In this article, we discuss 10 new stock stock picks of billionaire Rob Citrone.
Rob Citrone is an American hedge fund manager who in 1999 co-founded Discovery Capital Management, a hedge fund that focuses its investments on emerging markets and has a Q3 13F portfolio worth $1.3 billion, with a top ten holdings concentration of 65.61%. The fund also has discretionary assets under management of $3.6 billion.
In the third quarter of 2021, Discovery Capital Management purchased 31 new stocks, made additional purchases in 17 equities, sold out of 22 securities, and reduced holdings in 16 companies. The top buys of the hedge fund were Five9, Inc. (NASDAQ:FIVN), Zynga Inc. (NASDAQ:ZNGA), and Charter Communications, Inc. (NASDAQ:CHTR). Whereas, Rob Citrone’s Discovery Capital Management reduced holdings in Micron Technology, Inc. (NASDAQ:MU), Meta Platforms, Inc. (NASDAQ:FB), and Novonix Limited (NASDAQ:NVX).
With investments focused in the healthcare, utilities and telecommunications, information technology, finance, energy, and communications sectors, the most notable stocks in the Q3 portfolio of billionaire Rob Citrone included Pfizer Inc. (NYSE:PFE), Alphabet Inc. (NASDAQ:GOOG), and Uber Technologies, Inc. (NYSE:UBER).
Our Methodology
We used the Q3 2021 portfolio of billionaire Rob Citrone’s Discovery Capital Management for this analysis, selecting the hedge fund’s newest stock picks for the period. The securities are ranked according to Discovery Capital Management’s stake value in each holding.
New Stock Picks of Billionaire Rob Citrone
10. Atea Pharmaceuticals, Inc. (NASDAQ:AVIR)
Discovery Capital Management’s Stake Value: $5,708,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.42%
Number of Hedge Fund Holders: 25
Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) is a Boston-based biopharmaceutical company that is focused on creating therapies for life-threatening viral diseases. Rob Citrone acquired a position in Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) in Q3 2021, buying 162,800 shares worth $5.70 million, representing 0.42% of the billionaire’s 13F securities for the period.
On January 6, Morgan Stanley analyst Matthew Harrison downgraded Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) to Underweight from Equal Weight with a price target of $7, down from $14. He believes that the company’s most advanced product, oral COVID antiviral AT-527, has missed the critical window to achieve a major boost of COVID sales.
In Q3 2021, 25 hedge funds were bullish on Atea Pharmaceuticals, Inc. (NASDAQ:AVIR), with stakes totaling $568 million, as compared to the same number of funds holding stakes in Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) worth $352.3 million in the quarter earlier. RA Capital Management held the leading stake in Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) in the third quarter of 2021, with 5.4 million shares valued at $190.2 million.
9. CS Disco, Inc. (NYSE:LAW)
Discovery Capital Management’s Stake Value: $5,993,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.44%
Number of Hedge Fund Holders: 22
CS Disco, Inc. (NYSE:LAW) is a technology company that enables legal firms to improve their outcomes with SaaS solutions. Rob Citrone purchased 125,000 CS Disco, Inc. (NYSE:LAW) shares in the third quarter of 2021, worth roughly $6 million, representing 0.44% of his total 13F portfolio.
Piper Sandler analyst Arvind Ramnani lowered the price target on CS Disco, Inc. (NYSE:LAW) on January 13 to $48 from $61 and kept an Overweight rating on the shares. The analyst reduced price targets on 20 vertical software and fintech stocks after a “multiple reset and estimate revisions”.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 22 funds reported owning stakes in CS Disco, Inc. (NYSE:LAW), with stakes equaling $100.7 million. Alex Sacerdote’s Whale Rock Capital Management held the biggest stake in CS Disco, Inc. (NYSE:LAW), holding 356,353 shares worth over $17 million.
In addition to Pfizer Inc. (NYSE:PFE), Alphabet Inc. (NASDAQ:GOOG), and Uber Technologies, Inc. (NYSE:UBER), CS Disco, Inc. (NYSE:LAW) is a notable addition to Rob Citrone’s third quarter portfolio.
8. Itaú Unibanco Holding S.A. (NYSE:ITUB)
Discovery Capital Management’s Stake Value: $6,382,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.47%
Number of Hedge Fund Holders: 16
Headquartered in São Paulo, Itaú Unibanco Holding S.A. (NYSE:ITUB) is a leading Brazilian financial services company that serves customers globally, providing investment banking and retail banking services.
Rob Citrone’s Discovery Capital Management headed into the third quarter of 2021 with a newly acquired position in Itaú Unibanco Holding S.A. (NYSE:ITUB), buying 1.2 million shares of the company, worth $6.3 million. The stock accounts for 0.47% of the fund’s Q3 13F securities.
