In this article, we discuss the 10 stocks to buy based on Michael Pausic’s Foxhaven Asset Management Portfolio. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks to Buy Based on Michael Pausic’s Foxhaven Asset Management Portfolio.
Michael Pausic is the co-founder and portfolio manager of Foxhaven Asset Management. Pausic started his career as a Media and Communications banker. Before that, he completed his BS in engineering from the University of Virginia in 1986 and MBA from Fuqua School of Business at Duke University in 1989.
Meta Platforms, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V) are some of the notable names in Foxhaven Asset Management’s portfolio. These three companies make up around 25.37% of the fund’s portfolio, and Meta Platforms, Inc. (NASDAQ:FB) is the firm’s most significant holding.
Our Methodology
Here is our list of 10 stocks to buy based on Michael Pausic’s Foxhaven Asset Management portfolio. These were picked from the Foxhaven Asset Management portfolio at the end of the third quarter of 2021.
10 Stocks to Buy Based on Michael Pausic’s Foxhaven Asset Management Portfolio
10. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Foxhaven Asset Management’s Stake Value: $162.9 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 4.69%
Number of Hedge Fund Holders: 44
Hilton Worldwide Holdings Inc. (NYSE:HLT) is a multinational hospitality company headquartered in Virginia, United States. The company has about 6500 locations worldwide and about 18 different brands covering different market segments.
On October 10, BMO Capital analyst Ari Klein raised the price target for Hilton Worldwide Holdings Inc. (NYSE:HLT) from $135 to $144, keeping a Market Perform rating. The company saw a bit of a downfall during the pandemic; however, analysts are optimistic about the company’s recovery.
Hilton Worldwide Holdings Inc. (NYSE:HLT) is one of the the top picks of Foxhaven Asset Management along with Meta Platforms, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V).
Pershing Square Holdings, Ltd. mentioned Hilton Worldwide Holdings Inc. (NYSE:HLT) in their second-quarter 2021 investor letter. Here is what the firm said:
“While the hotel industry has been extremely negatively impacted by the COVID-19 pandemic, Hilton has done an excellent job navigating industry volatility, a testament to the company’s high-quality, asset light, high-margin business model and superb management team. From the moment the pandemic began, Hilton’s management team took decisive actions to ensure the company not only managed through what it knew would be a challenging period, but also positioned the company to generate improved margins, cash fl ows and investment returns once the business recovers to pre-COVID-19 demand levels.
Industry RevPAR (the industry metric for same-store sales at a given hotel) bottomed in April 2020 and has shown sequential improvement every quarter as travel and mobility have recovered along with COVID-19 vaccine rollouts and a resumption in travel. In recent months, there is increasing evidence that a robust recovery scenario is underway, led by domestic leisure travel occasions which is currently trending above 2019 demand levels. For the first three weeks of July, the most recent data the company provided, RevPAR has already recovered to 85% of 2019 levels – a signifi cant improvement over prior months driven by increased hotel occupancy and a rapid recovery in rate.
While management anticipates a moderation in leisure demand as we exit the summer, it expects the moderation in leisure travel to be off set by a more pronounced recovery in business transient travel occasions as offi ces reopen this fall. Although there remains near-term uncertainty in domestic travel given the increase in COVID-19 case numbers following the arrival of the Delta variant in the U.S., we believe that the medium-term outlook continues to point to a robust recovery scenario. Throughout the pandemic, Hilton took actions to reduce corporate expenses by about 20% compared to 2019 levels.
Simultaneously, the company provided resources and support to the Hilton owner community which further solidifi ed Hilton as the preferred franchise partner, thereby expanding Hilton’s pipeline of units around the world.
In the most recent quarter Hilton affi rmed its near-to-medium term outlook of mid-single-digit net unit growth, and a resumption of its historical 6-7% net unit growth beginning in 2023-2024, higher growth than competitors, and further evidence of Hilton’s unique business model.
We believe that Hilton will continue to grow its market share over time given independent hotels’ increased interest in seeking an affi liation with global brands, particularly in the wake of the pandemic. While the recovery may continue to be uneven, Hilton has made tremendous progress which will help it become an even more profi table and stronger business going forward.”
