
American Express Company (NYSE:AXP) stock accounts for about 16.27% of Aquamarine Capital’s portfolio, as the hedge fund owns a $34.70 million stake in the company.
In its second-quarter 2021 investor letter, ClearBridge Investments, an investment management firm, mentioned American Express Company (NYSE:AXP). Here is what the fund said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
1. Berkshire Hathaway Inc. (NYSE:BRK.A)
Spier’s Stake Value: $39,076,000
Percentage of Guy Spier’s 13F Portfolio: 18.33%
Number of Hedge Fund Holders: 116
Berkshire Hathaway Inc. (NYSE:BRK-A) operates in the insurance, freight rail transportation, and utility industries worldwide through its subsidiaries. It is ranked first on our list of 10 stocks to buy in 2021 according to Guy Spier’s Aquamarine Capital.
The hedge fund managed by Guy Spier owns more than 140,600 shares in Berkshire Hathaway Inc. (NYSE:BRK.A) worth over $39.08 million, representing close to 18.33% of their portfolio. Our database shows that 116 hedge funds are bullish on Berkshire Hathaway Inc. (NYSE:BRK.A) in the second quarter of 2021, up from 111 in the previous quarter. The hedge fund also owns 30 class A shares of Berkshire Hathaway.
In its third-quarter 2021 investor letter, Black Bear Value Partners mentioned Berkshire Hathaway Inc. (NYSE:BRK.A). Here is what the fund said:
“Please see Q1 letter for our Berkshire on a Napkin investment exercise. We have written on it extensively and will save your eyeballs from extraneous reading. Berkshire is very cheap for owning such high-quality businesses and will continue to grind higher and compound value for us.”
You can also take a peek at 8 Best Stocks to Buy According to Billionaire Nicholas J. Pritzker and 10 Best Stocks to Buy According to Billionaire Daniel Sundheim.
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Disclosure: None. 10 Stocks to Buy in 2021 According to Guy Spier’s Aquamarine Capital is originally published on Insider Monkey.