On January 31, Itaú Unibanco Holding S.A. (NYSE:ITUB) declared a $0.0031 per share monthly dividend, in line with previous. The dividend was paid on February 11, to shareholders of record on February 2.
In a press release on February 11, Itaú Unibanco Holding S.A. (NYSE:ITUB) announced a Q4 GAAP EPS of R$0.64, and a revenue of R$33.44 billion, up 14.6% year-on-year.
Barclays analyst Gilberto Garcia on January 24 initiated coverage of Itaú Unibanco Holding S.A. (NYSE:ITUB) with an Equal Weight rating and a $4.50 price target. While the company’s scale is positive, it could also limit the bank’s options for inorganic growth, according to the analyst.
Among the hedge funds tracked by Insider Monkey, 16 funds were long Itaú Unibanco Holding S.A. (NYSE:ITUB) in Q3 2021, with stakes equaling $379.5 million, as compared to the same number of funds in the quarter earlier, holdings stakes in Itaú Unibanco Holding S.A. (NYSE:ITUB) worth $431.6 million. Fisher Asset Management owns a $114 million stake in the company as of the third quarter of 2021, and is the largest stakeholder of the company.
7. Grupo Financiero Galicia S.A. (NASDAQ:GGAL)
Discovery Capital Management’s Stake Value: $6,698,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.50%
Number of Hedge Fund Holders: 7
Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is a prominent financial services company based in Buenos Aires, Argentina. The company specializes in retail banking, offshore banking, insurance, mortgages, consumer finance, and warehousing. Rob Citrone purchased 665,185 shares of Grupo Financiero Galicia S.A. (NASDAQ:GGAL) in Q3 2021, worth $6.6 million, representing 0.50% of the billionaire’s 13F investments.
JPMorgan analyst Domingos Falavina downgraded Grupo Financiero Galicia S.A. (NASDAQ:GGAL) on January 31 to Underweight from Neutral with a price target of $8, down from $9. The analyst sees deteriorating macroeconomic expectations, particularly inflation, as a “meaningful headwind” for Argentine banks, as well as “virtually zero visibility” on results.
Marshall Wace LLP held the biggest position in Grupo Financiero Galicia S.A. (NASDAQ:GGAL) in Q3 2021, with 868,693 shares worth $8.74 million. Overall, 7 hedge funds were bullish on the stock in the third quarter of 2021, with stakes totalling $24.78 million.
6. MongoDB, Inc. (NASDAQ:MDB)
Discovery Capital Management’s Stake Value: $7,153,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.53%
Number of Hedge Fund Holders: 47
MongoDB, Inc. (NASDAQ:MDB) is a New York-based software company that is known for its source-available NoSQL database, MongoDB. MongoDB is used by customers worldwide. In Q3 2021, Rob Citrone, via Discovery Capital Management, purchased 15,171 shares of MongoDB, Inc. (NASDAQ:MDB), worth $7.15 million, accounting for 0.53% of the fund’s total 13F securities.
Barclays analyst Raimo Lenschow lowered the price target on MongoDB, Inc. (NASDAQ:MDB) on January 12 to $556 from $590 and kept an Overweight rating on the shares. The analyst said that the main issue for software investors in 2022 is not around end demand but the correct valuation level for the space.
According to the third quarter database of Insider Monkey, 47 hedge funds were bullish on MongoDB, Inc. (NASDAQ:MDB), with stakes equalling $2.1 billion, as compared to 44 funds in the preceding quarter, holding stakes in MongoDB, Inc. (NASDAQ:MDB) worth $1.6 billion. Tybourne Capital Management was a prominent stakeholder of the company in Q3 2021, with 584,539 shares valued at $275.6 million.
Hedge funds are piling into MongoDB, Inc. (NASDAQ:MDB), just like Pfizer Inc. (NYSE:PFE), Alphabet Inc. (NASDAQ:GOOG), and Uber Technologies, Inc. (NYSE:UBER).
5. Palo Alto Networks, Inc. (NASDAQ:PANW)
Discovery Capital Management’s Stake Value: $7,622,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.57%
Number of Hedge Fund Holders: 73
Palo Alto Networks, Inc. (NASDAQ:PANW) is a California-based multinational cybersecurity company, specializing in network security, cloud computing, and firewalls. Rob Citrone acquired 15,912 Palo Alto Networks, Inc. (NASDAQ:PANW) shares in the third quarter of 2021, worth $7.6 million, representing 0.57% of the billionaire’s total 13F holdings for the period.
Palo Alto Networks, Inc. (NASDAQ:PANW) announced on January 25 that the Department of Veterans Affairs selected the company to secure its expanded remote workforce, its network of internet of medical things, and the new electronic health record modernization program. The VA will adopt the products of Palo Alto Networks, Inc. (NASDAQ:PANW) in this multi year agreement, supporting the VA’s efforts to offer secure services to the U.S. veterans.
