In this article, we will discuss the top 10 tech stocks to invest in today according to John Armitage’s Egerton Capital.
John Armitage is the co-founder of Egerton Capital, which is a popular British hedge fund. Egerton Capital was founded in 1994 in London, and it has massively grown over the years, returning 15% on average annually since its inception. With a portfolio valued at $20.1 billion, Armitage’s Egerton Capital employs a bottom-up approach to investment, researching stocks thoroughly to create a dynamic, diversified, and eclectic portfolio.
Some of the most noteworthy stocks in Armitage’s Q2 portfolio are Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Facebook, Inc. (NASDAQ:FB), among others discussed extensively below.
John Armitage of Egerton Capital
Why do we care about hedge fund activity? 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.
Our Methodology
With this context in mind, let’s discuss the 10 tech stocks to invest in today according to John Armitage’s Egerton Capital. We used Egerton Capital’s 13F portfolio for the second quarter of 2021 to rank these stocks. The list was compiled according to the value of each holding in the investment portfolio.
The number of hedge fund holders for each stock are mentioned to gauge its popularity with smart money. We also made sure to include stocks with mostly positive analysts’ ratings and strong fundamentals.
Tech Stocks to Invest in Today According to John Armitage’s Egerton Capital
10. Sea Limited (NYSE:SE)
Egerton Capital’s Stake Value: $178,421,000
Percentage of Egerton Capital’s 13F Portfolio: 0.88%
Number of Hedge Fund Holders: 104
Sea Limited (NYSE:SE) is a consumer internet company that offers a platform providing digital entertainment, electronic commerce, and digital financial services. The tech conglomerate is headquartered in Singapore, and heads three key businesses: Garena, Shopee, and SeaMoney.
Out of the elite hedge funds traced by Insider Monkey, 104 funds were bullish on Sea Limited, with stakes worth over $12.2 billion at the end of June. This is compared to 98 hedge funds with stakes valued at $10.4 billion in the previous quarter.
9. StoneCo Ltd. (NASDAQ:STNE)
Egerton Capital’s Stake Value: $192,530,000
Percentage of Egerton Capital’s 13F Portfolio: 0.95%
Number of Hedge Fund Holders: 44
StoneCo Ltd. (NASDAQ:STNE) is a provider of financial technology solutions, with a cloud-based platform for e-commerce across in-store, online, and mobile channels.
Armitage’s Egerton Capital owns 2.87 million shares in StoneCo Ltd. as of the end of the second quarter, amounting to $192.5 million, and making up 0.95% of Armitage’s 13F portfolio.
On September 3, HSBC analyst Neha Agarwala kept a Buy rating on StoneCo Ltd.’s stock but lowered the price target from $85 to $65.
JDP Capital Management mentioned StoneCo Ltd. in its Q2 2021 investor letter. Here is what they said:
“StoneCo has been in our portfolio since early 2019 and has appreciated 225% since. In the first half of 2021 the stock was down nearly 20% and was a drag on the fund’s performance.
Stone is a leading fintec company in Brazil that provides back-office software, loans and other financial services to small and medium sized businesses (SMBs). We have discussed Stone in past letters and the company’s “ladder up” from a card processor to a supplier of enterprise software used to sell financial products on top of such as working capital loans…” (Click here to see the full text)
8. Match Group, Inc. (NASDAQ:MTCH)
Egerton Capital’s Stake Value: $206,254,000
Percentage of Egerton Capital’s 13F Portfolio: 1.02%
Number of Hedge Fund Holders: 63
Match Group, Inc. (NASDAQ:MTCH) is the eighth stock on our list of 10 tech stocks to invest in today according to John Armitage’s Egerton Capital. Match Group, Inc. is a Dallas-based internet and technology company that owns and manages the leading global portfolio of digital dating platforms including Tinder, Match.com, Meetic, OkCupid, PlentyofFish, and more.
Armitage’s Egerton Capital owns 1.27 million shares in Match Group, Inc. as of the end of the second quarter, valued at $206.2 million, representing 1.02% of Armitage’s 13F portfolio.
At the end of the second quarter of 2021, 63 hedge funds in Insider Monkey’s elite database reported owning stakes in Match Group, Inc., down from 68 in the previous quarter.
7. Yandex N.V. (NASDAQ:YNDX)
Egerton Capital’s Stake Value: $229,931,000
Percentage of Egerton Capital’s 13F Portfolio: 1.14%
Number of Hedge Fund Holders: 31
Yandex N.V. (NASDAQ:YNDX) is the next stock on our list of 10 tech stocks to invest in today according to John Armitage’s Egerton Capital. Yandex N.V. is the biggest Russian technology company, and the second largest search engine in Russian on the internet today.
Armitage’s Egerton Capital owns 3.2 million shares in Yandex N.V. as of the end of the second quarter, valued at $229.9 million, and making up 1.14% of Armitage’s 13F portfolio.
