In this article, we will discuss 10 technology stock picks of John Kim’s Night Owl Capital.
John Sang-Hyun Kim is the Managing Director and Chief Compliance Officer of Night Owl Capital. John Kim joined Night Owl Capital Management in 2005 and has more than 20 years of experience in the financial advisory industry. He received his undergraduate degree from Yale University in 1995 and also received a graduate law degree from Yale five years later.
John Kim started his career as an analyst at J. Bush & Co, Inc. and later on joined Morgan Stanley Investment Management Inc. as an Investment Banking Associate in 1999.
Night Owl Capital Management was founded in 1993 as Southfield Investment Management. It is based in Connecticut and primarily focuses on large-cap and mid-cap companies across the United States and a few other countries. The fund mainly makes long-term, public equity investments in growing companies.
As of the third quarter of 2021, Night Owl Capital Management has around $707 million in assets under management and holdings of $569.84 million in 13F securities.
Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Meta Platforms, Inc. (NASDAQ:FB) are some of the most notable names in Night Owl Capital Management’s portfolio.
Our Methodology
With this context in mind, here are 10 technology stock picks of John Kim’s Night Owl Capital. The companies have been picked from Night Owl Capital’s 13F portfolio.
The hedge fund sentiment of each stock has been taken from Insider Monkey’s database of 867 hedge funds.
10 Technology Stock Picks of John Kim’s Night Owl Capital
10. Meta Platforms, Inc. (NASDAQ:FB)
Night Owl Capital’s Stake Value: $25.69 million
Percentage of Night Owl Capital’s 13F Portfolio: 4.5%
Number of Hedge Fund Holders: 248
According to the filings of the third quarter of 2021, Night Owl Capital Management owned 75,698 shares of Meta Platforms, Inc. (NASDAQ:FB) worth $25.69 million, comprising 4.5% of the fund’s portfolio.
Meta Platforms, Inc. (NASDAQ:FB) saw a decline in hedge fund sentiment in the third quarter of 2021, with 248 hedge funds having a stake in the company worth $38.57 billion compared to 266 worth $42.35 billion in the previous quarter.
Meta Platforms, Inc. (NASDAQ:FB) was mentioned by Jefferies Group in its third-quarter 2021 investor letter. Here is what the firm said:
“While still early, FB is in the process of building the platforms that will ultimately support the development the Metaverse. We look at FB’s position through the lens of 4 current investment initiatives: 1) Oculus VR hardware, 2) Smart glasses, 3) Augmented Reality lenses, and 4) “Horizon Workrooms”
Oculus Virtual Reality hardware: Since acquiring Oculus in 2014 ($2B deal), FB has been focused on developing best-in-class hardware and complementary software & services to support VR experiences. The Oculus Quest 2 is FB’s newest VR headset; it retails at $299 and allows users to play games, try fitness classes, play sports, and watch concerts in virtual environments. Most importantly, Quest 2 is linked to users’ Facebook accounts, which means users can seamlessly connect with friends in virtual environments to play games or spend time together. We believe one of FB’s biggest differentiators in VR is its large array of non-gaming experiences that were designed for Oculus. For instance, users can explore extreme terrain in National Geographic Explore VR, join virtual fitness classes, or simulate being a chef. As FB’s hardware continues to improve and becomes less cumbersome, we would expect a flywheel of greater developer and user adoption of VR…” (Click here to see the full text)
9. Sprout Social, Inc. (NASDAQ:SPT)
Night Owl Capital’s Stake Value: $30.84 million
Percentage of Night Owl Capital’s 13F Portfolio: 5.41%
Number of Hedge Fund Holders: 29
Sprout Social, Inc. (NASDAQ:SPT) is a software company that unifies the social media system of record, action and intelligence. The company operates across several countries in the Americas, Europe, Asia and the Middle East, and Africa.
Nancy Zevenbergen’s Zevenbergen Capital Investments holds the largest stake in Sprout Social, Inc. (NASDAQ:SPT) with 1.26 million shares worth $153.49 million, representing 2.91% of the fund’s portfolio.