9. Visa Inc. (NYSE:V)
Foxhaven Asset Management’s Stake Value: $166.15 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 4.78%
Number of Hedge Fund Holders: 143
Visa Inc. (NYSE:V) is a California-based multinational company that provides financial services mainly in electronic funds transfers around the globe. The most common forms of its products are credit, debit, and prepaid cards.
According to the third-quarter 13F filings, Foxhaven Asset Management owns 745,908 shares of Visa Inc. (NYSE:V) worth $166.5 million, representing 4.78% of the fund’s portfolio.
L1 Capital mentioned Visa Inc. (NYSE:V) in their third-quarter investor letter. Here is what the firm said:
“In our view, the payment network company, Visa, remain very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa’s transaction volumes, however in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. Nearer term, we believe the recovery in international travel as the world gradually normalises and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
8. Pegasystems Inc. (NASDAQ:PEGA)
Foxhaven Asset Management’s Stake Value: $171.29 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 4.93%
Number of Hedge Fund Holders: 25
Pegasystems Inc. (NASDAQ:PEGA) is a software company that primarily focuses on Automation, Robotic Process Automation, and Artificial Intelligence. The company has around 6000 employees, 46 locations and more than 250 global partners worldwide.
The investment management firm Carillon Tower Advisers mentioned Pegasystems Inc. (NASDAQ:PEGA) in their second-quarter 2021 investor letter. Here is what it said:
“Pegasystems develops software used in automating business tasks. The company’s artificial intelligence-driven recommendations for customer service contact centers is a key growth driver, and a mix shift towards cloudcomputing should result in a higher valuation over time. Investors have appreciated this dynamic, sending the shares higher.”
7. Coupang, Inc. (NYSE:CPNG)
Foxhaven Asset Management’s Stake Value: $255.9 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.37%
Number of Hedge Fund Holders: 45
Coupang, Inc. (NYSE:CPNG) is a South-Korean e-commerce and digital distribution company founded in 2010. The company is South Korea’s most prominent online marketplace. In 2021, Coupang, Inc. (NYSE:CPNG) announced expanding its operations to Japan and Taiwan.
In 2020, Coupang, Inc. (NYSE:CPNG) was the fastest-growing company among 250 retailers worldwide.
In the third quarter of 2021, Coupang, Inc. (NYSE:CPNG) saw some capacity limitations due to warehouse fire and COVID-related costs. On November 15, Mizuho analyst James Lee decreased the company’s price target from $40 to $32 and held a Neutral rating on Coupang, Inc. (NYSE:CPNG) shares.
6. Intuit Inc. (NASDAQ:INTU)
Foxhaven Asset Management’s Stake Value: $256.1 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.38%
Number of Hedge Fund Holders: 64
Intuit Inc. (NASDAQ:INTU) is an American company that provides enterprise application software to its customers. The company operates in 9 countries, and its major products are TurboTax, QuickBooks, Mint, and Credit Karma. In the third quarter of 2021, Intuit Inc. (NASDAQ:INTU) also acquired Mailchimp, an email marketing service, for $12 billion
Terry Smith’s Fundsmith LLP owns the most significant number shares in Intuit Inc. (NASDAQ:INTU), with 4.58 million shares worth $2.47 billion, representing 6.83% of Fundsmith’s portfolio. Foxhaven Asset Management reduced its activity in Intuit Inc. (NASDAQ:INTU) by 13% in the third quarter of 2021.
Cooper Investors mentioned Intuit Inc. (NASDAQ:INTU) in their third-quarter 2021 investor letter. Here is what they said:
“The other meaningful deal during the quarter was Intuit’s acquisition of Mailchimp for $12bn. Intuit has reinvented itself over the last decade and thrived with a leadership position in QuickBooks Online, the financial accounting software for small businesses (effectively the ‘Xero of the US’). We originally invested in Intuit in February 2020, excited by the QuickBooks prospects.
