In this article, we discuss the 5 stocks to buy according to Anand Desai’s Darsana Capital. If you want to read our detailed analysis of Desai’s history, investment philosophy, and hedge fund performance, go directly to the 10 stocks to buy according to Anand Desai’s Darsana Capital.
5. Meta Platforms, Inc. (NASDAQ:FB)
Darsana Capital Stake Value: $271,512,000
Percentage of Darsana Capital’s 13F Portfolio: 8.94%
Number of Hedge Fund Holders: 248
Meta Platforms, Inc. (NASDAQ:FB), formerly known as Facebook, Inc., is a worldwide technological corporation based in the United States. As Morgan Stanley analyst Brian Nowak revised his forecasts and carried forward prices throughout his Internet sector coverage, he raised his price objective on Meta Platforms, Inc. (NASDAQ:FB) to $395 from $365 in January 2022, retaining an “Overweight” rating on the company.
Meta Platforms, Inc. (NASDAQ:FB) recently saw a decrease in hedge fund sentiment. The number of long hedge fund positions declined to 248 at the end of the third quarter compared to 266 positions in the previous quarter. Intermede Investment Partners, with approximately 469,111 shares worth $157.79 million, is the largest shareholder in Meta Platforms, Inc. (NASDAQ:FB) as of Q4.
In its fourth-quarter 2021 investor letter, Wedgewood Partners mentioned Meta Platforms, Inc. (NASDAQ:FB). Here is what the fund said:
“Meta Platforms, formerly known as Facebook, detracted from performance. Meta’s core Facebook properties reported an impressive +35% revenue growth, an acceleration over last year’s +22% revenue growth, as small businesses continued to flock to the Company’s advertising platform. However, the Company’s forward-looking guidance came in below what many investors were expecting because changes to Apple’s mobile operating system (iOS) privacy policies made it more difficult for advertisers and Facebook to track the performance of ad spend. Facebook has anticipated Apple’s changes for some time; however the rollout of alternative performance tracking will take time for advertisers to implement. Longer-term, we think Facebook’s core properties represent a compelling value proposition for most small advertisers because the Company has billions of daily users that flock to it. Although Meta’s spending on noncore projects related to what it defines as the “metaverse” has driven expense growth higher, we consider it not too out of line compared to the spending of most large technology companies that often just refer to it as “research and development.” Meta trades at an attractive multiple and with an unmatched competitive positioning in social media advertising, so we added to our position during the quarter.”
4. Guidewire Software, Inc. (NYSE:GWRE)
Darsana Capital Stake Value: $297,175,000
Percentage of Darsana Capital’s 13F Portfolio: 9.79%
Number of Hedge Fund Holders: 26
Guidewire Software, Inc. (NYSE:GWRE), or simply Guidewire, is a San Mateo, California-based software firm. In December, Guidewire Software, Inc. (NYSE:GWRE) reported earnings for the first quarter fiscal year 2022, posting earnings per share of -$0.21, exceeding estimates by $0.04. The quarterly revenue was down 2.3% from the prior-year quarter, amounting to $165.9 million, beating estimates by $1.17 million.
After its Q1 earnings beat and above-consensus Q2 guidance, BTIG analyst Matt VanVliet
boosted his price target on Guidewire Software, Inc. (NYSE:GWRE) to $146 from $138 in December and kept a “Buy” rating on the stock.
At the end of the third quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $2.01 billion in Guidewire Software, Inc. (NYSE:GWRE), down from 27 the preceding quarter worth $1.84 billion.
Wasatch Global Investors, an investment management firm, in its first-quarter 2021 investor letter mentioned Guidewire Software, Inc. (NYSE:GWRE). Here is what the fund said:
“Guidewire Software, Inc. (GWRE) was another large detractor. The company provides enterprise software for the property and casualty insurance industry. The software supports collaborative workflow, cooperation with external partners and rule-based decision making—all of which characterize modern underwriting and claims operations. Guidewire’s InsuranceSuite platform allows insurance-industry customers to manage claims, policies and billing functions. Other modules can be added to assist in data management, analytics and digital engagement. We believe Guidewire will eventually be well-positioned to benefit as insurance companies increasingly replace their core (usually on-premises) legacy software with centralized, cloud-based offerings. In the shortterm, however, Guidewire has seen some challenges with its move to the cloud. We think these challenges, along with the broad correction among technology names, accounted for the stock-price decline.”
3. Shopify Inc. (NYSE:SHOP)
Darsana Capital Stake Value: $305,051,000
Percentage of Darsana Capital’s 13F Portfolio: 10.05%
Number of Hedge Fund Holders: 73
Shopify Inc. (NYSE:SHOP) is a cloud-based commerce platform that caters to small and medium-sized enterprises. Shopify Inc. (NYSE:SHOP) reported $336.2 million in subscription revenue in the third quarter, compared to $350.9 million expected.