ClearBridge Investments mentioned Sprout Social, Inc. (NASDAQ:SPT) in its second-quarter 2021 investor letter. Here is what it said:
“Sprout Social (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.”
8. Visa Inc. (NYSE:V)
Night Owl Capital’s Stake Value: $33.02 million
Percentage of Night Owl Capital’s 13F Portfolio: 5.79%
Number of Hedge Fund Holders: 143
Visa Inc. (NYSE:V) is a California-based company founded in 1958 that provides financial services in the form of electronic funds transfer. The main products of the company include credit cards, debit cards, and prepaid cards.
Despite Amazon.com, Inc.’s (NASDAQ:AMZN) decision to stop accepting payments through Visa cards issued through the UK over high processing fees, Visa Inc. (NYSE:V) remains bullish in the eyes of analysts. Morgan Stanley analyst James Faucette reports that this weakness in the company’s shares creates a buying opportunity.
On November 17, UBS analyst Rayna Kumar assumed coverage of Visa Inc. (NYSE:V) with a Buy rating and set a price target of $275 on its shares.
The investment management firm L1 Capital mentioned Visa Inc. (NYSE:V) in its third-quarter 2021 investor letter. Here is what the firm said:
“In our view, the payment network company, Visa, remain very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa’s transaction volumes, however in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. Nearer term, we believe the recovery in international travel as the world gradually normalises and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
7. Alphabet Inc. (NASDAQ:GOOGL)
Night Owl Capital’s Stake Value: $33.55 million
Percentage of Night Owl Capital’s 13F Portfolio: 5.88%
Number of Hedge Fund Holders: 195
Among the hedge funds being tracked by Insider Monkey, London-based TCI Fund Management is the leading stakeholder in Alphabet Inc. (NASDAQ:GOOGL) with 2.95 million shares worth $7.86 billion, representing 18.89% of the fund’s portfolio.
Out of the 867 hedge funds in Insider Monkey’s database, 143 funds held stakes in the company worth $26.16 billion, down from 162 funds holding stakes worth $27.60 billion in the preceding quarter.
According to the third quarter’s filings, Night Owl Capital Management owned 12,590 shares in Alphabet Inc. (NASDAQ:GOOGL) worth $33.55 million, representing 5.88% of the portfolio. The fund also increased its activity in the company by 20% in the third quarter.
Alphabet Inc. (NASDAQ:GOOGL) was mentioned by Saturna Capital, an investment management firm, in its third-quarter 2021 investor letter. Here is what it said:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
6. Mastercard Incorporated (NYSE:MA)
Night Owl Capital’s Stake Value: $33.83 million
Percentage of Night Owl Capital’s 13F Portfolio: 5.93%
Number of Hedge Fund Holders: 146
Mastercard Incorporated (NYSE:MA) is an American multinational tech company that offers financial services worldwide through MasterCard, Maestro, and Cirrus. The company’s clientele includes the public, sellers, financial institutions, and governments.
On November 11, UBS analyst Rayna Kumar initiated coverage of Mastercard Incorporated (NYSE:MA) with a Buy rating and set a price target of $448.
On November 30, Mastercard Incorporated (NYSE:MA) announced that the quarterly dividend would be raised to 49c from 44c and the cash dividend will be paid out on February 9, 2022.
Mastercard Incorporated (NYSE:MA), along with Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Meta Platforms, Inc. (NASDAQ:FB), is a significant name in Night Owl Capital Management’s portfolio.
L1 Capital mentioned Mastercard Incorporated (NYSE:MA) in its third-quarter 2021 investor letter. Here is what the letter said:
“Mastercard returned to top 10. We have held Mastercard since inception of the Fund. Over the 6 weeks to 30 September 2021, Mastercard’s share price retreated 10% and we took advantage of what we believe will be a short-term pullback in the share price to add to our investment. Recent weakness in Mastercard’s share price is most likely due to concerns about disintermediation and other pressures caused by growth in ‘Buy now, Pay later’ and other new payment offerings, as well a general market rotation away from higher growth companies in favour of more cyclical businesses.”
