In this article, we discuss the top 10 stocks to invest in according to Carl Anderson’s Marcho Partners.
Carl Anderson serves as Chief Investment Officer at Marcho Partners and has 20 years of investing experience. He started his career as an Analyst at Gleacher & Co in 1995, and later on, in 1999, he co-founded an online advertising company, AllAdvantage, and served as its Vice President. He worked there till 2001 and then joined StoneBrook Fund Management where he remained for seven years before joining Glenn Capital Management as Managing Director and Portfolio Manager. Before founding Marcho Partners, Carl Anderson was a partner at Social Capital LP from 2016 to 2018.
Carl Anderson completed his B.A. in Economics from Princeton University. Moreover, he received an MBA from Stanford University Graduate School of Business in 1999.
Marcho Partners is a London-based hedge fund established in the fourth quarter of 2018 and incorporated in England and Wales. It is a technology-focused investment firm that takes both long and short positions in public technology equities.
Sea Limited (NYSE:SE), Shopify Inc. (NYSE:SHOP) and MercadoLibre, Inc. (NASDAQ:MELI) are some of the most notable holdings in Marcho Capital’s portfolio as of the third quarter.
Photo by Joshua Mayo on Unsplash
Our Methodology
We used the third-quarter investment portfolio of Marcho Partners to make this list.
Stocks to Invest In According to Carl Anderson’s Marcho Partners
10. Cazoo Group Ltd (NYSE:CZOO)
Marcho Partners’ Stake Value: $33.3 million
Marcho Partners’ 13F Portfolio: 2.09%
Number of Hedge Fund Holders: 32
Cazoo Group Ltd (NYSE:CZOO) is a London-based online car retailer founded in 2018. The company acts as a subsidiary of Cazoo Holdings Limited. According to third-quarter 13F filings, Marcho Partners owned 4.29 million shares of Cazoo Group Ltd (NYSE:CZOO) worth $33.3 million, representing 2.09% of the hedge fund’s portfolio.
On November 16, Cazoo Group Ltd (NYSE:CZOO) acquired Swipcar, a Spanish consumer car service, for around $34 million.
9. Farfetch Limited (NYSE:FTCH)
Marcho Partners’ Stake Value: $71.5 million
Marcho Partners’ 13F Portfolio: 4.48%
Number of Hedge Fund Holders: 51
Farfetch Limited (NYSE:FTCH) is an online luxury fashion goods company headquartered in London. The company operates in several countries across the globe through online retail. However, it also has in-store operations in the UK, USA, France, and Japan.
Out of 867 hedge funds from the Insider Monkey database, 63 hedge funds held stakes worth $4.25 billion in the second quarter of 2021. However, in the third quarter, the number of hedge funds went down to 51 worth.
Farfetch Limited (NYSE:FTCH) was mentioned by Polen Capital in their third-quarter 2021 investor letter. Here is what the firm said:
“Farfetch, an e-commerce luxury retailer, traded down during the quarter despite beating earnings expectations. We continue to believe Farfetch is well-positioned to capitalize on growth in ecommerce luxury retail because of its scale and carefully cultivated partnerships with leading luxury brands. We added to our position.”
8. Spotify Technology S.A. (NYSE:SPOT)
Marcho Partners’ Stake Value: $100 million
Marcho Partners’ 13F Portfolio: 6.27%
Number of Hedge Fund Holders: 48
Spotify Technology S.A. (NYSE:SPOT) is an online music streaming service. On November 24, Benchmark analyst Matthew Harrigan initiated coverage on Spotify Technology S.A. (NYSE:SPOT) with a $300 price target and Buy rating on its shares. According to Harrigan, the company “continues to out-innovate larger hyperscale tech competitors.”
According to Insider Monkey’s database, Cathie Wood’s ARK Investment Management holds the most significant stake in Spotify Technology S.A. (NYSE:SPOT) with 4.6 million shares worth $1 billion. It is followed by Tiger Global Management LLC with $597.5 million worth of shares. Ken Griffin’s Citadel Investment Group holds the third spot in the company’s shares after the firm increased its holdings in the company by 187% to worth $180.87 million.