At the end of June, 31 hedge funds in Insider Monkey’s database owned stakes worth $1.36 billion in Yandex N.V., up from 29 in the previous quarter with stakes valued at $1.26 billion. William B. Gray’s Orbis Investment Management has a $418.7 million stake in Yandex N.V., making it the leading stakeholder of the tech company.
Polen Capital Management mentioned Yandex N.V. in its Q2 2021 investor letter. Here is what they said:
“From a country perspective, weak performance from Russian companies Yandex drove relative performance lower. Yandex is the leading internet search platform in Russia and was the top detractor from both absolute and relative performance this quarter. This underperformance came about despite solid results in 2020 which showed Yandex’s total e-commerce gross merchandise value grew three-fold in 2020 to over ₽56 billion RUB. Specifically, in the fourth quarter of 2020, Yandex saw year-on-year growth of 127%.
In our view, Yandex is one of the highest quality businesses in our investment universe. It has built a defensible competitive moat around its core search business, reinvesting its cash flows in new growth areas to remain relevant in a fast-changing global internet landscape.
We think Yandex benefits from an innovative and forward-thinking management team, which is shaping the development of the Russian internet.
With solid execution, Yandex has the potential to transform into an ecosystem which the company’s Chief Technology Officer describes as the “Silicon Valley of Russia.” Yandex remains a top five holding in the Portfolio.”
6. PayPal Holdings, Inc. (NASDAQ:PYPL)
Egerton Capital’s Stake Value: $437,399,000
Percentage of Egerton Capital’s 13F Portfolio: 2.17%
Number of Hedge Fund Holders: 143
PayPal Holdings, Inc. (NASDAQ:PYPL) is the sixth stock on our list of 10 tech stocks to invest in today according to John Armitage’s Egerton Capital.
As of the end of the second quarter, Armitage’s Egerton Capital owns 1.5 million shares in PayPal Holdings, Inc., amounting to $437.3 million, representing 2.17% of Armitage’s 13F portfolio.
The stock is quite popular among the smart money, as 143 hedge funds monitored by Insider Monkey were bullish on PayPal Holdings, Inc. at the end of June. This is compared to the same number of hedge funds in the previous quarter as well. Axel Capital Management is the leading stakeholder in PayPal Holdings, Inc., with stakes worth $11.4 million.
Here is what Wedgewood Partners has to say about PayPal Holdings Inc. in its Q3 2021 investor letter:
“Top performance detractors for the first quarter include PayPal. PayPal reported +40% growth in total payment volume to $311 billion during the second quarter’s most recent report. In spite of this impressive growth, the stock detracted from performance as the market became overly concerned about the pace at which its legacy eBay business rolled off. Despite the stock’s premium valuation, we continue to hold PayPal as a core position and think eBay represents short-term noise in PayPal’s longer-term drive to become a “super-app” with payments at its core.”
5. Netflix, Inc. (NASDAQ:NFLX)
Egerton Capital’s Stake Value: $793,578,000
Percentage of Egerton Capital’s 13F Portfolio: 3.94%
Number of Hedge Fund Holders: 113
Armitage’s Egerton Capital owns 1.5 million shares in Netflix, Inc. (NASDAQ:NFLX) as of the end of the second quarter, amounting to $793.5 million, representing 3.94% of Armitage’s 13F portfolio.
At the end of June, 113 hedge funds tracked by Insider Monkey were bullish on Netflix, Inc., up from 110 in the previous quarter.
On October 10, Netflix, Inc. estimated that its latest blockbuster TV series, Squid Game, will create almost $900 million in value for the company according to Bloomberg analyst Lucas Shaw.
Polen Capital mentioned Netflix, Inc. in its Q2 2021 investor letter. Here is what they said:
“For Netflix, we believe the underlying businesses for the company remain strong. With Netflix, we anticipate content spending to moderate as subscriber growth continues, which we believe should result in attractive double-digit earnings and cash flow growth over the next five years and beyond.”
4. Facebook, Inc. (NASDAQ:FB)
Egerton Capital’s Stake Value: $854,930,000
Percentage of Egerton Capital’s 13F Portfolio: 4.24%
Number of Hedge Fund Holders: 266
Armitage’s Egerton Capital owns 2.45 million shares in Facebook, Inc. as of the end of the second quarter, valued at $854.9 million, representing 4.24% of Armitage’s 13F portfolio.
The stock is immensely popular with hedge funds. 266 funds in Insider Monkey’s database were long Facebook, Inc. at the end of June, up from 257 in the previous quarter.
On October 15, Mark Mahaney from Evercore ISI kept an Outperform rating on the stock, setting a price target of $450. However, he added Facebook, Inc. to the “Tactical Underperform List” at Evercore ISI, due to tougher comps and the challenging online retail environment.
