In this article, we discuss 10 stocks to buy according to David Fear’s Thunderbird Partners.
Thunderbird Partners is a London-based hedge fund which manages a portfolio worth $834.3 million as of September 2021, with investments focused on the finance, information technology, consumer discretionary, and communications sectors. The hedge fund has a top 10 holdings concentration of 95.97%.
Thunderbird Partners was launched by David Fear, who previously ran a London-based hedge fund for the billionaire Ziff brothers.
The hedge fund’s top buys for the third quarter included Twitter, Inc. (NYSE:TWTR), Spotify Technology S.A. (NYSE:SPOT), and Airbnb, Inc. (NASDAQ:ABNB). Whereas, Thunderbird Partners sold out of JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Kirby Corporation (NYSE:KEX).
The most notable stocks in the Q3 portfolio of David Fear’s Thunderbird Partners include Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Alibaba Group Holding Limited (NYSE:BABA).
Source:Pixabay
Our Methodology
We used the Q3 portfolio of David Fear’s Thunderbird Partners to enlist the hedge fund’s top 10 stock picks, ranking them according to the fund’s stake value in each holding.
For further context on each stock, we have mentioned Q3 earnings, analyst ratings, and the hedge fund sentiment around the holdings.
Stocks to Buy According to David Fear’s Thunderbird Partners
10. Airbnb, Inc. (NASDAQ:ABNB)
Thunderbird Partners’ Stake Value: $17,215,000
Percentage of Thunderbird Partners’ 13F Portfolio: 2.06%
Number of Hedge Fund Holders: 58
Airbnb, Inc. (NASDAQ:ABNB), an American vacation rental company running an online marketplace for lodging and tourism activities, is one of the top stocks to buy according to David Fear’s Thunderbird Partners. The hedge fund owns 102,625 Airbnb, Inc. (NASDAQ:ABNB) shares as of Q3 2021, worth $17.2 million, representing 2.06% of the total 13F securities.
On November 4, Airbnb, Inc. (NASDAQ:ABNB) posted its Q3 results, announcing earnings per share of $1.23, beating estimates by $0.40. The quarterly revenue equaled $2.24 billion, outperforming estimates by $181.63 million.
Piper Sandler analyst Thomas Champion downgraded Airbnb, Inc. (NASDAQ:ABNB) on January 10 to Neutral from Overweight with a price target of $169, down from $215. While Airbnb, Inc. (NASDAQ:ABNB) remains a “top-tier asset”, the stock’s setup looks less favorable into 2022. He cites “elevated” Street expectations, valuation, and its “alternatives pure-play focus”, which may be less desirable as travel normalizes, for the downgrade.
A total of 58 hedge funds were bullish on Airbnb, Inc. (NASDAQ:ABNB) as of September 2021, with stakes valued at $2.71 billion. Renaissance Technologies, one of the largest Airbnb, Inc. (NASDAQ:ABNB) stakeholders, elevated its position in the company by 294% in the third quarter, holding 2.7 million shares worth $465.3 million.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Alibaba Group Holding Limited (NYSE:BABA), Airbnb, Inc. (NASDAQ:ABNB) is a notable stock from Thunderbird Partners’ Q3 portfolio.
Here is what Tollymore Investment Partners has to say about Airbnb, Inc. (NASDAQ:ABNB) in its Q3 2021 investor letter:
“Today disruptors are not typically seeking to replace incumbents entirely. Rather, they break the links in the customer journey, in doing so better aligning monetisation with value creation and minimizing externalities. For example, Airbnb broke the link between staying in residential property and owning it. Airbnb is a specific example of a business model innovation which separated asset use from ownership. This is hardly a novel idea; it’s called renting. Rental models lend themselves to assets which are expensive and durable, and where usage is infrequent.”
9. Harley-Davidson, Inc. (NYSE:HOG)
Thunderbird Partners’ Stake Value: $53,814,000
Percentage of Thunderbird Partners’ 13F Portfolio: 6.44%
Number of Hedge Fund Holders: 33
Harley-Davidson, Inc. (NYSE:HOG) is an American motorcycle manufacturer headquartered in Milwaukee, Wisconsin, selling its products and merchandise worldwide. Thunderbird Partners owns 1.4 million Harley-Davidson, Inc. (NYSE:HOG) shares as of September 2021, worth $53.8 million, representing 6.44% of the fund’s Q3 portfolio.
On November 22, Harley-Davidson, Inc. (NYSE:HOG) declared a quarterly per share dividend of $0.15. The dividend was paid on December 23, to shareholders of record on December 8.
