In this article, we discuss the 10 tech stock picks of Seth Wunder’s Black-And-White Capital based on Q2 holdings of the fund.
Seth Wunder is the portfolio manager of Black-And-White Capital, which he started in May 2016. He was also a founding partner at Contour Asset Management LLC and Tracer Capital Management LLC. Mr. Wunder was a member of the investing team of Brummer & Partners. He also worked as an analyst at Morgan Stanley Investment Management and Oppenheimer Funds. Mr. Wunder graduated from Cornell University with a B.S. degree in Applied Economics and Business Management.
Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), and Zoom Video Communications, Inc. (NASDAQ:ZM) were among the top holdings in Black-And-White Capital’s investment portfolio at the end of the second quarter of 2021.
The hedge fund, however, reduced its stake in Amazon.com, Inc. (NASDAQ:AMZN) by 9% from the first quarter of 2021, and currently owns 16,790 shares worth $57.76 million. Cowen analyst John Blackledge lowered his price target on Amazon.com, Inc. (NASDAQ:AMZN) to $4300 from $4400 and kept an “Outperform” rating on the shares.
Seth Wunder’s Black-And-White Capital began building its stake in Facebook, Inc. (NASDAQ:FB) in the first quarter of 2021. Though the hedge fund sold 150,200 shares of Facebook, Inc. (NASDAQ:FB) in the second quarter, it still owns 83,100 shares of the company.
Black-And-White Capital also has an $18.66 million stake in Zoom Video Communications, Inc. (NASDAQ:ZM), a cloud-based video conferencing platform.
Source: Pexels
Why is it important to keep an eye on hedge funds’ 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.
Keeping all these points in mind, let’s start our list of the 10 tech stock picks of Seth Wunder’s Black-And-White Capital. We used Wunder’s 13F portfolio for Q2 2021 for this analysis.
Tech Stock Picks of Seth Wunder’s Black-And-White Capital
10. International Game Technology PLC (NYSE:IGT)
Black-And-White Capital’s Stake Value: $24,207,000
Percentage of Black-And-White Capital’s 13F Portfolio: 2.5%
Number of Hedge Fund Holders: 32
The hedge fund holds more than 1.01 million shares in International Game Technology PLC (NYSE:IGT) worth $24.21 million, representing 2.5% of their portfolio. In addition, the hedge fund has increased its stake in the firm by 16% in the second quarter of 2021.
International Game Technology PLC (NYSE:IGT) recently saw a decrease in hedge fund sentiment. The number of long hedge fund positions declined to 32 at the end of the second quarter compared to 37 positions in the previous quarter.
9. Elastic N.V. (NYSE:ESTC)
Black-And-White Capital’s Stake Value: $26,018,000
Percentage of Black-And-White Capital’s 13F Portfolio: 2.68%
Number of Hedge Fund Holders: 55
Elastic N.V. (NYSE:ESTC) is a search firm that specializes in self-managed and SaaS solutions for search, logging, security, observability, and analytics.
In October, Elastic N.V. (NYSE:ESTC) purchased Optimyze, a continuous profiling platform for infrastructure, applications, and services.
In its second-quarter 2021 investor letter, Greenhaven Road Capital mentioned Elastic N.V. (NYSE:ESTC). Here is what the fund said:
“Our top five holdings represent more than half of our total long exposure and therefore five greatly influence overall returns. Elastic Software (ESTC) – Management continues to innovate and execute, rolling out new products and converting existing users from free to paid versions. They made adjustments to their licensing agreements, making it more difficult for Amazon to rip them off, and provided forward guidance that convinced investors that the growth train will continue to run for at least a few more years.”
8. Avalara, Inc. (NYSE:AVLR)
Black-And-White Capital’s Stake Value: $28,477,000
Percentage of Black-And-White Capital’s 13F Portfolio: 2.94%
Number of Hedge Fund Holders: 29
Avalara, Inc. (NYSE:AVLR) and its subsidiaries provide cloud-based transaction tax compliance solutions worldwide. Seth Wunder’s hedge fund owns 176,000 shares of the company, worth over $28.48 million.