5. ServiceNow, Inc. (NYSE:NOW)
Night Owl Capital’s Stake Value: $35.54 million
Percentage of Night Owl Capital’s 13F Portfolio: 6.23%
Number of Hedge Fund Holders: 87
ServiceNow, Inc. (NYSE:NOW) is a California-based software company that develops and provides a cloud-based computing platform to its customers for the management of workflow regarding the firm’s operations.
Among the hedge funds tracked by Insider Monkey, New York-based Tiger Global Management is the leading shareholder in ServiceNow, Inc. (NYSE:NOW) with 2.26 million shares worth $1.37 billion, making up 2.63% of the portfolio.
RiverPark Funds mentioned ServiceNow, Inc. (NYSE:NOW) in its third-quarter 2021 investor letter. Here is what it said:
“NOW shares were our final top contributor for 3Q on a strong beat and raise quarter. The company reported 31% subscription revenue growth, 30% subscription billings growth, and a 19% non-GAAP FCF margin for the quarter, while raising full year subscription revenue and billings guidance to 29% and 31%, respectively, as well as raising non-GAAP FCF margin by 100 basis points to 31%.
ServiceNow is a best-of-breed provider of both IT Service Management (ITSM) and IT Operations Management (ITOM) solutions to enterprise customers. The company’s products serve mainly its clients’ internal employee base with a current focus on automating the process of IT deployment, configuration and service and management of IT assets across an organization. Both its ITSM and ITOM solutions are delivered as a software-as-a-service (SaaS), and are each leading solutions in growing markets, driven by the secular trend of enterprises transitioning all aspects of their business and operations to the cloud. As the company maintains and adds customers, upsells them, and expands into adjacent markets, we believe NOW should sustain a strong long-term revenue and FCF growth trajectory.”
4. Fiserv, Inc. (NASDAQ:FISV)
Night Owl Capital’s Stake Value: $38.29 million
Percentage of Night Owl Capital’s 13F Portfolio: 6.71%
Number of Hedge Fund Holders: 65
Fiserv, Inc. (NASDAQ:FISV) is a Wisconsin-based Fortune 500 multinational company that offers services of financial technology and other financial solutions. The company has three segments: merchant acceptance, financial technology, and payments and network. The company caters to financial institutions, merchants, banks, corporations, healthcare institutes, and more.
According to the database of the 867 hedge funds tracked by Insider Monkey, 65 funds held stakes in Fiserv, Inc. (NASDAQ:FISV) worth $3.94 billion in the third quarter, down from 72 funds holding stakes worth $2.65 billion in the previous quarter.
On December 10, Evercore ISI analyst David Togut downgraded the stock from Outperform to In Line and lowered the price target from $161 to $101, citing the rising revenue and margin headwinds expectation in regards to the 3 U.S. merchant acquirers.
According to the third quarter filings, Night Owl Capital Management owned 352,906 shares in Fiserv, Inc. (NASDAQ:FISV) worth $38.29 million, representing 6.71% of the portfolio. The fund increased its activity in the company by 43%.
Fiserv, Inc. (NASDAQ:FISV) was mentioned in Madison Funds’ first-quarter 2021 investor letter. Here is what it said:
“This quarter we researched several new stock ideas, but because of high prices, acted on only one. Thus, a new portfolio name is Fiserv, with corporate headquarters in Brookfield, WI, just down I-94 from us. Fiserv is a technology company serving financial institutions (“FIs”) and retail merchants. It has two main business lines. In the first, it’s a market leader in outsourced IT solutions for banks and credit unions, online and mobile banking technology, digital money movement solutions, and card issuing services. Fiserv’s second core business is merchant acquiring and processing, where it’s a leader in providing a variety of solutions to help all types of merchants accept digital payments. They entered this business through the acquisition of First Data in 2019.