Of the 73 hedge funds that were bullish on Shopify Inc. (NYSE:SHOP) according to the third quarter database of Insider Monkey, Lone Pine Capital is the leading stakeholder of the company, holding 1.43 million shares worth $1.94 billion.
Anand Desai first bought 225,000 shares of Shopify Inc. (NYSE:SHOP) in the first quarter of 2021. He boosted his stake in the firm by 50% in the third quarter of 2021, and his 10.05% stake in Shopify Inc. (NYSE:SHOP) is now worth about $305,051million.
In its fourth-quarter 2021 investor letter, Guardian Fund mentioned Shopify Inc. (NYSE:SHOP). Here is what the fund said:
“When we first bought the shares in 2016, we were generally right about the fact that Shopify would be an important player in facilitating digital commerce by offering merchants good software. Early on we had a lot of respect for Tobi Lütke and his team, and we understood the enormous opportunity that laid in front of them. Yet, we were terrified by the valuation.
Today, it has become the dominant operating software platform for commerce with over 43,000 ecosystem partners and almost two million merchants. The market value has multiplied, and the valuation is lower than when we initiated the investment. We think that the risk-adjusted expected return is superior today.
At the beginning of 2021, market observers believed that the growth of pure digital commerce enablers like Shopify would come down significantly following a booming 2020 year. Growth remained strong; Shopify’s revenue for the first 9 months of 2021 increased by 65% versus the same period in 2020.
Shopify has two main revenue streams: merchant subscriptions and merchant solutions. The merchant subscription business is a SaaS business where companies pay a certain fixed amount to Shopify each month based on their size. Subscriptions offer revenue visibility to Shopify…” (Click here to see the full text)
2. Ferrari N.V. (NYSE:RACE)
Darsana Capital Stake Value: $313,680,000
Percentage of Darsana Capital’s 13F Portfolio: 10.33%
Number of Hedge Fund Holders: 27
Ferrari N.V. (NYSE:RACE), also known as Ferrari, is an Italian sports automobile designer, manufacturer, and retailer located in the Netherlands. The hedge fund chaired by Anand Desai owns 1.50 million shares in the automobile company worth over $313.68 million, representing 10.33% of their investment portfolio. Darsana Capital has increased its stake in Ferrari N.V. (NYSE:RACE) by 20% in the third quarter of 2021.
Morgan Stanley analyst Adam Jonas replaced General Motors Company (NYSE:GM) with Ferrari N.V. (NYSE:RACE) as his latest “Top Pick” in January 2022. He rated the stock as “Overweight” and gave a price target of $350.
Overall, 27 hedge funds monitored by Insider Monkey were bullish on Ferrari N.V. (NYSE:RACE) in the third quarter. The stakes of these funds are valued at $1.18 billion.
Ensemble Capital, in its second-quarter 2021 investor letter mentioned Ferrari N.V. (NYSE:RACE). Here is what the fund said:
“Ferrari: After posting standout performance in 2020, beating the S&P 500 by over 20%, Ferrari’s share price performance has lagged for much of this year. The main issue this quarter was the company pushing out their medium-term financial targets due to development and production delays caused by COVID, but this only led to a 1% decline in the stock price for the full quarter. While we believe the company did a fantastic job maintaining production in light of COVID, it did not surprise us that some of their longer-term, new model introductions might be delayed by a couple of quarters. While disappointing of course, Ferrari is curating a set of extremely exclusive mechanical works of art and we are much happier seeing them take the time to do things right, rather than rushing to meet a self-imposed financial target.”
1. The New York Times Company (NYSE:NYT)
Darsana Capital Stake Value: $418,795,000
Percentage of Darsana Capital’s 13F Portfolio: 13.79%
Number of Hedge Fund Holders: 45
The New York Times Company (NYSE:NYT) is a media company that creates, collects, and distributes news and information. The New York Times Company (NYSE:NYT) was downgraded from “Outperform” to “Peer Perform” in December, with a price target of $50, down from $54, according to Wolfe Research analyst John Janedis, due to mid-term investments and a particularly unfavourable mix on dropping print advertising.
The New York Times Co. (NYSE:NYT) agreed to pay $550 million for the sports subscription site The Athletic, bringing the company closer to its long-term subscriber goals while reinforcing a vital journalism sector.
By the end of the third quarter of 2021, 45 hedge funds out of the 867 tracked by Insider Monkey held stakes in The New York Times Co. (NYSE:NYT), worth roughly $2.43 billion. In the preceding quarter, there were 48 hedge funds with a total stake value of about $2.22 billion.
You can also take a peek at 13 Best Cloud Stocks To Buy Now and 10 Best Stocks To Buy According To Terry Smith’s Fundsmith LLP
