In this article, we discuss 9 stocks to buy in 2022 according to Mark Massey’s AltaRock Partners.
Mark T. Massey is the managing member and president of Altarock Partners, a hedge fund he has been associated with since February 2002. He holds a bachelor’s degree in Finance from the University of Virginia. The hedge fund has averaged a 12% yearly return since its inception. Mark Massey believes in value investing, concentrating on companies with a wide moat that can maintain a competitive advantage. The fund of Mark Massey looks for investing possibilities through qualitative research, focusing on buybacks, among other things. He believes that companies that buy back huge amounts of stock demonstrate that administration is on the same page and believes in “competitive moat sustainability.” Mark Massey looks for great companies at reasonable prices with the idea that their profitability would skyrocket in a decade or two.
AltaRock Partners has a fairly-focused portfolio, with five to 10 holdings at any given moment. After doing comprehensive fundamental research, the hedge fund adopts a value-oriented approach, investing in a few firms that the investment team believes are undervalued. It plans to manage its assets as genuine business shares, referring to them as a “conglomerate,” as Warren Buffett and Ben Graham do.
In the first quarter of 2022, AltaRock Partners disclosed 9 security holdings with a portfolio worth $3.92 billion. In Mark Massey’s portfolio as of the first quarter of 2022, the top holdings include Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).
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Our Methodology
We have selected the stocks based on Mark Massey’s AltaRock Partners investment portfolio at the conclusion of the first quarter of 2022. Insider Monkey’s database of over 900 elite hedge funds was used to assess the popularity of each stock in the hedge fund world as of Q4 2021.
Stocks to Buy in 2022 According to Mark Massey’s AltaRock Partners
9. Meta Platforms, Inc. (NASDAQ:FB)
AltaRock Partners’ Stake Value: $24,024,000
Percentage of AltaRock Partners’ 13F Portfolio: 0.61%
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is a company that creates social networking applications. It creates technology that allows individuals to connect, form communities, and expand their enterprises. Ken Fisher’s Fisher Asset Management held a notable stake in Meta Platforms, Inc. at the end of the first quarter of 2022, worth $2.49 billion.
Guggenheim analyst Michael Morris lowered his price target on Meta Platforms, Inc. to $250 from $275 on May 18 while maintaining a Buy rating on the company. He attributed the target revision to lower expectations and somewhat lower than consensus normalized EBITDA margins moving into Q1 results.
Mark Massey first invested in Meta Platforms, Inc. in the fourth quarter of 2020 by purchasing more than 1.71 million shares. However, in the first quarter of 2022, Mark Massey cut his stake in Meta Platforms, Inc. by 80%. His hedge fund still holds 108,039 shares of Meta Platforms, Inc., worth more than $24.02 million.
Meta Platforms, Inc. was part of 224 hedge fund portfolios in the fourth quarter of 2021, compared to 248 hedge funds in the previous quarter. Their total stake values were $31.85 billion and $38.57 billion, respectively.
Meta Platforms, Inc., like Alphabet Inc., Microsoft Corporation, and Amazon.com, Inc., is one of the stocks to buy according to Mark Massey’s AltaRock Partners.
Vulcan Value Partners, in its first-quarter 2022 investor letter, talked about Meta Platforms, Inc.. Here is what the fund said:
“Meta Platforms Inc., the parent company of Facebook, reported excellent operating results in 2021. Its revenue increased 37%, operating earnings increased 40%, and the company generated $40 billion of free cash flow. Despite these excellent results, Meta experienced extreme volatility in its stock price during the first quarter. We believe that two factors are responsible for this volatility. First, the company quantified the headwind to revenue from Apple’s recent privacy changes in the amount of approximately $10 billion for 2022. Meta is rebuilding its advertising technology, and we believe the long-term headwinds from Apple’s privacy changes will be limited because Meta will create a suitable solution. Second, Meta continues to invest heavily into its Reality Labs segment, also known as the metaverse. While we believe the metaverse presents great opportunity for Meta, we are not assigning any value to it in our valuation work. While 2022 may be challenging for Meta, the company’s competitive advantages are still intact, and the company trades at a significant discount to our estimate of its intrinsic value. Despite our concerns about a possible recession, we expect Meta to return to double-digit bottom line growth next year.”
8. Moody’s Corporation (NYSE:MCO)
AltaRock Partners’ Stake Value: $41,606,000
Percentage of AltaRock Partners’ 13F Portfolio: 1.06%
Number of Hedge Fund Holders: 58
Moody’s Corporation works in the worldwide financial markets, providing credit ratings, research, tools, and data analysis. On May 3, Deutsche Bank analyst Faiza Alwy maintained a Buy rating on Moody’s Corporation and decreased her price objective to $372 from $408. In a research report, Alwy informed investors that Moody’s Corporation had lowered its fiscal 2022 guidance owing to reduced issuance volumes.