Management have executed exceptionally well on the opportunity set which has seen the shares double since our initial purchase. However, the company has now conducted two meaningful deals in Mailchimp and Credit Karma worth a combined US$20bn over the last 12 months. The investment proposition has shifted from a focus on QuickBooks to now being a financial and small business software conglomerate. We continue to very much admire the company, but with Intuit now trading on 50x forward earnings we no longer see such attractive latency on offer, nor the rewards for the level of execution risk and thus we have exited the position.”
5. Twilio Inc. (NYSE:TWLO)
Foxhaven Asset Management’s Stake Value: $272.4 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.85%
Number of Hedge Fund Holders: 96
Twilio Inc. (NYSE:TWLO) is a communications company that provides cloud communication services to its customers. Some of the major clients of the company are eBay Inc. (NASDAQ:EBAY), Uber Technologies, Inc. (NYSE:UBER), and Airbnb, Inc. (NASDAQ:ABNB).
As per Insider Monkey’s database, 96 hedge funds held stakes in Twilio Inc. (NYSE:TWLO) worth $6.37 billion in the third quarter of 2021, with the most significant stake by Cathie Wood’s ARK Investment Management. Wood’s firm owns 3.2 million shares of the company worth more than $1 billion.
The investment management firm Lakehouse Capital mentioned Twilio Inc. (NYSE:TWLO) in their second-quarter 2021 investor letter. Here are the contents of the letter:
“The Fund held 20 positions as of the end of June and exited four during the year (including) Twilio. The companies we exited were sold almost entirely on the basis of their valuations getting stretched well past their norms and to levels where the return profile no longer offered the asymmetric upside that led us to invest in the first place. We dislike selling on valuation as great growth companies are hard to find and letting winners run is an important facet of a winning growth strategy, however, we’re not gluttons for punishment either and in each of those cases we redeployed capital towards other high-quality growth companies with less demanding valuations.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Foxhaven Asset Management’s Stake Value: $278.4 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 8.02%
Number of Hedge Fund Holders: 242
Amazon.com, Inc. (NASDAQ:AMZN) accounts for 8.02% of Foxhaven’s 13F portfolio. The fund owns 84,752 shares of the company worth $278.4 million.
On November 22, Guggenheim analyst Seth Sigman gave Amazon.com, Inc. (NASDAQ:AMZN) a Buy rating with a price target of $4300.
The investment management firm Polen Capital mentioned Amazon.com, Inc. (NASDAQ:AMZN) in their third-quarter 2021 investor letter. Here is what the firm said:
“Amazon has also lagged as its revenue growth is slowing on the very difficult comparisons from last year when this behemoth was growing revenue by over 40%. We still expect exceptional long-term growth and significant margin expansion as the fastest growing (and now large) segments of Amazon are also generating the highest margins.”
3. MercadoLibre, Inc. (NASDAQ:MELI)
Foxhaven Asset Management’s Stake Value: $279.5 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 8.05%
Number of Hedge Fund Holders: 68
MercadoLibre, Inc. (NASDAQ:MELI) is an Argentinian company that operates online marketplaces and primarily focuses on e-commerce and online auctions. The company is Latin America’s most popular e-commerce site and operates across 16 countries of the region. The company also plans to allow cryptocurrency investments to its customers using digital wallets quite soon.
Barclays analyst Trevor Young has raised the price target of MercadoLibre, Inc. (NASDAQ:MELI) to $2200 up from $2100 and kept an Overweight rating after its third-quarter results. The analyst mentioned that the company is “executing on all fronts.”
Polen Capital mentioned MercadoLibre, Inc. (NASDAQ:MELI) in their second-quarter 2021 investor letter. Here is what the firm said:
“Argentina-based MercadoLibre operates Latin America’s leading e-commerce website and digital wallet. Both e-commerce and consumer finance are underpenetrated among the nearly 400 million citizens living in the company’s three largest markets: Brazil, Argentina, and Mexico.
MercadoLibre’s digitally native solution gives more than 70 million users an easy access point for both online shopping and a digital wallet.
From humble beginnings as a third-party marketplace, MercadoLibre’s management built the business over the last twenty years by steadily expanding the platform’s reach with new services to suit both merchants and consumers. Today’s offerings include financing capabilities for buyers and sellers, logistics, loyalty programs, classifieds listings, and grocery items. We think MercadoLibre can compound earnings at a 25% rate for the next five years.”