Baron Funds mentioned Spotify Technology S.A. (NYSE:SPOT) in their third-quarter 2021 investor letter. Here are the contents of the letter:
“Spotify Technology S.A. is a leading digital music service available in 178 international markets, offering on-demand audio streaming through paid premium subscriptions as well as a free ad-supported model. Shares were down as engagement declined while economies reopened and pandemic restrictions were lifted. We continue to view Spotify as a long-term winner in music streaming with potential to go from 158 million paying subscribers today to over 250 million in four years, driven by its scalable core music product as well as its growing library of spoken word content.”
7. Sea Limited (NYSE:SE)
Marcho Partners’ Stake Value: $134.79 million
Marcho Partners’ 13F Portfolio: 8.45%
Number of Hedge Fund Holders: 117
Sea Limited (NYSE:SE) is a Singaporean tech conglomerate founded in 2009. Its famous subsidiaries include SeaMoney, Shopee, and Garena. The company also owns Lion City Sailors FC, a soccer club that plays in Singapore Premier League.
The investment management firm Tao Value mentioned Sea Limited (NYSE:SE) in its second-quarter 2021 investor letter. Here is what it said:
“Sea continued to execute above expectation. The gaming business continued strong momentum, recording bookings of $1.1 billion, growing 117% y-o-y. The major franchise Free Fire showed no sign of slowing down in established ASEAN & LatAm market and received positive reception from new markets
like US. On e-commerce side, Shopee demonstrated early success in expanding to Brazil, by adopting a low-price category & gamification strategy. For 2021, Shopee is now top downloaded e-commerce app in Brazil, almost 2x of the second-place local leader Mercado Libre (MELI). I also see the most promising development is in its FinTech business – SeaMoney, which more than doubled its revenue in Q1 2021 from the previous quarter! With online lending products rolling out, SeaMoney is poised to grow rapidly, becoming the 3rd growth curve for Sea.”
6. Unity Software Inc. (NYSE:U)
Marcho Partners’ Stake Value: $151.3 million
Marcho Partners’ 13F Portfolio: 9.49%
Number of Hedge Fund Holders: 36
Unity Software Inc. (NYSE:U), formerly known as Over the Edge Entertainment, is a California-based video game software development company founded in 2004. The company acquired a Wellington-based digital visual effects company Weta Digital for $1.63 billion in November 2021 in a cash and shares deal.
According to the third-quarter 2021 filings, Marcho Partners owns approximately 1.2 million shares of Unity Software Inc. (NYSE:U) worth $151.3 million, representing 9.49% of the fund’s portfolio.
Unity Software Inc. (NYSE:U) remained quite bullish for hedge funds in the third quarter of 2021. Out of 867 hedge funds tracked by Insider Monkey, 36 held stakes in the company compared to 29 in the previous quarter.
Apart from Sea Limited (NYSE:SE), Shopify Inc. (NYSE:SHOP) and MercadoLibre, Inc. (NASDAQ:MELI), Unity Software Inc. (NYSE:U) is also one of the top favorite stocks for Marcho Partners.
5. Elastic N.V. (NYSE:ESTC)
Marcho Partners’ Stake Value: $168.4 million
Marcho Partners’ 13F Portfolio: 10.56%
Number of Hedge Fund Holders: 59
Elastic N.V. (NYSE:ESTC) is an American Dutch company that provides enterprise search, observability, security, logging and data analysis, data visualization, and infrastructure monitoring services. The company’s search technology is used by big names such as eBay Inc. (NASDAQ:EBAY), Lyft, Inc. (NASDAQ:LYFT), Uber Technologies, Inc. (NYSE:UBER), Wikipedia, and Tinder among many others.
On December 8, JPMorgan analyst Mark Murphy upgraded Elastic N.V. (NYSE:ESTC) from Neutral to Overweight. The analyst made no changes to the price target of $156.
Elastic N.V. (NYSE:ESTC) was mentioned by Greenhaven Road Capital in its third-quarter 2021 investor letter. Here is what it said:
“Elastic Software (ESTC) – Share prices are up more than threefold since our first purchases of Elastic Software. The company continues to report best-in-class net revenue retention (amount generated from existing customers) of 130%. With recent acquisitions, they are continuing their expansion into security. This is the company with the highest product velocity and largest addressable markets in our portfolio. With a massive base of customers using freemium/opensource products, there are fertile hunting grounds for growth.”