Berenberg analyst Andrew DeGasperi initiated coverage of Avalara with a “Buy” rating and gave a price target of $200.
Robert W. Koehn’s Ivy Lane Capital is Avalara, Inc.’s (NYSE:AVLR) most significant stakeholder, with 121,000 shares worth $19.58 billion.
Along with Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), and Zoom Video Communications, Inc. (NASDAQ:ZM), Avalara, Inc. (NYSE:AVLR) is one of the tech stock picks of Seth Wunder’s Black-And-White Capital.
In its second-quarter 2021 investor letter, ClearBridge Investments mentioned Avalara, Inc. (NYSE:AVLR). Here is what the fund said:
“Also within IT, we purchased shares of Avalara, a software maker providing cloud-based solutions for transaction tax compliance across global markets. Avalara supports the growth of ecommerce by addressing the complexities of tax calculations and return processing across different tax jurisdictions. Growth drivers include partnerships with Shopify and integration of its software into Adobe and Salesforce platforms.”
7. Facebook, Inc. (NASDAQ:FB)
Black-And-White Capital’s Stake Value: $28,895,000
Percentage of Black-And-White Capital’s 13F Portfolio: 2.98%
Number of Hedge Fund Holders: 266
In the second quarter, Seth Wunder’s Black-And-White Capital reduced its position in Facebook, Inc. (NASDAQ:FB) by 65% to 83,100 shares, accounting for just over 2.98% of the overall portfolio. Overall, hedge funds are loading up on Facebook, Inc. (NASDAQ:FB), as 266 out of 873 funds tracked by Insider Monkey held stakes in the company, compared to 257 funds a quarter earlier.
First Eagle Investment Management, in its second-quarter 2021 investor letter, mentioned Facebook, Inc. (NASDAQ:FB). Here is what the fund said:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
6. Western Digital Corporation (NASDAQ:WDC)
Black-And-White Capital’s Stake Value: $40,709,000
Percentage of Black-And-White Capital’s 13F Portfolio: 4.2%
Number of Hedge Fund Holders: 57
In the second quarter, Black-And-White Capital sold 327,500 shares of Western Digital Corporation (NASDAQ:WDC) stock; the hedge fund still holds 572,000 shares worth about $40.71 million.
Western Digital Corporation (NASDAQ:WDC) shares have offered investors returns of 36.02% in the past 12 months. Still, Goldman Sachs analyst Toshiya Hari reiterated a bearish outlook on the company. As a result, he downgraded Western Digital to “Neutral” from “Buy” and lowered his price target to $62, down from $91. According to the analyst, the company’s better competitive position in nearline HDD and enterprise SSD will be more than offset by cyclical issues in the NAND sector.
Out of the hedge funds being tracked by Insider Monkey, Stamford-based investment firm Point72 Asset Management is a leading shareholder in Western Digital Corporation (NASDAQ:WDC) with 5.81 million shares worth more than $413.64 million.
ClearBridge Investments, in its first-quarter 2021 investor letter, mentioned Western Digital Corporation (NASDAQ:WDC). Here is what the fund said:
“Our high active share approach made the most difference in IT, where the portfolio’s holdings gained 4.5% compared to a loss for the benchmark. Results were led by our more cyclical positions in digital storage provider Western Digital.”
5. RingCentral, Inc. (NYSE:RNG)
Black-And-White Capital’s Stake Value: $42,076,000
Percentage of Black-And-White Capital’s 13F Portfolio: 4.34%
Number of Hedge Fund Holders: 47
The hedge fund started building its position in the company in the fourth quarter of 2020 and currently holds over 144,800 shares in RingCentral, Inc. (NYSE:RNG), valued at $42.08 million. The company represents 4.34% of the hedge fund’s 13F portfolio.
Wells Fargo analyst Michael Turrin recently lowered his price target on RingCentral, Inc. (NYSE:RNG) to $375 from $425 and kept an “Overweight” rating on the shares.
Chase Coleman and Feroz Dewan’s Tiger Global Management LLC is the company’s most significant stakeholder, with 3.94 million shares worth $1.14 billion.
