In this article, we discuss the 10 new stock picks of billionaire Daniel Sundheim.
Daniel Sundheim is chief investment officer of D1 Capital Partners, which is a New York-based hedge fund that he founded in 2018. Sundheim is an American billionaire investor and renowned hedge fund manager, who was associated with Andreas Halvorsen’s Viking Global for 15 years before starting his own fund, where Sundheim served as the chief investment officer.
After graduating from the University of Pennsylvania in 1999 with a Bachelor’s in finance, Sundheim started his career with Bear Stearns Merchant Banking, where he stayed until 2002, before joining Viking Global. Currently, in addition to running his own hedge fund, he is a board member at Shippo, Collectors Universe, and Instacart.
Billionaire Daniel Sundheim runs a portfolio valued at $18 billion, in addition to controlling discretionary assets under management of approximately $34 billion. He invests primarily in the healthcare, finance, information technology, consumer discretionary, and communications sectors, catering to clients worldwide including family offices, sovereign wealth funds, hospitals, and pension funds.
The most notable stocks from billionaire Daniel Sundheim’s third quarter portfolio include Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB).
Daniel Sundheim of D1 Capital
Our Methodology
We used the Q3 portfolio of Daniel Sundheim’s D1 Capital Partners to select the billionaire’s top new stock picks. D1 Capital Partners added all of these stocks to their portfolio in the third quarter.
Billionaire Daniel Sundheim’s Portfolio: New Stock Picks
10. NetEase, Inc. (NASDAQ:NTES)
D1 Capital Partners’ Stake Value: $141,422,000
Percentage of D1 Capital Partners’ 13F Portfolio: 0.79%
Number of Hedge Fund Holders: 32
NetEase, Inc. (NASDAQ:NTES) is a Chinese company that operates an online platform which allows users to create communities, share content, communicate, and engage in social commerce. The company also offers e-commerce, online games, and advertising platforms. Daniel Sundheim added NetEase, Inc. to his Q3 portfolio, buying 1.65 million shares of the company, worth $141.4 million, representing 0.79% of the billionaire’s total investments.
NetEase, Inc. reported its third quarter results on November 16, posting earnings per share of $0.90, missing estimates by $0.06. Revenue over the period came in at $3.47 billion, up 22.40% year-over-year, exceeding estimates by $145.33 million.
Citi analyst Alicia Yap on November 17 lowered the price target on NetEase, Inc. to $136 from $142 and kept a Buy rating on the shares.
Orbis Capital Management is the largest NetEase, Inc. stakeholder, with 16.3 million shares, worth $1.3 billion. Overall, 32 hedge funds in the Q3 database of Insider Monkey were bullish on NetEase, Inc., down from 43 funds in the prior quarter.
In addition to Amazon.com, Inc., Microsoft Corporation, and Meta Platforms, Inc., NetEase, Inc. is a notable stock from billionaire Daniel Sundheim’s Q3 portfolio.
9. Masimo Corporation (NASDAQ:MASI)
D1 Capital Partners’ Stake Value: $148,159,000
Percentage of D1 Capital Partners’ 13F Portfolio: 0.82%
Number of Hedge Fund Holders: 31
Daniel Sundheim’s D1 Capital Partners acquired a stake in Masimo Corporation (NASDAQ:MASI) in the third quarter, buying 547,298 shares of the company, valued at $148.1 million. Masimo Corporation is a medical technology company that develops patient monitoring technologies, hospital automation solutions, home monitoring devices, and ventilation solutions.
In the third quarter of 2021, 31 hedge funds monitored by Insider Monkey were long Masimo Corporation, up from 28 funds in the preceding quarter. One of the leading Masimo Corporation stakeholders is Terry Smith’s Fundsmith LLP, holding a $117.7 million position in the company.
Piper Sandler analyst Jason Bednar on November 15 raised the price target on Masimo Corporation to $330 from $320 and kept an Overweight rating on the shares after the company expressed a high level of confidence in maintaining its sales momentum. The analyst views Masimo Corporation as a “safe haven for medtech investors.”
Here is what Headwaters Capital has to say about Masimo Corporation in its Q2 2021 investor letter:
“I exited the position in Masimo (“MASI”) during the quarter. Masimo is the leader in SET pulse oximeters (a device that is placed on your finger to measure oxygen levels) that are used in medical settings. The sell decision was driven by delayed new product roll-outs and slower uptake of new products that have been introduced. While I believe the core business for MASI will continue to perform well, I’m concerned that revenue growth from new products will be slower to materialize and could pressure the company’s premium valuation.”