2. Atlassian Corporation Plc (NASDAQ:TEAM)
Foxhaven Asset Management’s Stake Value: $349.08 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 10.05%
Number of Hedge Fund Holders: 60
Atlassian Corporation Plc (NASDAQ:TEAM) is an Australian software company. The company was founded in 2002, and in the third quarter of 2021, it was one of the top picks of Foxhaven Asset Management. The fund owns 891,828 shares of Atlassian Corporation Plc (NASDAQ:TEAM) worth $349.08 million, accounting for 10.05% of the fund’s third-quarter portfolio.
Atlassian Corporation Plc (NASDAQ:TEAM) recently posted its first-quarter 2022 results, in which the company posted an EPS of $0.46 compared to the $0.40 estimates.
Atlassian Corporation Plc (NASDAQ:TEAM) was mentioned by the investment management firm Tao Value in their third-quarter 2021 investor letter. Here is what they said:
“Atlassian (TEAM) delivered a “ripper”(quoting management from earnings call) quarter, adding a record 23K new customers last quarter, which is more than the total new customers of full year 2020. The cloud revenue also shows growth acceleration. This is surprisingly impressive, give that TEAM is believed to pull future demand forward to last quarter (i.e. the market expects de-acceleration after such effect) by ending their on-premise offerings in February 2021. As a result, the stock price jumped up 20+% on the earnings day. TEAM has increased 20-fold from our initial purchase and is now growing into our 3rd largest position.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Foxhaven Asset Management’s Stake Value: $436.38 million
Percentage of Foxhaven Asset Management’s 13F Portfolio: 12.57%
Number of Hedge Fund Holders: 248
The parent company of Instagram, Facebook, WhatsApp, and other major social media platforms and the tech giant Meta Platforms, Inc. (NASDAQ:FB) takes the top spot in our top ten picks according to Michael Pausic’s Foxhaven Asset Management.
According to Foxhaven Asset Management’s third-quarter filings, the fund owns close to 1.29 million shares of Meta Platforms, Inc. (NASDAQ:FB) worth $436.38 million, which constitutes about 12.57% of the fund’s portfolio.
On October 26, Monness Crespi analyst Brian White cut the price target on Meta Platforms, Inc. (NASDAQ:FB) from $500 to $460 and kept a Buy rating. In a research note, the analyst said that the third quarter 2021 results of the company were “lackluster” and noted that the orchestration towards the fourth quarter lacked enthusiasm.
Jefferies Group posted their third-quarter 2021 investor letter and mentioned Meta Platforms, Inc. (NASDAQ:FB) in it. Here is what the letter said:
“While still early, FB is in the process of building the platforms that will ultimately support the development the Metaverse. We look at FB’s position through the lens of 4 current investment initiatives: 1) Oculus VR hardware, 2) Smart glasses, 3) Augmented Reality lenses, and 4) “Horizon Workrooms”
Oculus Virtual Reality hardware: Since acquiring Oculus in 2014 ($2B deal), FB has been focused on developing best-in-class hardware and complementary software & services to support VR experiences. The Oculus Quest 2 is FB’s newest VR headset; it retails at $299 and allows users to play games, try fitness classes, play sports, and watch concerts in virtual environments. Most importantly, Quest 2 is linked to users’ Facebook accounts, which means users can seamlessly connect with friends in virtual environments to play games or spend time together. We believe one of FB’s biggest differentiators in VR is its large array of non-gaming experiences that were designed for Oculus. For instance, users can explore extreme terrain in National Geographic Explore VR, join virtual fitness classes, or simulate being a chef. As FB’s hardware continues to improve and becomes less cumbersome, we would expect a flywheel of greater developer and user adoption of VR…” (Click here to see full text)
You can also take a look at George Soros Stock Portfolio: Top 10 Large-Cap Stock Picks and Top 10 Stocks to Invest in According to Alan Fournier’s Pennant Capital.
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Disclosure: None. 5 Stocks to Buy Based on Michael Pausic’s Foxhaven Asset Management Portfolio is originally published on Insider Monkey.