Harley-Davidson, Inc. (NYSE:HOG) announced on October 27 its Q3 results, posting earnings per share of $1.18, exceeding estimates by $0.42. Revenue over the period totaled $1.16 billion, up 20.39% year-over-year, beating estimates by $14.21 million.
BMO Capital analyst Gerrick Johnson raised the price target on Harley-Davidson, Inc. (NYSE:HOG) to $62 from $54 and kept an Outperform rating on the shares on October 28. The company’s Q3 results were better than expected, with retail sales, motorcycle shipment, and financial services performance all ahead of estimates.
Rehan Jaffer’s H Partners Management is the largest Harley-Davidson, Inc. (NYSE:HOG) stakeholder as of Q3 2021, with 11.20 million shares worth roughly $410 million. Overall, 33 hedge funds in the third quarter database of Insider Monkey were bullish on the stock, down from 37 funds in the prior quarter.
8. Interactive Brokers Group, Inc. (NASDAQ:IBKR)
Thunderbird Partners’ Stake Value: $56,896,000
Percentage of Thunderbird Partners’ 13F Portfolio: 6.81%
Number of Hedge Fund Holders: 31
Interactive Brokers Group, Inc. (NASDAQ:IBKR), an American multinational company offering online brokerage and direct market access to stocks, options, futures, forex, bonds, and ETFs, is one of the top stocks to buy according to Thunderbird Partners. The hedge fund holds 912,676 Interactive Brokers Group, Inc. (NASDAQ:IBKR) shares, worth $56.8 million. The stock represents 6.81% of Thunderbird Partners’ Q3 portfolio.
On October 19, Interactive Brokers Group, Inc. (NASDAQ:IBKR) declared a $0.10 per share quarterly dividend, in line with previous. The dividend was paid on December 14, to shareholders of record on December 1.
Interactive Brokers Group, Inc. (NASDAQ:IBKR) posted Q3 earnings on October 19, reporting an EPS of $0.78, beating estimates by $0.02. The $464 million revenue dropped 15.33% from the prior-year quarter, missing estimates by $175.82 million.
BofA analyst Craig Siegenthaler initiated coverage of Interactive Brokers Group, Inc. (NASDAQ:IBKR) with a Buy rating and a $126 price target on December 15. The analyst said that the company has a “key” competitive advantage in technology research and development, which allows the firm to launch new capabilities faster and at lower price points than peers.
In the third quarter of 2021, 31 hedge funds were bullish on Interactive Brokers Group, Inc. (NASDAQ:IBKR), down from 36 funds in the preceding quarter. Select Equity Group is the leading stakeholder of the company, with 5.79 million shares worth $361.3 million.
7. Twitter, Inc. (NYSE:TWTR)
Thunderbird Partners’ Stake Value: $57,893,000
Percentage of Thunderbird Partners’ 13F Portfolio: 6.93%
Number of Hedge Fund Holders: 94
Thunderbird Partners acquired a stake in Twitter, Inc. (NYSE:TWTR) during the third quarter of 2021, buying 958,659 shares worth $57.8 million. The stock accounts for 6.93% of the fund’s total 13F portfolio.
On October 26, Twitter, Inc. (NYSE:TWTR) reported its third quarter financial results, posting a per share loss of $0.54, missing estimates by $0.72. Revenue over the period jumped 37.13% year-over-year to $1.28 billion, outperforming estimates by $1.02 million.
Truist analyst Youssef Squali lowered the price target on Twitter, Inc. (NYSE:TWTR) to $60 from $80 but kept a Buy rating on the shares on January 10. The analyst cites his updated model following the sale of MoPub and the expected increase in operating spending under the company’s new CEO. The sharp pullback and the compelling long-term story makes Twitter, Inc. (NYSE:TWTR) “attractive” for patient investors.
Stephen Mandel’s Lone Pine Capital is the biggest Twitter, Inc. (NYSE:TWTR) stakeholder as of September 2021, holding 21.5 million shares worth $1.30 billion. Overall, 94 hedge funds monitored by Insider Monkey were long Twitter, Inc. (NYSE:TWTR) during the third quarter, with stakes totaling $6.30 billion.
Here is what Greenwood Investors has to say about Twitter, Inc. (NYSE:TWTR) in its Q3 2021 investor letter:
“Being entrepreneurial, by definition, means taking the path untraveled, and heading into the unknown with daring boldness. Offense playbooks, by design, must take competition by surprise. Coming from a humble place with brands and companies that were ridiculed by competitors, when Sergio put medium-term plans out to the market, they were not timid. He would always aim higher than anyone, especially his competitors, believed he and his team could reach. And while not every target was always achieved, the formidable results speak for themselves.