In its second-quarter investor letter, Baron Opportunity Fund highlighted a few stocks, and RingCentral Inc. (NYSE:RNG) is one of them. Here is what the fund said:
“RingCentral, Inc. has been a three-year portfolio holding and remains a leader in the cloud unified communications-as-a-service (UCaaS) space, which includes voice, video, messaging, and call center services. But after posting its third quarter in a row of accelerating revenue growth in the first quarter, RingCentral’s shares began to sell off on fears around heightened competition with both Microsoft Teams, of which RingCentral is a partner, and with Zoom Communications, a former partner who has launched its own voice communications offering. Shares sold off further during the period with the rotation out of secular growth names into cyclicals. We used the pullback in the shares to add significantly to our position given RingCentral’s best-in-class UCaaS technology, including five 9’s contractual service commitments (fully operational 99.999% of the time) for voice, which is orders of magnitude above its competitors; presence in roughly 40 countries; data governance and security requirements; number portability with all the relevant domestic and international carriers; and positioning as the Gartner Magic Quadrant UCaaS Leader. The UCaaS market is still quite early in its adoption curve, with only about 3% penetration of the roughly 400 million existing business landline seats in operation today. We believe RingCentral is in a solid position to capture meaningful share of this market, with its exclusive partnerships with legacy landline players like Avaya, Atos, and Alcatel, which effectively gives it a “hunting license” for about half of those 400 million legacy seats, leveraging joint go-to-market efforts with each partner. We remain confident that RingCentral is well positioned to achieve at least 30% top-line growth for years to come, along with steadily improving operating margins and free cash flow generation.”
4. Wix.com Ltd. (NASDAQ:WIX)
Black-And-White Capital’s Stake Value: $51,989,000
Percentage of Black-And-White Capital’s 13F Portfolio: 5.37%
Number of Hedge Fund Holders: 35
Wix.com Ltd. (NASDAQ:WIX) is an Israeli software firm that specializes in cloud-based web development. Wix.com Ltd. (NASDAQ:WIX) beat market expectations on earnings per share by $0.13 in the second quarter. It is placed fourth on the list of 10 tech stock picks of Seth Wunder’s Black-And-White Capital.
In September, Piper Sandler analyst Clarke Jeffries initiated coverage of Wix.com Ltd. (NASDAQ:WIX), rating the stock as “Neutral” and gave a price target of $252.
Baron Funds, an investment management firm, in its fourth-quarter 2020 investor letter, mentioned Wix.com Ltd. (NASDAQ:WIX). Here is what the fund said:
“Weakness in IT was largely due to share price declines from web software firm Wix.com Ltd. After doubling during the first three quarters of 2020, Wix’s shares fell slightly on concerns that its business, which benefited from increased website creation during the pandemic, could eventually moderate.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Black-And-White Capital’s Stake Value: $57,760,000
Percentage of Black-And-White Capital’s 13F Portfolio: 5.97%
Number of Hedge Fund Holders: 271
The hedge fund owns 16,790 shares in Amazon.com, Inc. (NASDAQ:AMZN) worth $57.76 million, representing close to 5.97% of its portfolio. Black-And-White Capital has trimmed its stake in the firm by 9% in the second quarter of 2021.
Hedge fund managers see more upside for Amazon.com, Inc. (NASDAQ:AMZN) in 2021, given they were adding to their net holdings in the second quarter. At the end of the second quarter, 271 hedge funds in our database held stakes in Amazon.com, Inc. (NASDAQ:AMZN), compared to 243 funds in the previous quarter.
In its third-quarter 2021 investor letter, Worm Capital LLC mentioned Amazon.com (NASDAQ:AMZN). Here is what the fund said:
“Our core portfolio as of this writing—TSLA, SPOT, SHOP, ABNB, and AMZN—are all premier examples of companies that use the concept of aggregation of marginal gains to continuously improve their value proposition for customers. After all, what is innovation if not just a continuous search for fractional advantages in business?
Amazon, for instance, accumulates marginal gains by compressing their costs year after year for consumers, creating an infrastructure and logistics network unrivaled by its peers. In the short-term, the market can often misunderstand the intentions of the “marginal gain accumulators,” but over time, their value-creation becomes obvious in hindsight.”