The hedge fund chaired by Mark Massey held 123,310 shares in Moody’s Corporation in Q1 2022, worth over $41.61 million. 58 out of the 924 hedge funds held stakes in Moody’s Corporation in the fourth quarter of 2021, worth $16.85 billion, compared to the same number of funds in the preceding quarter holding stakes in Moody’s Corporation worth $15.70 billion.
On May 2, Moody’s Corporation posted earnings for the first quarter of 2022, reporting an EPS of $2.89, in line with market estimates. In addition, revenue for the quarter was $1.52 billion, down 5% from the previous year’s first-quarter revenue. The company also issued a quarterly dividend of $0.70 per share, in line with previous.
Legendary investor and billionaire Warren Buffett’s Berkshire Hathaway is the most significant stakeholder of Moody’s Corporation as of the first quarter of 2022. The Oracle of Omaha owns 24.67 million shares of the company, worth $8.32 billion.
7. Mastercard Incorporated (NYSE:MA)
AltaRock Partners’ Stake Value: $89,791,000
Percentage of AltaRock Partners’ 13F Portfolio: 2.28%
Number of Hedge Fund Holders: 144
Mastercard Incorporated (NYSE:MA) is a technology-based firm. Consumers, financial institutions, merchants, governments, and businesses are all connected via the payments sector. On May 19, Mastercard Incorporated and fintech giant OPay announced a strategic partnership, opening the door for greater financial inclusion and economic growth by allowing millions of people across the Middle East and Africa to make electronic payments.
On May 17, Goldman Sachs analyst Will Nance initiated coverage of Mastercard Incorporated, maintaining a Buy rating and a $460 price target, representing a 38% upside. Based on its 13F holdings for the first quarter of 2022, AltaRock Partners owned 251,249 shares in Mastercard Incorporated. The position was valued at $89.79 million.
Among the hedge funds tracked by Insider Monkey, Charles Akre’s Akre Capital Management is a notable shareholder of Mastercard Incorporated as of Q1 2022, with 5.86 million shares worth $2.09 billion. In the fourth quarter, fund managers reduced their Mastercard Incorporated holdings. There were 144 hedge funds in our database that held stakes in Mastercard Incorporated’s at the end of the fourth quarter, compared to 146 funds in the third quarter.
Ensemble Capital mentioned Mastercard Incorporated in its Q1 2022 investor letter. Here is what the fund said:
“Mastercard (7.6% weight in the Fund): This company literally earns a percent based fee on dollars spent. When inflation increases the prices of goods across the economy, Mastercard’s revenue increases along with inflation. Thus, the company in some respects is perfectly hedged against inflation with their revenue accelerating automatically when inflation surges.”
6. Visa Inc. (NYSE:V)
AltaRock Partners’ Stake Value: $331,791,000
Percentage of AltaRock Partners’ 13F Portfolio: 8.45%
Number of Hedge Fund Holders: 142
Visa Inc. (NYSE:V) is a global financial services company based in the United States. It enables electronic payment transfers worldwide, primarily through Visa-branded credit cards, debit cards, and prepaid cards. By the end of the fourth quarter of 2021, Insider Monkey identified 142 hedge funds that had stakes in Visa Inc.. The total stakes held by these funds amounted to more than $29.30 billion. In Q1 2022, Chris Hohn’s TCI Fund Management held a prominent stake in Visa Inc., with more than 19.92 million shares worth $4.42 billion.
AltaRock Partners owned 1.50 million shares in Visa Inc. valued at over $331.79 million, representing 8.45% of the hedge fund’s Q1 portfolio. Will Nance of Goldman Sachs initiated coverage of Visa Inc. on May 17, reiterating a Buy rating and a $282 price target. He believes that Visa is the world’s premier payment company, with “great leverage to the long-term secular growth driver from payment electronification”. Paysafe Limited (NYSE:PSFE) and Visa Inc. announced on May 3 that their partnership has been expanded to include Visa Direct, Visa’s real-time push payment technology.
Just like Alphabet Inc., Microsoft Corporation, and Amazon.com, Inc., Visa Inc. is a notable stock in the Q1 portfolio of Mark Massey’s AltaRock Partners.