On January 24, Citi analyst Fatima Boolani initiated coverage of Palo Alto Networks, Inc. (NASDAQ:PANW) with a Buy rating and a $585 price target. The analyst is positive on the company’s valuation and growth potential and said that the stock “offers defensive exposure as software investors continue to rotate out of high multiple software assets”.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 73 hedge funds were long Palo Alto Networks, Inc. (NASDAQ:PANW), up from 69 funds in the quarter prior. David Blood and Al Gore’s Generation Investment Management held the leading stake in Palo Alto Networks, Inc. (NASDAQ:PANW) in the third quarter, with 1.6 million shares worth $773.3 million.
4. Visa Inc. (NYSE:V)
Discovery Capital Management’s Stake Value: $7,841,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.58%
Number of Hedge Fund Holders: 143
Visa Inc. (NYSE:V) is a California-based multinational financial services company that offers credit cards and payment systems to customers worldwide. In Q3 2021, Discovery Capital Management acquired 35,200 shares of Visa Inc. (NYSE:V), worth $7.8 million, accounting for 0.58% of the fund’s 13F portfolio.
On January 27, Visa Inc. (NYSE:V) reported earnings for the fourth quarter, posting an EPS of $1.81, topping estimates by $0.11. The company’s revenue came in at $7.06 billion, up 24.13% year-over-year, outperforming estimates by $265 million.
Mizuho analyst Dan Dolev raised the price target on Visa Inc. (NYSE:V) on February 2 to $235 from $220 and kept a Neutral rating on the shares to account for the Q4 results and guidance.
Visa Inc. (NYSE:V) declared on January 27 a $0.375 per share quarterly dividend, in line with previous. The dividend is payable on March 1, to shareholders of record on February 11.
Among the hedge funds monitored by Insider Monkey in Q3 2021, 143 funds were bullish on Visa Inc. (NYSE:V), down from 162 funds in the quarter earlier. TCI Fund Management owned the leading stake in Visa Inc. (NYSE:V) in the third quarter of 2021, with roughly 20 million shares worth $4.4 billion.
Here is what Weitz Investment Management, Inc. has to say about Visa Inc. (NYSE:V) in its Q4 2021 investor letter:
“Reports to investors usually focus on the winners that prove the worthiness of the managers. It’s possible that we’ve been guilty of that on occasion, despite our best efforts to accurately convey what has worked and what hasn’t. This time, though, we are going to celebrate the great businesses we own that “went nowhere” in 2021. In a generally expensive market facing potentially strong headwinds in 2022, we find it very encouraging to own a number of proven winners whose stocks have been “resting” for the last year or so. They will not necessarily save us from markdowns during broad-based corrections, but they are companies that we believe can survive and grow business value through almost anything. They are the kinds of businesses that allow us to sleep well at night and not be tempted to sell at the wrong time. Here are some examples:
Established payments companies have been out of favor recently. Cross-border payments have been depressed with COVID disrupting international travel. These types of payments are particularly lucrative for Visa and their absence has impacted earnings. Further, we believe investors have overestimated the negative competitive impact of new fintech companies that have emerged over the past few years. Many of these “disrupters” depend on the Visa “rails” over which electronic payments travel, and these wily incumbents have a way of acquiring, copying or otherwise competing with upstarts.”
3. State Street Corporation (NYSE:STT)
Discovery Capital Management’s Stake Value: $8,472,000
Percentage of Discovery Capital Management’s 13F Portfolio: 0.63%
Number of Hedge Fund Holders: 42
State Street Corporation (NYSE:STT) is a Boston-based financial services and bank holding company that provides expertise in securities, investment management, stock trading, and the foreign exchange market. Rob Citrone’s Discovery Capital Management bought 100,000 State Street Corporation (NYSE:STT) shares in Q3 2021, worth $8.4 million, representing 0.63% of the fund’s Q3 investments.
Publishing its Q4 results on January 19, State Street Corporation (NYSE:STT) posted earnings per share of $2.00, beating estimates by $0.11. The $3.05 billion outperformed estimates by approximately $52 million.
Barclays analyst Jason Goldberg raised the price target on State Street Corporation (NYSE:STT) on January 3 to $130 from $110 and kept an Overweight rating on the shares. The analyst expects bank stocks to continue to outperform the market in 2022. He expects loan growth to accelerate and net interest margins to benefit from higher interest rates, despite some near-term uncertainty owing to the COVID-19 omicron variant.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 42 funds were bullish on State Street Corporation (NYSE:STT), up from 37 funds in the quarter earlier. Harris Associates, the largest State Street Corporation (NYSE:STT) stakeholder, held 4.8 million shares worth $412.2 million in the third quarter of 2021.