This past earnings season, as Twitter was the only social media company to deliver on guidance while also confirming the quarter ahead to be at least as good, the stock sold off materially as its monetizable daily active user (MDAU) targets in the medium-term were called into question. While founder Jack Dorsey is clearly unafraid to look foolish to the public, or even in front of congress, he also manages multiple businesses at the same time. Competitors openly make fun of him. But his team is exceptionally loyal to him, and they have set out very ambitious targets for themselves over the next few years. The recent sell-off in Twitter shares was like deja vu all over again, as I reminisced about the Fiat capital markets day in 2014, fittingly on Twitter in this tweet thread. With its product and revenue servers rebuilt, it can now innovate and launch new ad formats faster than ever before. We look forward to the Twitter team pressing its offense strategy as a major peer loses focus on its core business.”
6. Six Flags Entertainment Corporation (NYSE:SIX)
Thunderbird Partners’ Stake Value: $74,536,000
Percentage of Thunderbird Partners’ 13F Portfolio: 8.93%
Number of Hedge Fund Holders: 42
Six Flags Entertainment Corporation (NYSE:SIX) is a Texas-based amusement park corporation with properties in Canada, Mexico, and the United States. Thunderbird Partners boosted its stake in Six Flags Entertainment Corporation (NYSE:SIX) by 62% in Q3 2021, holding a total of 1.75 million shares, worth $74.5 million. The stock represents 8.93% of the fund’s 13F securities.
On October 27, Six Flags Entertainment Corporation (NYSE:SIX) published its third quarter earnings. The company announced an EPS of $1.80, exceeding estimates by $0.36. The Q3 revenue came in at $638.28 million, gaining 405.26% from the prior-year quarter, outperforming estimates by $51.21 million.
Credit Suisse analyst Benjamin Chaiken upgraded Six Flags Entertainment Corporation (NYSE:SIX) to Outperform from Neutral with a price target of $53, up from $52. The shares offer a “compelling risk/reward” following the recent sell off, according to the analyst.
42 hedge funds tracked by Insider Monkey in the third quarter reported owning stakes in Six Flags Entertainment Corporation (NYSE:SIX), valued at over $1 billion, as compared to 36 funds holding stakes worth roughly $895 million in Six Flags Entertainment Corporation (NYSE:SIX) in the preceding quarter.
One of the largest stakeholders of Six Flags Entertainment Corporation (NYSE:SIX) as of Q3 2021 is billionaire Ken Griffin’s Citadel Investment Group, with 2.24 million shares worth $95.2 million.
Just like Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Alibaba Group Holding Limited (NYSE:BABA), Six Flags Entertainment Corporation (NYSE:SIX) is one of the top stocks from Thunderbird Partners’ Q3 portfolio.
5. Spotify Technology S.A. (NYSE:SPOT)
Thunderbird Partners’ Stake Value: $78,524,000
Percentage of Thunderbird Partners’ 13F Portfolio: 9.41%
Number of Hedge Fund Holders: 48
Spotify Technology S.A. (NYSE:SPOT), a Swedish audio streaming and media services company, is one of the top stocks to buy according to David Fear’s Thunderbird Partners. The hedge fund owns 348,469 shares of Spotify Technology S.A. (NYSE:SPOT), worth $78.5 million. The stock represents 9.41% of Thunderbird Partners’ Q3 portfolio.
Spotify Technology S.A. (NYSE:SPOT) announced its third quarter results on October 27, reporting an EPS of $0.01, beating estimates by $0.17. Revenue for the period jumped 25.85% year-over-year to $2.90 billion, exceeding estimates by $64.16 million.
Benchmark analyst Matthew Harrigan initiated coverage of Spotify Technology S.A. (NYSE:SPOT) with a Buy rating and a $300 price target on November 24. Spotify Technology S.A. (NYSE:SPOT) is “the marquee global audio streaming service” and “continues to out innovate larger hyperscale tech competitors”, according to the analyst. He sees advertising and podcasting growth increasingly complementing premium music streaming.
Cathie Wood’s ARK Investment Management is the largest Spotify Technology S.A. (NYSE:SPOT) stakeholder as of Q3 2021, with 4.6 million shares worth over $1 billion. Overall, 48 hedge funds were bullish on Spotify Technology S.A. (NYSE:SPOT) in the third quarter.
