2. Shopify Inc. (NYSE: SHOP)
Coleman’s Stake Value: $572,669,000
Percentage of Chase Coleman’s 13F Portfolio: 1.31%
Number of Hedge Fund Holders: 91
Shopify Inc. (NYSE: SHOP) is a business company that provides a global business platform and assistance. Shopify stock has returned more than 65% to investors over the course of the past twelve months. It was founded in 2006 and is ranked second on our list of 10 best tech and dividend stocks to buy according to billionaire Chase Coleman. Just like Alibaba Group Holding Limited (NYSE: BABA), JD.com, Inc. (NASDAQ: JD) and Amazon.com, Inc. (NASDAQ: AMZN), Shopify is one of the best stocks to buy according to billionaire Chase Coleman.
In the first quarter of 2021, Shopify posted adjusted EPS of $2.01, which beat the market estimates by $1.26. The revenue over the period was $988.6 million, up 110.3% YoY, beating the estimates by $129.7 million. Last month, Loop Capital’s analyst Anthony Chukumba initiated a coverage on the stock, rating it as “Buy,” with a price target of $1,400.00.
Tiger Global Management LLC holds 517,550 shares in the company worth over $572 million, representing 1.31% of their portfolio. Tiger Global activity on Shopify stock increased by 168% in the past few months, the latest data reveals. At the end of the first quarter of 2021, 91 hedge funds in the database of Insider Monkey held stakes worth $9.98 billion in Shopify Inc. (NYSE: SHOP), down from 90 the preceding quarter worth $8.72 billion.
Based on our calculations, Shopify ranks 28th in our list of the 30 Most Popular Stocks Among Hedge Funds.
In its Q4 2020 investor letter, RGA Investment Advisors, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE: SHOP) was one of them. Here is what the fund said:
“While we are pleased with the results of these specific purchases, we made a huge mistake of omission at that time. This mistake will likely be one of the biggest we ever make in our careers. Specifically, we did deep work on Shopify and loved everything about the business qualitatively. Unfortunately, we ultimately found ourselves unable to get comfortable with the numbers.
We built our model up from the key performance indicators (KPIs) that drive revenues. Our last save of the model dated 8/3/2016 looked as follows: (Page 2). These numbers seemed right from everything we understood about the company. While we tend not to rely on sell-side consensus estimates before finishing our own workup of the business, we do give them a look once we feel comfortable with how we have approached our analysis as it is often helpful to get a sense of what the average participant in the market expects the business to do. With Shopify, the sell-side consensus was so far from where our numbers were shaking out, it seemed almost impossible that we were basing our analysis on the same underlying information. Our natural next step was thus to take the sell-side consensus data and work backwards to figure out the implied expectations on each of the key revenue drivers. Here is what the sell-side consensus looked like as at the time: (Page 2).
Shopify’s actual revenues for 2016-2018 ended up being $389m, $673m and $1,073m. In other words, not only were we justifiably far more optimistic than the consensus estimate, but we also were far too conservative in terms of how the company actually performed.
The nature of our job as securities analysts is to take calculated risks, in an uncertain world where the “true” answer is inherently unknowable before the fact. We operate in what many call an “efficient market” and subscribe to the belief that for the most part, markets are generally pretty efficient and it requires differentiated analysis to find a return above what the market can offer. So why did we pass on Shopify despite 1) deeply believing in the qualitative elements of the business; and, 2) seeing a meaningful gap between what we expected and the consensus expected? The answer is unfortunate but simple: we lacked confidence in ourselves. It was the first time we truly experienced such a stark divergence between our expectation and the consensus and the result was the inclination was to pound ourselves over the head with how dumb we must be, rather than the other way around. We also learned that the truly great companies use their strong business advantages, smart management and execution to raise the bar every step along the way. Obviously this is a cycle which cannot continue ad infinitum, but especially in instances where our qualitative work identifies the inherent strengths in the business and the numbers shake out to be quite fair, the consistent “raising of the bar” can be a potent driver for the stock.
Please do not judge us too harshly for our mistake on Shopify, for we have from the very beginning made one commitment above all else to both our clients and ourselves: that we will be better today than we were yesterday, and better tomorrow than we are today. While this mistake was quite costly, it ended up being a key confidence and process builder.”