Baron Funds mentioned Visa Inc. in its Q1 2022 investor letter. Here’s what the firm said:
“Shares of global payment network Visa, Inc. were up 2.5% on strong quarterly results with 24% revenue growth and 27% EPS growth. Payment volume grew 20% with notable strength in cross-border volumes as travel activity rebounded from depressed levels. Management raised full-year guidance to reflect high-teens revenue growth. Shares also likely benefited from a “flight to safety” during a volatile quarter for equities. We continue to own the stock due to Visa’s long runway for growth underpinned by the continued migration from cash transactions to card/digital and strong competitive advantages, operating in a duopoly with Mastercard.”
5. Charter Communications, Inc. (NASDAQ:CHTR)
AltaRock Partners’ Stake Value: $349,432,000
Percentage of AltaRock Partners’ 13F Portfolio: 8.9%
Number of Hedge Fund Holders: 73
Charter Communications, Inc. (NASDAQ:CHTR) is a company that provides high-speed internet access. Spectrum TV, Spectrum Internet, and Spectrum Voice are among its offerings. The most significant stakeholder of Charter Communications, Inc. is Harris Associates, with 4.13 million shares worth $2.25 billion.
Analyst Walter Piecyk of LightShed Partners initiated coverage of Charter Communications, Inc., maintaining a Neutral rating on May 4. Securities filings reveal that AltaRock Partners trimmed its stake in Charter Communications, Inc. by 53% during the first quarter of 2022. The fund owns 640,548 shares of Charter Communications, Inc. worth over $349.43 million, representing 8.9% of the portfolio.
According to our database, the number of long hedge fund positions in Charter Communications, Inc. decreased at the end of the fourth quarter of 2021. 73 hedge funds held a position in Charter Communications, Inc., compared to 74 funds in the third quarter.
Here is what ClearBridge Investments said about Charter Communications, Inc. in its Q1 2021 investor letter:
“We also added to Charter Communications, a historically strong performer that has faced headwinds recently due to a deceleration in broadband subscriber growth following a period of robust results during the pandemic.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
AltaRock Partners’ Stake Value: $414,816,000
Percentage of AltaRock Partners’ 13F Portfolio: 10.57%
Number of Hedge Fund Holders: 279
Amazon.com, Inc. is a worldwide technology corporation that provides online retail buying services. In Q1 2022, Ken Fisher’s Fisher Asset Management was a notable shareholder of Amazon.com, Inc., with 2.36 million shares worth $7.70 billion.
Amazon.com, Inc. is a new arrival in Mark Massey’s portfolio, as his hedge fund bought about 127,246 shares of the company, worth $414.82 million in the first quarter of 2022. As of the end of the fourth quarter of 2021, 279 hedge funds in Insider Monkey’s database held stakes in Amazon.com, Inc., an increase compared to 242 funds in the preceding quarter.
On May 18, Amazon.com, Inc. announced the introduction of the next-generation Fire 7 and Fire 7 Kids tablets, stating that they will improve its most affordable tablet’s speed, performance, and value.
Here is what Baron Funds had to say about Amazon.com, Inc. in its Q1 2022 investor letter:
“Jeff Bezos sums up the current market behavior well in his 2000 shareholder letter where he quoted Benjamin Graham’s famous statement that, in the short term, a stock market is a voting machine, while in the long term, it is a weighing machine, saying that Amazon is a “company that wants to be weighed, and over time we will be – over the long term, all companies are. In the meantime, we have our heads down working to build a heavier and heavier company.”
We have a lot of conviction that our businesses are doing the same – working to build heavier and heavier companies.”
3. Microsoft Corporation (NASDAQ:MSFT)
AltaRock Partners’ Stake Value: $812,492,000
Percentage of AltaRock Partners’ 13F Portfolio: 20.71%
Number of Hedge Fund Holders: 262
Microsoft Corporation is a global technology company based in Redmond, Washington, manufacturing computer software, consumer electronics, personal computers, and associated products and services. Microsoft Corporation was present in the public stock portfolios of 262 hedge funds in the fourth quarter of 2021, compared to 250 funds in the earlier quarter.
On May 18, American Airlines Group Inc. (NASDAQ:AAL) and Microsoft Corporation announced a partnership in which American Airlines will use Microsoft Azure as its preferred cloud platform for airline applications and critical work schedules, significantly accelerating its digital transformation and solidifying Microsoft’s position as one of the airline’s largest technology partners.
Among the hedge funds tracked by Insider Monkey, Fisher Asset Management is a notable shareholder of Microsoft Corporation as of Q1 2022, with 27.87 million shares worth $8.59 billion. Mark Massey’s AltaRock Partners first invested in Microsoft Corporation back in the second quarter of 2021. In the first quarter of 2022, the hedge fund raised its position in Microsoft Corporation by 54% to 2.64 million shares, accounting for 20.71% of the overall portfolio.