4. Wix.com Ltd. (NASDAQ:WIX)
Marcho Partners’ Stake Value: $173.09 million
Marcho Partners’ 13F Portfolio: 10.86%
Number of Hedge Fund Holders: 25
Wix.com Ltd. (NASDAQ:WIX) is an Israeli company that provides cloud-based web development services from 19 locations across the world. The company has also owned the famous online art community website DevianArt since 2017. It was acquired for $36 million.
At the end of the third quarter of 2021, Marcho Partners owned 883,266 shares of Wix.com Ltd. (NASDAQ:WIX) worth $173.09 million, making up 10.86% of the fund’s portfolio. Marcho Partners increased its holdings in the company by 68% in the same quarter.
Baron Funds mentioned Wix.com Ltd. (NASDAQ:WIX) in its third-quarter 2021 investor letter. Here is what the firm said:
“Underperformance of investments in IT, Consumer Discretionary, and Financials detracted the most from relative results. Wix.com Ltd. provides software that helps microbusinesses build and maintain their websites. Its stock was the largest detractor from performance after the company’s quarterly results showed a modest year-over-year slowdown in new customer additions, driven primarily by the waning of pandemic-driven trends.”
3. MercadoLibre, Inc. (NASDAQ:MELI)
Marcho Partners’ Stake Value: $175.9 million
Marcho Partners’ 13F Portfolio: 11.04%
Number of Hedge Fund Holders: 68
MercadoLibre, Inc. (NASDAQ:MELI) is Latin America’s most popular e-commerce and online auctions company. The company is headquartered in Argentina and incorporated in the USA. The company has approximately 175 million users and operates in 19 countries across Latin America.
The analysts have been quite optimistic about MercadoLibre, Inc. (NASDAQ:MELI) recently. On November 5, Barclays analyst Trevor Young raised the company’s price target to $2200 from $2100.
Panayotis Takis Sparaggis’ Alkeon Capital Management holds the largest stake in MercadoLibre, Inc. (NASDAQ:MELI) with 445,136 shares worth $747.56 million. With an increased activity of 20% in the third quarter of 2021, the company represents 1.26% of Alkeon’s portfolio.
MercadoLibre, Inc. (NASDAQ:MELI) was mentioned by LRT Capital Management in its third-quarter 2021 investor letter. Here is what the firm said:
“Mercadolibre, Inc. (MELI) – the LatAm eCommerce, shipping, and payments company, is now trading at a very attractive valuation – its lowest P/S ratio ever. The concerns here have to do with the recession in Brazil and slowing economic growth throughout the region.”
2. Shopify Inc. (NYSE:SHOP)
Marcho Partners’ Stake Value: $177.9 million
Marcho Partners’ 13F Portfolio: 11.16%
Number of Hedge Fund Holders: 73
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company. As of May 2021, 1.7 million businesses use the company’s platform across 175 countries.
Out of 867 hedge funds in the Insider Monkey database, 73 of them held stakes in Shopify Inc. (NYSE:SHOP) in the third quarter of 2021, compared to 85 in the previous quarter, showing a decline in the hedge fund sentiment.
Here is what the investment management firm ClearBridge Investments said about Shopify Inc. (NYSE:SHOP) in its second-quarter 2021 investor letter:
“Shopify (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”
1. AppLovin Corporation (NASDAQ:APP)
Marcho Partners’ Stake Value: $240.7 million
Marcho Partners’ 13F Portfolio: 15.1%
Number of Hedge Fund Holders: 24
AppLovin Corporation (NASDAQ:APP) is a Californian mobile technology company which through its subsidiaries MAX, AppDiscovery, and SparkLabs allow developers to market, monetize, analyze, and publish their apps.
According to Insider Monkey’s database, 24 companies held stakes worth $1.1 billion in AppLovin Corporation (NASDAQ:APP) in the third quarter of 2021.
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Disclosure: None. 10 Stocks to Invest In According to Carl Anderson’s Marcho Partners is originally published on Insider Monkey.