Within the first business, Fiserv’s software is critical to the daily operations of FI clients. Their solutions not only provide the vital central processing systems, but also enable services such as electronic bill pay and digital money transfers at both large institutions and local banks and credit unions alike. As such, it is an incredibly sticky business that is resilient through economic cycles. On the merchant acquiring side of Fiserv, they process trillions of dollars annually for millions of merchant clients. Their solutions cater to all types of merchants and optimize for seamless acceptance and high authorization rates while also limiting fraud. Similar to the IT outsourcing business, Fiserv’s merchant solutions are critical to their customers’ daily operations. Furthermore, we are especially encouraged by their investments in new solutions, particularly Clover and Carat. Clover is a small and midsize business merchant acquiring platform and Carat is an e-commerce acquiring platform. Both these products hit the bullseye in terms of the way people are interacting with the retail industry, and both are growing at above market rates, which we believe will sustain into the future…” (Click here to see the full text)
3. Shopify Inc. (NYSE:SHOP)
Night Owl Capital’s Stake Value: $42.99 million
Percentage of Night Owl Capital’s 13F Portfolio: 7.54%
Number of Hedge Fund Holders: 73
Shopify Inc. (NYSE:SHOP) is an Ontario-based multinational company that offers an e-commerce platform to businesses of different sizes.
Among the hedge funds tracked by Insider Monkey, Connecticut-based Lone Pine Capital has the most significant stake in Shopify Inc. (NYSE:SHOP) with 1.43 million shares worth $1.93 billion, making up 6.53% of the portfolio.
ClearBridge Investments mentioned Shopify Inc. (NYSE:SHOP) in its second-quarter 2021 investor letter. Here is what it said:
“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.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Night Owl Capital’s Stake Value: $50.18 million
Percentage of Night Owl Capital’s 13F Portfolio: 8.8%
Number of Hedge Fund Holders: 242
On December 2, UBS analyst Kunal Madhukar initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) with a Buy rating and a price target of $4,700.
Among the 867 hedge funds tracked by Insider Monkey, 242 funds held stakes in Amazon.com, Inc. (NASDAQ:AMZN) worth $42.55 billion in the third quarter.
According to the database of Insider Monkey, Washington-based Fisher Asset Management is the leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 1.93 million shares worth $6.34 billion, representing 3.94% of the portfolio.
Amazon.com, Inc. (NASDAQ:AMZN) was mentioned in the third quarter 2021 investor letter of Davis Funds. Here is what it said:
“E-commerce, online search and advertising, social media and software are another component of the portfolio that have proven, attractive businesses. The online portion of the Fund is currently dominated by such market leaders as Amazon.com. We are attracted to these names based on the size and rapid expansion of their market opportunities globally, their ability to generate and grow new revenue sources through constant innovation, ample operating leverage as they continue to scale and capable, focused, highly competitive leadership teams. If purchased at sensible prices, these types of businesses in our experience can contribute meaningfully to long-term results.”
1. Microsoft Corporation (NASDAQ:MSFT)
Night Owl Capital’s Stake Value: $53.1 million
Percentage of Night Owl Capital’s 13F Portfolio: 9.31%
Number of Hedge Fund Holders: 250
According to the third quarter filings, Microsoft Corporation (NASDAQ:MSFT) is the most significant investment in Night Owl Capital Management’s portfolio. In the third quarter of 2021, the fund owned 188,381 shares worth $53.1 million, making up 9.31% of the portfolio.
According to recent regulatory filings, on November 22, the CEO of Microsoft Corporation (NASDAQ:MSFT), Satya Nadella, sold around 838,600 of common stock worth $285.3 million which reduced his holding in the company by around 50%.
Polen Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its third-quarter 2021 investor letter. Here is what it said:
“After modest Portfolio activity during the second quarter of 2021, activity increased during the third quarter. We would broadly characterize the various trades into two objectives: 1) managing risk, and 2) managing valuation. In both cases, we aimed to maintain the Portfolio’s growth profile. In aggregate, we believe we were able to increase expected earnings growth while reducing risk and the overall portfolio valuation… We also trimmed Microsoft, which had grown to nearly 10% of the Portfolio. At an 8% weighting, it still represents one of our largest positions.”
You can also take a look at Matthew Davis’ Coann Capital Portfolio: Top 10 Stock Picks and Echo Street Capital Management: Greg Poole’s Top 10 Stock Picks.
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Disclosure: None. 10 Technology Stock Picks of John Kim’s Night Owl Capital is originally published on Insider Monkey.
