4 Stocks to Buy According to Alexander Captain’s Cat Rock Capital

In this article, we discuss 4 stocks to buy according to Alexander Captain’s Cat Rock Capital. If you want to read our detailed analysis of Captain’s investment philosophy and performance, go directly to 8 Stocks to Buy According to Alexander Captain’s Cat Rock Capital. 

4. Meta Platforms, Inc. (NASDAQ:META)

Cat Rock Capital’s Stake Value: $56,468,000
Percentage of Cat Rock Capital’s 13F Portfolio: 12.01%
Number of Hedge Fund Holders: 184

Alexander Captain’s Cat Rock Capital trimmed its stake in American multinational tech company Meta Platforms, Inc. (NASDAQ:META) by 57% in Q2 2022. This leaves the investment value at 350,192 shares worth $56.47 million.

The number of hedge funds tracked by Insider Monkey holding stakes in Meta Platforms, Inc. (NASDAQ:META) declined to 184 in Q2, down from 200 in the preceding quarter. The aggregate value of these stakes is over $18.20 billion.

On October 13, Cowen analyst John Blackledge maintained an ‘Outperform’ rating while reducing his price objective on Meta Platforms, Inc. (NASDAQ:META) from $250 to $205. Due to a mix of macroeconomic and foreign exchange headwinds, the move to short-form video monetisation, and a worse-than-anticipated 3Q22 Digital ad expert check call, the analyst cut his 2022–2027 advertising predictions.

In its Q3 2022 investor letter, Wedgewood Partners mentioned Meta Platforms, Inc. (NASDAQ:META). Here is what the fund said:

“Meta Platforms, Inc. (NASDAQ:META) detracted from performance during the quarter. Meta’s advertising revenue grew +3% (currency-adjusted) over 2021 and is up +70% since 2019 (pre-pandemic). The shift of advertisers and consumers to social media has been fairly dramatic and sticky. The company reported $2.88 billion “daily active people” of its Family of Apps (as of June 2022) and is +35% higher than the comparable month pre-COVID (June 2019). Meta also serves over 10 million advertisers which is up from 8 million in January 2020. In spite of these impressive gains, the stock now trades at absolute levels well below where it traded before the pandemic. We suspect much of the market’s concern revolves around slowing revenue growth. It is fairly evident that there was a tremendous pull-forward of demand for many businesses and services over the past couple of years, and that the normalization of revenue growth from that “pull-forward” is hardly an existential crisis. Further, while Meta’s profit margins have fallen below pre-pandemic levels, it’s important to note that the company likely hired well in excess of what it needed because it assumed the pandemic induced growth would continue. Meta has plenty of room to moderate its expense base and drive significant value by repurchasing shares at today’s historically depressed multiples.”

3. Microsoft Corporation (NASDAQ:MSFT)

Cat Rock Capital’s Stake Value: $69,601,000
Percentage of Cat Rock Capital’s 13F Portfolio: 14.81%
Number of Hedge Fund Holders: 258

Cat Rock Capital bought a stake in the tech giant Microsoft Corporation (NASDAQ:MSFT) in the first quarter of 2020. According to the 13F filings for the second quarter of 2022, Cat Rock Capital holds 271,000 shares of Microsoft Corporation (NASDAQ:MSFT), amounting to more than $69.60 million and representing 14.81% of the fund’s portfolio value.

As part of its multi-city data center strategy for India, Microsoft Corporation (NASDAQ:MSFT), a leading provider of US-based software, intends to build a sizable hyper-scale data center in Pune. Accordingly, the business paid Finolex Industries $39.92 million for commercial land in Pune.

In anticipation of Microsoft Corporation (NASDAQ:MSFT)’s fiscal Q1 earnings on October 25, Deutsche Bank analyst Brad Zelnick retained a ‘Buy’ rating on the stock on October 18 while trimming his price objective from $330 to $315. According to Zelnick, although investors are aware of the dismal consumer history, particularly regarding PCs and Windows, they believe that Microsoft’s commercial and corporate businesses have not become markedly worse and are still holding up.