8. Tempur Sealy International, Inc. (NYSE:TPX)
D1 Capital Partners’ Stake Value: $167,122,000
Percentage of D1 Capital Partners’ 13F Portfolio: 0.93%
Number of Hedge Fund Holders: 37
Daniel Sundheim’s hedge fund owns 3.6 million Tempur Sealy International, Inc. (NYSE:TPX) shares, worth $167.1 million, representing 0.93% of the total Q3 investments.
UBS analyst Atul Maheswari raised the price target on Tempur Sealy International, Inc. to $60 from $57 and kept a Buy rating on the shares on December 15. The company has several drivers to sustain solid growth over the next several years, with strong performance over the past few years which was driven by share gains rather than industry growth, according to the analyst.
The biggest Tempur Sealy International, Inc. stakeholder as of September 2021 is Rehan Jaffer’s H Partners Management, holding 7.70 million shares worth $357.3 million. Overall, 37 hedge funds were long Tempur Sealy International, Inc. in the third quarter, with stakes amounting to $1.29 billion.
Here is what Vulcan Value Partners has to say about Tempur Sealy International, Inc. in its Q1 2021 investor letter:
“Tempur Sealy International is the leading designer, manufacturer, and distributor of mattresses globally. The company has recognizable brands across all price points. Approximately 80% of the company’s revenue is derived from its wholesale channel with roughly 5,400 retail partners. The remaining 20% of revenue comes from its retail stores and e-commerce site, Tempur-Pedic.com. Its iconic brand portfolio, world-class manufacturing facilities, and go-to-market omni channel strategy are all competitive advantages. We are pleased to be able to own the company in the portfolio again.”
7. Parker-Hannifin Corporation (NYSE:PH)
D1 Capital Partners’ Stake Value: $205,241,000
Percentage of D1 Capital Partners’ 13F Portfolio: 1.14%
Number of Hedge Fund Holders: 39
Parker-Hannifin Corporation (NYSE:PH) is an engineering and manufacturing company that specializes in motion control technologies. D1 Capital Partners bought 734,000 Parker-Hannifin Corporation shares in Q3 2021, worth $205.2 million, representing 1.14% of the firm’s total 13F securities.
Billionaire Andreas Halvorsen’s Viking Global, the largest Parker-Hannifin Corporation stakeholder, boosted its position in the company by 366% in Q3. Viking Global owns 3.10 million shares of Parker-Hannifin Corporation, worth $867.1 million. Overall, 39 funds were bullish on the stock at the end of September.
On November 4, Parker-Hannifin Corporation announced its Q3 results. The company posted earnings per share of $4.26, beating estimates by $0.56. The quarterly revenue came in at $3.76 billion, outperforming estimates by $123.5 million.
Mizuho analyst Brett Linzey on December 16 initiated coverage of Parker-Hannifin Corporation with a Neutral rating and a $345 price target. The analyst sees “plenty to like” about Parker-Hannifin Corporation’s long-term outlook but not enough near-term upside to warrant a Buy rating.
Here is what Oakmark Funds has to say about Parker-Hannifin Corporation in their Q1 2021 investor letter:
“Parker Hannifin approached our estimates of intrinsic value and were, therefore, eliminated during the period. The company was a longstanding investment of the Fund and produced successful outcomes. We believe Parker Hannifin, one of our longest tenured positions, is a high-quality, well-managed industrial with strong competitive positions in good end markets. However, after the market price reflected these positives, we elected to sell to pursue more attractive alternatives that were priced at steeper discounts to our estimates of intrinsic value.”
6. Opendoor Technologies Inc. (NASDAQ:OPEN)
D1 Capital Partners’ Stake Value: $225,070,000
Percentage of D1 Capital Partners’ 13F Portfolio: 1.25%
Number of Hedge Fund Holders: 35
Billionaire Daniel Sundheim purchased 10.96 million Opendoor Technologies Inc. (NASDAQ:OPEN) shares during the third quarter of 2021, worth $225 million, representing 1.25% of his total 13F portfolio. Opendoor Technologies Inc. provides an online real estate platform, which allows users to process online payments, make property purchases, and list premises for sale.