2. Couchbase, Inc. (NASDAQ:BASE)
Discovery Capital Management’s Stake Value: $17,095,000
Percentage of Discovery Capital Management’s 13F Portfolio: 1.27%
Number of Hedge Fund Holders: 13
Couchbase, Inc. (NASDAQ:BASE), a California-based software company, was added to Rob Citrone’s portfolio in the third quarter, with the billionaire buying 549,492 shares worth over $17 million, representing 1.27% of his total 13F securities.
On January 12, Barclays analyst Raimo Lenschow lowered the price target on Couchbase, Inc. (NASDAQ:BASE) to $30 from $41 and kept an Overweight rating on the shares. The analyst says the main question for software investors in 2022 is not around end demand, as there are “no issues there”, but valuation for the sector remains a concern.
Adams Street Partners is the biggest stakeholder of Couchbase, Inc. (NASDAQ:BASE) as of Q3 2021, with 1.78 million shares worth roughly $50 million. Overall, 13 hedge funds were bullish on Couchbase, Inc. (NASDAQ:BASE) in the third quarter of 2021, with stakes totaling approximately $107 million.
Here is what Baron Discovery Fund has to say about Couchbase, Inc. (NASDAQ:BASE) in its Q4 2021 investor letter:
“In the fourth quarter, the Fund was down 3.13% versus the Russell 2000 Growth Index, which was roughly unchanged. For the full-year 2021, the Fund was up 4.89% and beat the 2.83% return of the Russell 2000 Growth Index by 2.06%. The lion’s share of the underperformance in the fourth quarter was due to stock selection in the Information Technology (IT) and Health Care sectors. In IT, there was a fairly even spread of winners and losers for the quarter, though IPO profit taking affected Couchbase, Inc. after big third quarter gains.
Couchbase, Inc. provides modern database software that collects and stores data and powers enterprise applications, for which there is no tolerance for disruption, inaccuracy, or downtime. We wrote about our initial investment in this exciting company in our last quarterly letter. Its solution is fast (it utilizes caching, or retrieval from memory versus hard drives), scales to large amounts of records (which is expensive for old-style relational databases, and not even possible with some of the other NoSQL solutions), and works in all settings (on-premise, in the cloud, or in mixed hybrid environments). Couchbase, with revenues of $150 million, is addressing a large total market of $62 billion, which is slowly migrating to the cloud and using less rigid database structures. We added to our investment in the quarter when shares sold off due to multiple compression in the software sector. We believe that the selling was significantly overdone, and Couchbase now sells at a multiple that is about 25% of its main competitor. We believe that on an absolute and relative basis this 25%-plus grower is meaningfully undervalued.”
1. Five9, Inc. (NASDAQ:FIVN)
Discovery Capital Management’s Stake Value: $34,316,000
Percentage of Discovery Capital Management’s 13F Portfolio: 2.56%
Number of Hedge Fund Holders: 76
Headquartered in San Ramon, California, Five9, Inc. (NASDAQ:FIVN) is a provider of cloud software for contact centers in the United States and internationally. Heading into Q3 2021, Rob Citrone purchased 214,827 Five9, Inc. (NASDAQ:FIVN) shares, worth $34.3 million, accounting for 2.56% of the billionaire’s 13F securities.
On February 1, William Blair analyst Matt Stotler initiated coverage of Five9, Inc. (NASDAQ:FIVN) with an Outperform rating and no price target. According to the analyst, Five9, Inc. (NASDAQ:FIVN) is a leader in the cloud contact center market and has a strong ability to retain and expand its customer relationships, illustrated by its 123% dollar-based retention rate as of September 30, 2021. He believes that the opportunity for Five9, Inc. (NASDAQ:FIVN) is “substantial and could continue to grow” as it executes on its strategic growth initiatives and explores new products.
According to the Q3 database of Insider Monkey, 76 hedge funds were long Five9, Inc. (NASDAQ:FIVN), up from 45 funds in the quarter earlier. Alkeon Capital Management held the biggest stake in Five9, Inc. (NASDAQ:FIVN) in Q3 2021, with more than 3 million shares worth $480.6 million.
Here is what ClearBridge Investments has to say about Five9, Inc. (NASDAQ:FIVN) in its Q1 2021 investor letter:
“Five9 is a cloud-based contact center as a service software provider that is replacing aging on-premise legacy solutions that dominate the installed base. Companies are being forced to modernize and cloud penetration is still low; Five9 is positioned to benefit and should see further growth driven by its cross-selling add-on modules and an AI product that generates high revenue.”
You can also take a look at 10 Best Dividend Stocks According to Thomas Steyer’s Farallon Capital and 10 Stocks to Sell According to Billionaire Daniel Sundheim.
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Disclosure: None. 10 New Stock Picks of Billionaire Rob Citrone is originally published on Insider Monkey.