In its Q4 2021 investor letter, Vulcan Value Partners highlighted a few stocks, and Microsoft Corporation was one of them. Here is what the fund said:
“Microsoft Corporation was a material contributor during the quarter. It is one of the highest quality companies in the world. We believe it has tremendous competitive advantages in its consumer and commercial Microsoft Office products as well as in its server and tools and Azure divisions. Over the last several years, Microsoft Corporation has been implementing a successful transition from a traditional software license and maintenance revenue model to a subscription revenue model. The company remains competitively entrenched, produces strong free cash flow, and has a strong balance sheet.”
2. TransDigm Group Incorporated (NYSE:TDG)
AltaRock Partners’ Stake Value: $926,020,000
Percentage of AltaRock Partners’ 13F Portfolio: 23.61%
Number of Hedge Fund Holders: 64
TransDigm Group Incorporated (NYSE:TDG) manufactures, designs, and supplies engineered aviation components for commercial and military aircrafts. TransDigm Group Incorporated on May 10 posted earnings for the March quarter. The reported EPS came in at $3.86, beating estimates by $0.17. Revenue over the period gained 11.8% as compared to the previous year’s quarter, reaching $1.33 billion, outperforming estimates by $20 million.
Susquehanna analyst Charles Minervino cut TransDigm Group Incorporated’s price objective to $620 from $720 on May 11 but maintained a Neutral rating on the stock. The analyst raised his estimates, noting a stronger-than-expected comeback in Commercial Aftermarket and lower costs, which brought adjusted EBITDA margins closer to historical highs.
AltaRock Partners started building its position in TransDigm Group Incorporated in the fourth quarter of 2014. In Q1 2022, the hedge fund strengthened its position in TransDigm Group Incorporated by buying 70,225 additional shares. This makes its stake in TransDigm Group Incorporated total 1.42 million shares worth $926.02 million.
Overall, hedge funds are loading up on TransDigm Group Incorporated, as 64 out of the 924 funds tracked by Insider Monkey held stakes in the search engine and ads giant in Q4 2021, up from 63 funds a quarter earlier.
In its Q2 2021 investor letter, Vulcan Value Partners mentioned TransDigm Group Incorporated. Here is what the fund said:
“TransDigm Group Inc., another material contributor during the quarter, is an aerospace manufacturer providing highly engineered, niche components for use on commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales. Its business was impacted by the global pandemic; however, the company has been able to maintain margins despite strong revenue headwinds, and it continues to generate strong free cash flow.”
1. Alphabet Inc. (NASDAQ:GOOG)
AltaRock Partners’ Stake Value: $932,058,000
Percentage of AltaRock Partners’ 13F Portfolio: 23.76%
Number of Hedge Fund Holders: 158
Alphabet Inc. is a California-based technology holding company headquartered in Mountain View. In the first quarter, Mark Massey loaded up on Alphabet Inc., increasing his hold on the company by 17%. AltaRock Partners owns 335,110 shares of Alphabet Inc., worth $932.06 million.
On May 17, Alphabet Inc. launched the Assured Open Source Software service, which allows commercial and government users of open-source software to effortlessly incorporate the same OSS packages used by Google into their own development processes.
In the first fiscal quarter of 2022, Chris Hohn’s TCI Fund Management held a prominent stake in Alphabet Inc., with 2.37 million shares worth over $6.62 billion. 158 hedge funds were bullish on Alphabet Inc. in the fourth quarter of 2021, compared to 156 funds the previous quarter, according to Insider Monkey’s data. The aggregate stakes owned in the fourth quarter of 2021 amounted to $36.63 billion, up from $34.96 billion in the third quarter of 2021.
Farrer Wealth Advisors, in its Q1 2022 investor letter, mentioned Alphabet Inc.. Here is what the fund said:
“Alphabet: We won’t waste much time trying to explain to our clients why Alphabet is such a phenomenal business, we believe that is quite self-evident. The better explanation is why we never bought Alphabet before. The reason was a personal bias we held based on three beliefs (which we now believe to be incorrect)
Growth in YouTube would stall as the increased ad-load would turn-off viewers (the double ad-load at the beginning of videos for example). Consumers will focus on discovery rather than search to purchase new items. For example – using Instagram/TikTok to decide what new clothes to buy instead of ‘googling’ for clothes. Other Bets: In general, we felt that capital spent on “Other Bets” has been a bit wasteful with the segment earning just around $3.1bn in revenue versus nearly $21bn in operating losses over the last five years…” (Click here to see the full text)
You can also take a peek at Top 10 Stock Picks of Eli Cohen’s Crescent Park Management and 10 Best Tech Stocks to Buy Now According to Joe Dimenna’s Zweig-DiMenna Partners
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This article is originally published at Insider Monkey.