Sylebra Capital Management is the biggest Opendoor Technologies Inc. stakeholder, increasing its position in the company by 157% in Q3, holding 19.5 million shares worth $401.5 million. Overall, a total of 35 funds were bullish on Opendoor Technologies Inc. in the third quarter, with stakes totaling $1.74 billion.
Opendoor Technologies Inc. announced its Q3 results on November 10, posting a loss per share of $0.03, missing estimates by $0.02. Revenue over the period came in at $2.27 billion, outperforming estimates by $253.16 million.
On November 11, Credit Suisse analyst Yoni Yadgaran lowered the price target on Opendoor Technologies Inc. to $31 from $40 following quarterly results. The analyst kept an Outperform rating on the stock.
Opendoor Technologies Inc. is one of the notable stocks from Daniel Sundheim’s Q3 portfolio, just like Amazon.com, Inc., Microsoft Corporation, and Meta Platforms, Inc..
Here is what Baron Opportunity Fund has to say about Opendoor Technologies Inc. in their Q2 2021 investor letter:
“Opendoor Technologies Inc. operates a digital platform for home purchases and sales on which buyers can tour homes, make offers, and secure financing, and sellers can receive next-day cash offers with flexible close dates. Shares were down in the quarter given rising mortgage rates and the potential knock-on effects to the housing environment. Despite investor concerns, the housing market remains robust. As the iBuying industry leader disrupting an enormous and highly inefficient industry, we believe Opendoor will grow regardless of the housing market environment.”
5. Netflix, Inc. (NASDAQ:NFLX)
D1 Capital Partners’ Stake Value: $236,790,000
Percentage of D1 Capital Partners’ 13F Portfolio: 1.32%
Number of Hedge Fund Holders: 106
In Q3 2021, Daniel Sundheim’s D1 Capital Partners purchased 387,964 Netflix, Inc. (NASDAQ:NFLX) shares, worth $236.7 million, accounting for 1.32% of the firm’s total 13F portfolio. Netflix, Inc. is a subscription-based digital streaming and original production company.
JPMorgan analyst Doug Anmuth is “incrementally positive” on Netflix, Inc. shares, stating that Netflix, Inc.’s Q4 content strengthened in December and that subscriber growth should follow. He reiterated an Overweight rating on Netflix, Inc., keeping a $750 price target.
Of the 106 hedge funds that were bullish on Netflix, Inc. in the third quarter, Fisher Asset Management is one of the largest Netflix, Inc. shareholders, with a $2.53 billion position in the company.
Here is what FPA U.S. Core Equity Fund has to say about Netflix, Inc. in its Q3 2021 investor letter:
“Among the Fund’s biggest winners was Netflix, which appreciated 15.5% during the third quarter. I continue to be very bullish on NFLX’s long-term potential. The market can often take a short-term view and I believe such is the case with how it trades NFLX from quarter to quarter, typically based on how many paid net subscriptions it garners.
I believe the market may define NFLX’s total addressable market too narrowly by focusing on the approximate 74 million of pay TV households in the U.S. and one billion pay TV households across the globe or about 700 million ex-China. Based on those denominators, NFLX’s paid memberships of approximately 74 million in North America and 135 million throughout the rest of the world (as of 6/30/21) would point to a business that is much more mature (at around 30% penetrated) than it likely is…” (Click here to see the full text)
4. Texas Roadhouse, Inc. (NASDAQ:TXRH)
D1 Capital Partners’ Stake Value: $252,436,000
Percentage of D1 Capital Partners’ 13F Portfolio: 1.41%
Number of Hedge Fund Holders: 36
Texas Roadhouse, Inc. (NASDAQ:TXRH), an American chain of steakhouses, is one of the newest stock picks of billionaire Daniel Sundheim as of the third quarter. Sundheim’s D1 Capital Partners bought 2.76 million Texas Roadhouse, Inc. shares, valued at $252.4 million, accounting for 1.41% of the firm’s total investments.
Barclays analyst Jeffrey Bernstein raised the price target on Texas Roadhouse, Inc. to $92 from $90 and kept an Equal Weight rating on the shares on December 15. Restaurants are expected to experience an upside in 2022 since pandemic concerns are easing with no lasting impact on sales, labor supply is improving, and inflation is becoming less pressing.