Here is what Rowan Street Capital has to say about Spotify Technology S.A. (NYSE:SIX) in its Q3 2021 investor letter:
“At Rowan Street, the #1 fundamental principle of everything we do is we have a mindset of a business owner — this is how we approach all our investments. When you start looking at the world through the lens of a business owner, you start paying less and less attention to the stock tickers that bounce up and down every day and realize that most of the time these daily stock price gyrations have very little to do with the long term intrinsic value of the business. Over the long run, however, stock prices accurately reflect the fundamentals of businesses. For example, when you purchase a house or a commercial property or buy into a small business, you do not get a quote on it every single moment or every single day. You are in it for the long run, and you make your investment decision based on the earnings that your property or business can generate over the next 5-10 years in relation to the capital that you have to put up up-front.
This is exactly how we structure the portfolio of our fund and how we judge the performance of our businesses, in which we are minority owners.
Let’s look at one of our investments, Spotify, as an example. We encourage you to review our investment thesis on Spotify that we published in our Q2 2020 Letter and in H1 2021 Letter. The company went public in April of 2018 and since the stock has delivered the following calendar year returns:
2018: -24% (since IPO date)
2019: +32%
2020: +110%
2021: -26% (as of this writing)
As you can see, performance of an individual stock can be very lumpy from year to year. Spotify was the biggest contributor to our funds’ performance in 2020 and it’s the second biggest detractor thus far in 2021. Do these short-term stock price gyrations matter to us? Absolutely not! Focusing on this and judging our investment based on how it performs in any given year would be akin to attempting to win a football game while keeping our eyes on the scoreboard. This is why at Rowan Street, our eyes will always be focused on the “playing field”. If we continue to do that, the score will take care of itself over time!
What does it look like on the “playing field” for Spotify?…” (Click here to see the full text)
4. Alibaba Group Holding Limited (NYSE:BABA)
Thunderbird Partners’ Stake Value: $81,924,000
Percentage of Thunderbird Partners’ 13F Portfolio: 9.81%
Number of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA), a Chinese multinational ecommerce, technology, and retail corporation, is one of the top stock picks of Thunderbird Partners as of September 2021. The hedge fund holds 553,356 Alibaba Group Holding Limited (NYSE:BABA) shares, worth $81.9 million. The stock represents 9.81% of Thunderbird Partners’ Q3 portfolio.
115 hedge funds were bullish on Alibaba Group Holding Limited (NYSE:BABA) in the third quarter, with stakes valued at $10.20 billion, as compared to 146 funds in the preceding quarter holding stakes in the company worth $16.7 billion. Billionaire Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 14.2 million shares worth $2.1 billion.
On November 18, Alibaba Group Holding Limited (NYSE:BABA) reported its Q3 results, posting earnings per share of $1.75, missing estimates by $0.19. The company announced a $31.43 billion revenue, up 33.83% year-over-year, but missed estimates by approximately $670 million.
Citi analyst Alicia Yap lowered the price target on Alibaba Group Holding Limited (NYSE:BABA) to $216 from $234 and kept a Buy rating on the shares on January 10. The analyst reduced fiscal Q3 and out year estimates for Alibaba citing the “challenging” macro environment.
Here is what Distillate Capital has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2021 investor letter:
“The largest sales in the quarter were the Chinese E-commerce giant Alibaba. While Alibaba is still attractively valued, it is not as attractively valued as other Chinese names after the significant sell-off that has occurred in that region. Alibaba was therefore sold to make room for other Chinese stocks within the limits of the regional weight.”
3. Western Digital Corporation (NASDAQ:WDC)
Thunderbird Partners’ Stake Value: $100,142,000
Percentage of Thunderbird Partners’ 13F Portfolio: 12%
Number of Hedge Fund Holders: 41
Western Digital Corporation (NASDAQ:WDC) is a California-based manufacturer of computer hard disk drives, storage devices, data center systems, and cloud storage services. Thunderbird Partners owns 1.77 million shares of Western Digital Corporation (NASDAQ:WDC) as of the third quarter of 2021, worth $100.1 million, representing 12% of the fund’s Q3 13F securities.
Among the hedge funds tracked by Insider Monkey, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management is the largest stakeholder of Western Digital Corporation (NASDAQ:WDC) in the third quarter, with 4.23 million shares worth $239.1 million. Overall, 41 hedge funds were bullish on Western Digital Corporation (NASDAQ:WDC) in Q3 2021, down from 57 funds in the preceding quarter.
Publishing its Q3 results on October 28, Western Digital Corporation (NASDAQ:WDC) posted an EPS of $2.49, exceeding estimates by $0.05. The $5.05 billion revenue missed estimates by $7.48 million.
Evercore ISI analyst C.J. Muse raised the price target on Western Digital Corporation (NASDAQ:WDC) to $75 from $65 to reflect 7.2 times his calendar 2023 EPS estimate. He kept an Outperform rating on the shares on December 13, which he contends are “structurally under-valued”.