2. Booking Holdings Inc. (NASDAQ:BKNG)
Black-And-White Capital’s Stake Value: $61,201,000
Percentage of Black-And-White Capital’s 13F Portfolio: 6.32%
Number of Hedge Fund Holders: 100
Booking Holdings Inc. (NASDAQ:BKNG) is an online travel firm that offers hotels, bed and breakfasts, hostels, apartments, vacation rentals, and other types of lodgings.
Cowen analyst Kevin Kopelman increased his price target on Booking Holdings Inc. (NASDAQ:BKNG) to $2950 from $2700 and reiterated an “Outperform” rating on the shares.
Seth Wunder’s Black-And-White Capital decreased its hold in Booking Holdings Inc. (NASDAQ:BKNG) by 4% in the second quarter, ending the period with 27,970 shares of the company.
Ensemble Capital, an investment management firm, in its third-quarter 2021 investor letter (NASDAQ:BKNG). Here is what the fund said:
“Booking : On the March 20, 2020 conference call we referenced at the beginning of this letter, we discussed our assessment of online travel agent Booking Holdings during the initial phase of the pandemic. At that time, we explained why we continued to hold a position in the company. We highlighted that while we fully expected demand to collapse and be slow to recover, our analysis indicated that they were very well positioned to survive the pandemic even if it lasted much longer than expected. And we said that companies that survived the pandemic would be well positioned to thrive on the other side
The key for us to holding the stock was our belief that traveling is hardwired into human DNA. While we could not know how long the pandemic would last, we were certain that when it was once again safe to travel, business would boom once again.
Today, more than 18 months later, travel has come roaring back despite the pandemic still not having come to an end. There continues to be significant barriers to travel, such as severe restrictions on international travel and the general health concerns of travelers. But in areas where people are allowed to
travel, such as domestically within the United States, leisure travel has boomed…” (Click here to see the full text)
1. Match Group, Inc. (NASDAQ:MTCH)
Black-And-White Capital’s Stake Value: $67,693,000
Percentage of Black-And-White Capital’s 13F Portfolio: 6.99%
Number of Hedge Fund Holders: 63
Match Group, Inc. (NASDAQ:MTCH) tops the list of 10 tech stock picks of Seth Wunder’s Black-And-White Capital. It is a technology and internet firm based in the United States. It owns and manages the world’s biggest online dating portfolio, with over 45 brands including Tinder, Match.com, Meetic, OkCupid, Hinge, PlentyOfFish, Ship, and OurTime.
Truist analyst Youssef Squali raised his price target on Match Group, Inc. (NASDAQ:MTCH) to $190 from $160 and kept a “Buy” rating on the shares.
ClearBridge Investments, in its second-quarter 2021 investor letter, mentioned Match Group, Inc. (NASDAQ:MTCH). Here is what the fund said:
“We initiated a position in Match Group in the quarter, the leading provider of dating products globally with 50%+ share of global online dating users. While this increases our overweight to the communication services sector, it adds indirect exposure to the consumer and diversifies the portfolio at the subsector level with an interactive media and service company, versus our historical overweight within traditional media. We see Match as a disruptor in the large, relatively underpenetrated market for online dating (there are 620 million global singles between 18 and 65, excluding China, versus the company’s 10 million paying subscribers today), and believe the company is well-positioned to benefit from a post-COVID-19 return to normalcy. We are also attracted to Match’s strong profitability profile and high degree of visibility given a large portion of revenue is subscription based.”
You can also take a peek at 12 Best Big Tech Stocks to Buy Right Now and 10 Best Tech Stocks to Buy Now According to Orkun Kilic’s Berry Street Capital
Suggested articles:
- Billionaire Daniel Sundheim is Buying These 10 Tech Stocks
- 10 Best Biotech Stocks to Buy According to Joseph Edelman’s Perceptive Advisors
- 15 Biotech Stocks to Buy Now According to Srini Akkaraju and Michael Dybbs’ Samsara BioCapital
Disclosure: None. 10 Tech Stock Picks of Seth Wunder’s Black-And-White Capital is originally published on Insider Monkey.