Melvin Capital Management is the biggest Texas Roadhouse, Inc. stakeholder as of Q3 2021, with an approximately $370 million position in the company. Overall, 36 hedge funds in the third quarter database of Insider Monkey were bullish on Texas Roadhouse, Inc., with total stakes amounting to $993.4 million.
3. Warby Parker Inc. (NYSE:WRBY)
D1 Capital Partners’ Stake Value: $432,521,000
Percentage of D1 Capital Partners’ 13F Portfolio: 2.41%
Number of Hedge Fund Holders: 12
Daniel Sundheim, via D1 Capital Partners, purchased 8.15 million Warby Parker Inc. (NYSE:WRBY) shares, worth $432.5 million, representing 2.41% of the firm’s Q3 portfolio. Warby Parker Inc. is an online retailer from the United States, selling prescription glasses and sunglasses.
On November 12, Warby Parker Inc. announced its Q3 earnings. The company posted an EPS of $0.02, exceeding estimates by $0.24. The quarterly revenue totaled $137.37 million, beating estimates by $4.28 million.
Loop Capital analyst Anthony Chukumba on December 10 lowered the price target on Warby Parker Inc. to $52 from $60 and kept a Hold rating on the shares, citing the rising inflation, which may negatively impact the valuations for high growth companies like Warby Parker Inc..
Chase Coleman’s Tiger Global Management is the largest Warby Parker Inc. stakeholder, with 15.1 million shares worth $802.7 million. Overall, 12 hedge funds were long Warby Parker Inc. in Q3, with stakes totaling $1.41 billion.
2. Bath & Body Works, Inc. (NYSE:BBWI)
D1 Capital Partners’ Stake Value: $573,762,000
Percentage of D1 Capital Partners’ 13F Portfolio: 3.20%
Number of Hedge Fund Holders: 56
Bath & Body Works, Inc. is an American retailer selling body wash, lotions, fragrances, and candles, among other similar personal care products. Daniel Sundheim, as of Q3 2021, acquired 9.10 million Bath & Body Works, Inc. shares, worth $573.7 million, representing 3.20% of the billionaire’s total 13F securities.
Bath & Body Works, Inc., on November 17, posted its Q3 results. The company announced an EPS of $0.92, beating estimates by $0.31. The revenue came in at $1.68 billion, exceeding estimates by $69.03 million.
Goldman Sachs analyst Kate McShane initiated coverage of Bath & Body Works, Inc. with a Buy rating and a $93 price target on December 14. The analyst sees Bath & Body Works, Inc. as a “strong brand with high awareness and customer retention”. The company’s strengths also include its omnichannel engagement, attractive valuation, and high margins.
56 hedge funds tracked by Insider Monkey were bullish on Bath & Body Works, Inc. in Q3 2021, with stakes equaling $6.5 billion, as compared to 53 funds holding stakes in Bath & Body Works, Inc. worth $6.3 billion in the preceding quarter.
1. Robinhood Markets, Inc. (NASDAQ:HOOD)
D1 Capital Partners’ Stake Value: $776,614,000
Percentage of D1 Capital Partners’ 13F Portfolio: 4.34%
Number of Hedge Fund Holders: 20
Robinhood Markets, Inc. (NASDAQ:HOOD) is one of the latest additions to Daniel Sundheim’s third quarter portfolio, with the billionaire buying 18.45 million shares of the company, worth $776.6 million, representing 4.34% of his total 13F investments. Robinhood Markets, Inc. is a financial services company that operates as a stockbroker and runs an electronic trading platform, assisting users with stock trading, ETFs, and cryptocurrencies.
Deutsche Bank analyst Brian Bedell on December 17 lowered the price target on Robinhood Markets, Inc. to $17 from $32 and kept a Hold rating on the shares. The analyst heads into 2022 “even more constructive than at the start of 2021” on the brokers, asset managers, and exchanges sector.
Neil Mehta’s Greenoaks Capital is the biggest Robinhood Markets, Inc. stakeholder as of September 2021, with 22.65 million shares worth $776.6 million. Overall, 20 hedge funds were bullish on Robinhood Markets, Inc. in the third quarter, with total stakes amounting to $4.6 billion.
You can also take a look at 10 Best Biotech Stocks to Buy According to Mark Lampert and Gabriel Plotkins’ Melvin Capital Portfolio: Top 10 Picks.
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This article is originally published at Insider Monkey.
