3. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 23
Share Price (as of January 4): $134.28
Share Price Decline in 2022 as of Jan. 8: 19%
Upstart Holdings, Inc. (NASDAQ:UPST) provides loan services using cloud-based artificial intelligence, as an alternative to traditional banking systems that use FICO scores to assess applicants. Although shares of the company soared 271.29% in the last year, they have lost around half of their value in the last few months, and this presents an excellent buying opportunity for long-term investors. Upstart Holdings, Inc. (NASDAQ:UPST) enjoys a massive foothold in two largest lending segments: auto and personal lending.
For the third quarter, Upstart Holdings, Inc. (NASDAQ:UPST) posted earnings per share of $0.60, beating estimates by $0.27. It was found in the portfolio of 23 hedge funds at the close of the third quarter, up from 21 a quarter ago, showing that investors are confidently buying the company stock.
On December 9, Morgan Stanley analyst James Faucette initiated coverage of Upstart Holdings, Inc. (NASDAQ:UPST) with a $200 price target and an ‘Equal Weight’ rating, noting that the company has emerged as a premier fintech name.
Vulcan Value Partners, an investment management firm, talked about Upstart Holdings, Inc. (NASDAQ:UPST) in its investor letter for the third quarter. Here’s what the fund said:
“We purchased Upstart Holdings Inc., and it was also a material contributor during the quarter. Upstart is an artificial intelligence (AI) and cloud-based lending platform. Upstart’s customers, banks and institutional investors, are able to make more profitable loans utilizing Upstart’s software. The company uses over 1600 variables in its AI models, and its platform underwrites superior loans with higher approval rates, lower default rates, and lower interest rates for consumers compared to alternative lending sources. As former owners of FICO, we believe Upstart has the potential to be the FICO of the 21st century. The company has a virtuous circle that is constantly strengthening its competitive position. Upstart’s AI based methodology is more accurate than conventional underwriting and FICO scores alone, and it is expanding financial services profitably to the underbanked and the unbanked. In turn, customers allocate more loans to Upstart. Increased loan volume creates more data which improves the AI-based lending platforms’ accuracy, resulting in even more volume flowing to Upstart. We purchased Upstart in our Small Cap portfolio in the fourth quarter of 2020, and since then it has grown into a large cap company with a current market cap of approximately $26 billion. Its value has compounded more rapidly than we ever could have modeled. We are pleased to purchase Upstart in our Large Cap portfolio, and we are pleased with the initial results; however, we are more excited about its long-term prospects.”
