3. Roku, Inc. (NASDAQ:ROKU)
Mr. Sacerdote’s Stake Value: $580 million
Percentage of Mr. Sacerdote’s 13F Portfolio: 3.78%
Number of Hedge Fund Holders: 61
Roku, Inc. (NASDAQ:ROKU) is an American television streaming company that provides connections and sells smart televisions under its brand name. The company operates in several countries such as the United States, Canada and the United Kingdom, and it reaches its customers directly and through retailers and distributors.
Roku, Inc. (NASDAQ:ROKU)’s share price has grown by an eye popping 47% over the last year, and Mr. Sacerdote added the company to his portfolio in the second quarter of this year. He owns 1.2 million shares that are worth $580 million and make up for 3.78% of his hedge fund’s portfolio. Additionally, during the second quarter 61 out of 873 hedge funds polled by Insider Monkey also had a stake in Roku, Inc. (NASDAQ:ROKU).
The company posted revenue of $645 million and GAAP EPS of $0.52 by the end of its second quarter this year, as it beat analyst estimates on both counts. Indicating positive sentiment, Cleveland Research initiated coverage of Roku, Inc. (NASDAQ:ROKU) shares in September with a Buy rating and set a $389 price target for the company.
In a second quarter 2021 investor letter, LRT Capital Management had the following to say about Roku, Inc. (NASDAQ:ROKU):
“Historically, investors viewed Roku as a provider of commoditized hardware. However, we see the business as a provider of a platform for streaming services with ongoing recurring revenues as the company reduces its reliance on hardware sales for profits. In fact, over the past 5 years, the share of revenue coming from hardware sales has shrunk to just 45%, while its contribution to gross profit declined to 19%.1 We believe that the company’s strong competitive advantage is rooted in its high switching cost and scale-based cost advantages. In addition, we believe Roku is only in the beginning stages of its growth both domestically in the United States and internationally where the cord-cutting phenomenon is at least five years behind the U.S. Lastly, Roku’s capital allocation strategy has been exemplary and focused primarily on acquisitions that improve the customer experience and value of its platform. The moat, growth opportunities, and the company’s track record of capital allocation makes us believe that Roku can deliver strong investment returns to shareholders in the upcoming years…”
Catherine D. Wood’s Ark Investment Management was Roku, Inc. (NASDAQ:ROKU) largest shareholder by the end of the second quarter through owning 4.7 million shares worth $2.1 billion.