Here is what ClearBridge Investments has to say about Western Digital Corporation (NASDAQ:WDC) in its Q1 2021 investor letter:
“Our high active share approach made the most difference in IT, where the portfolio’s holdings gained 4.5% compared to a loss for the benchmark. Results were led by our more cyclical positions in digital storage provider Western Digital.”
2. Alphabet Inc. (NASDAQ:GOOG)
Thunderbird Partners’ Stake Value: $134,120,000
Percentage of Thunderbird Partners’ 13F Portfolio: 16.07%
Number of Hedge Fund Holders: 156
Thunderbird Partners owns 50,166 shares of Alphabet Inc. (NASDAQ:GOOG) as of Q3 2021, worth $134.1 million, representing 16.07% of the fund’s 13F portfolio.
Tigress Financial analyst Ivan Feinseth raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,540 from $3,185 and reiterated a Strong Buy rating on the shares on December 3, citing the company’s increasing artificial intelligence-first focus is driving greater product functionality and “significant” growth opportunities.
Alphabet Inc. (NASDAQ:GOOG) announced solid Q3 results on October 26, posting earnings per share of $27.99, exceeding estimates by $4.75. The $65.12 billion revenue also outperformed estimates by $1.83 billion.
Chris Hohn’s TCI Fund Management is the largest Alphabet Inc. (NASDAQ:GOOG) stakeholder, with 2.95 million shares worth $7.86 billion. Overall, 156 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG) as of September 2021, with stakes amounting to $34.95 billion.
Here is what Saturna Capital Amana Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Thunderbird Partners’ Stake Value: $145,679,000
Percentage of Thunderbird Partners’ 13F Portfolio: 17.45%
Number of Hedge Fund Holders: 248
Meta Platforms, Inc. (NASDAQ:FB), the parent company of Facebook, Instagram, and WhatsApp, is the largest holding in David Fear’s Thunderbird Partners’ Q3 portfolio. The fund owns 429,239 shares of Meta Platforms, Inc. (NASDAQ:FB), worth $145.6 million, representing 17.45% of the total Q3 investments.
On October 25, Meta Platforms, Inc. (NASDAQ:FB) reported its third quarter financial results, posting an EPS of $3.22, beating estimates by $0.04. Revenue over the period totaled $29.01 billion, up 35.12% from the prior-year quarter, but missed estimates by $513.23 million.
Loop Capital analyst Alan Gould on December 20 lowered the price target on Meta Platforms, Inc. (NASDAQ:FB) to $380 from $420 but kept a Buy rating on the shares. The magnitude of Meta Platforms, Inc. (NASDAQ:FB)’s spending on the Metaverse over the next several years and how rapidly the spending at Facebook Reality Labs will increase from the $10 billion being spent in 2021 will be a key focus for investors, according to the analyst.
Fisher Asset Management is one of the biggest Meta Platforms, Inc. (NASDAQ:FB) stakeholders, with 7.59 million shares worth $2.5 billion. Overall, 248 hedge funds in the third quarter database of Insider Monkey were long Meta Platforms, Inc. (NASDAQ:FB), down from 266 funds in the prior quarter.
Here is what ClearBridge Large Cap Growth Strategy has to say about Meta Platforms, Inc. (NASDAQ:FB) in its Q3 2021 investor letter:
“While Amazon.com and Facebook, the Strategy’s overweights in the mega cap group, underperformed both their FAAMG peers and the benchmark in the third quarter, we maintain conviction in these names because they have the highest growth profiles. Amazon is projected to grow earnings per share at 19% next year and Facebook at 13%, while Apple is expected to see only breakeven earnings in 2022 (Exhibit 1). Facebook remains at the center of regulatory attention, although we believe that the worst-case scenario options are low-probability events and that the digital advertising market continues to be quite healthy. In a similar way, we prefer to play the secular growth trends in digital advertising through Facebook rather than Google and the rollout of 5G via Qualcomm instead of Apple. Facebook has multiple products that can continue to drive attractive revenue growth including direct e-commerce solutions, payments, AR/VR and monetizing WhatsApp. In addition, the Federal Trade Commission’s dismissal of the government’s antitrust case against Facebook (even though the case was subsequently re-filed) supports our view that antitrust action against the company will be difficult to achieve.”
You can also take a look at 10 Best Tech Stocks to Buy Now According to Nishkama Capital and 10 Best Stocks To Buy According to Billionaire Larry Robbins.
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Disclosure: None. 10 Stocks to Buy According to David Fear’s Thunderbird Partners is originally published on Insider Monkey.