Wedgewood Partners mentioned Facebook, Inc. in its Q3 2021 investor letter. Here is what they said:
“Facebook detracted from performance despite posting a staggering +56% growth in advertising revenues. Much of the stock’s underperformance was driven by non operating concerns that we view as mostly political in nature. The Company’s digital properties command a massive audience of over 2.7 billion daily users, so any government or state actor would be able to wield tremendous power by controlling that audience and it should not be a surprise when those actors attempt to do that. However, Facebook has invested aggressively in its content curation capabilities that address many of the concerns raised by media and political critics. We continue to carry Facebook at our maximum weighting as the stock is trading in line with a market multiple despite unrivaled competitive positioning and rapid growth, representing one of the best risk-rewards available in the market.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Egerton Capital’s Stake Value: $1,265,270,000
Percentage of Egerton Capital’s 13F Portfolio: 6.28%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. is an immensely popular tech stock according to John Armitage’s Egerton Capital. The American tech company is a multinational focusing on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is one of the Big Five technology firms in the United States, and is the most valuable global brand. Amazon.com, Inc. has had vast economic and cultural influence worldwide.
Armitage’s Egerton Capital, as of the end of the second quarter, owns 367,794 shares in Amazon.com, Inc., valued at $1.26 billion, and making up 6.28% of Armitage’s 13F portfolio.
Amazon.com, Inc. is the most popular tech stock amongst the smart money. Of the hedge funds tracked by Insider Monkey, 271 funds were bullish on Amazon.com, Inc. at the end of June, up from 243 in the previous quarter.
Baird analyst Colin Sebastian kept an Outperform rating on the stock on October 13, with a price target of $4000.
Worm Capital LLC mentioned Amazon.com, Inc. in its Q3 2021 investor letter. Here is what they 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. Microsoft Corporation (NASDAQ:MSFT)
Egerton Capital’s Stake Value: $1,361,949,000
Percentage of Egerton Capital’s 13F Portfolio: 6.77%
Number of Hedge Fund Holders: 238
As of the end of June, Armitage’s Egerton Capital owns 5.02 million shares in Microsoft Corporation, amounting to $1.36 billion, representing 6.77% of Armitage’s 13F portfolio.
Out of the 873 hedge funds tracked by Insider Monkey, 238 funds were bullish on Microsoft Corporation at the end of June, with stakes worth $62.46 billion, down from 251 in the previous quarter, with stakes valued at $58.9 billion.
Baron Opportunity Fund mentioned Microsoft Corporation in its Q2 2021 investor letter. Here is what the fund said:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft was a top contributor in the period because it trades at reasonable free cash flow and earnings valuations, has cloud and digital transformation tailwinds at its back, reported a solid March quarter, and beat Street expectations by a wide margin. Microsoft’s results continued to be strong across the board, with Azure cloud computing revenues up 46% in constantcurrency (“cc”) terms and commercial cloud bookings growth of 38% cc, the best in years. Microsoft also reported robust profitability growth, with operating income expanding 31% and GAAP earnings up 45%. We believe the company is well positioned for continued solid growth and profitability through market share gains as more companies look to transform and digitize their businesses as they move operations to the cloud.”
1. Alphabet Inc. (NASDAQ:GOOG)
Egerton Capital’s Stake Value: $2,210,331,000
Percentage of Egerton Capital’s 13F Portfolio: 10.98%
Number of Hedge Fund Holders: 155
Armitage’s Egerton Capital owns 881,903 shares in Alphabet Inc. as of the end of June, valued at $2.21 billion, and making up 10.98% of Armitage’s 13F portfolio.
At the end of June, 155 hedge funds in Insider Monkey’s database were long Alphabet Inc., down from 159 in the previous quarter.
On October 12, JP Morgan analyst Doug Anmuth kept an Overweight rating on Alphabet Inc.’s shares, with a price target of $3250.
Wedgewood Partners mentioned Alphabet Inc. in its Q3 2021 portfolio. Here is what they said:
“Alphabet’s core Google search business accelerated to multiyear highs, up nearly +70% driven in part by advertisers rushing to the Company’s Android platform. We estimate Android runs on nearly three-quarters of all smartphones; however, its share of ad spend is lower. Recent policy changes to Apple’s iOS operating system have made it more difficult for advertisers to get a return on its ad spend across the Apple ecosystem. These changes should help close the gap between Android and iOS advertising share and sustain Alphabet’s torrid growth.”
You can also take a look at Billionaire DE Shaw’s Top 10 Stock Picks and 10 High Yield Dividend Champions.
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Key Earnings Reports to Watch
- 10 Reddit’s WallStreetBets Stocks Under $5
- Top 10 Stocks to Invest in According to John Smith Clark’s Southpoint Capital Advisors
This article is originally published at Insider Monkey.