Among the hedge funds tracked by Insider Monkey, 258 were long Microsoft Corporation (NASDAQ:MSFT) at the end of Q2 2022, compared to 259 funds in the last quarter.

Lakehouse Capital, an investment management company, mentioned Microsoft Corporation (NASDAQ:MSFT) in its September 2022 investor letter. Here is what the fund said:

“During the month, the Fund initiated a new position in Microsoft Corporation (NASDAQ:MSFT), a name that is no doubt familiar to our investors. The company was founded by Bill Gates and Paul Allen in a friend’s garage in 1975 and began dominating the operating system market with MS-DOS by the mid-1980s. The company has come a long way since then and is now widely considered the most critical and indispensable IT mega-vendor for businesses globally. In addition to its well-known Windows operating systems and Office productivity suite, the company has a broad portfolio of strategic products, including a rapidly growing public cloud business in Azure and a sizeable gaming presence.…” (Click here to read the full text)

2. Semrush Holdings, Inc. (NYSE:SEMR)

Cat Rock Capital’s Stake Value: $76,024,000
Percentage of Cat Rock Capital’s 13F Portfolio: 16.17%
Number of Hedge Fund Holders: 12

Semrush Holdings, Inc. (NYSE:SEMR) is an American publicly traded company that provides the Semrush SaaS platform. Semrush assists its clients with social media marketing and search engine optimization to improve their online presence. It has 91,000 clients, and 80%  of them now spend $10,000 or more annually than they did the previous year.

According to Insider Monkey’s data, 12 hedge funds held stakes worth $140.51 million in Semrush Holdings, Inc. (NYSE:SEMR) at the end of the second quarter of 2022, compared to the same number of funds in the prior quarter worth $116.34 million.

Alexander Captain’s Cat Rock Capital is the most prominent position holder in Semrush Holdings, Inc. (NYSE:SEMR). The hedge fund has 5.88 million shares of Semrush Holdings, Inc. (NYSE:SEMR) worth $76.02 million, accounting for 16.17% of the total Q2 portfolio. This is a 7% increase over the previous quarter when the hedge fund owned 5.52 million shares in the company.

In its Q1 2021 investor letter, ClearBridge Investments mentioned Semrush Holdings, Inc. (NYSE:SEMR). Here is what the fund said:

“We established seven new positions during the quarter, (including SEMrush) largely financed through trims in existing holdings whose market values have risen. Four of the additions play roles in the accelerating digital transformation of the sales, marketing and customer development processes. SEMrush, in the IT sector, is a software provider that help clients optimize their marketing spend across digital search and social media platforms.”

1. Docebo Inc. (NASDAQ:DCBO)

Cat Rock Capital’s Stake Value: $138,561,000
Percentage of Cat Rock Capital’s 13F Portfolio: 29.48%
Number of Hedge Fund Holders: 15

Docebo Inc. (NASDAQ:DCBO) offers a cloud-based learning management system for teaching internal and external workforces, partners, and clients. It has offices in Asia, Europe, and North America. According to Insider Monkey’s data, Docebo Inc. (NASDAQ:DCBO) was part of 15 hedge fund portfolios at the end of Q2 2022, compared to 11 in the prior quarter.

Alexander Captain’s Cat Rock Capital has owned a stake in Docebo Inc. (NASDAQ:DCBO) since Q4 2020. The hedge fund’s $138.56 million investment in the second quarter of 2022 represents 29.48% of the total 13F securities. In addition, Cat Rock Capital held the most significant position in Docebo Inc. (NASDAQ:DCBO) in Q2.

You can also take a peek at 10 Stocks to Buy According to James Morrow’s Callodine Capital Management and 10 Stocks to Buy According to Teresa Barger’s Cartica Management.

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