In this article, we will be taking a look at billionaire DE Shaw’s latest portfolio: top 5 stock picks. To read our detailed analysis of these stocks and Shaw’s investment insights, you can go directly to see Billionaire DE Shaw’s Latest Portfolio: Top 10 Stock Picks.
5. Paypal Holdings, Inc. (NASDAQ:PYPL)
DE Shaw’s Stake Value: $595,598,000
Percentage of DE Shaw’s 13F Portfolio: 0.69%
Number of Hedge Fund Holders: 97
Paypal Holdings, Inc. (NASDAQ:PYPL) is an information technology company operating a platform enabling digital payments. The company offers payment solutions under various names, like PayPal, PayPal Credit, and Braintree.
On August 31, Jason Kupferberg at BofA upgraded shares of Paypal Holdings, Inc. (NASDAQ:PYPL) from Neutral to Buy. The analyst also raised his price target on the stock from $94 to $114.
Paypal Holdings, Inc. (NASDAQ:PYPL) gained by 2.8% in light of BofA’s upgrade. Kupferberg noted that the move came in light of cost savings and the potential for share buybacks undertaken by the company.
Paypal Holdings, Inc. (NASDAQ:PYPL) was found in the 13F holdings of 97 hedge funds in the second quarter. Their total stake value in the company was $5.2 billion.
Mayar Capital, an asset management firm, mentioned Paypal Holdings, Inc. (NASDAQ:PYPL) in its second quarter 2022 investor letter. Here’s what they said:
“This quarter, we bought shares in PayPal (NASDAQ:PYPL), the payments platform. PayPal has been one of the more high-profile victims of the market’s brutal ruthlessness over the past few months, and the stock fell by over two thirds between its peak in July to the beginning of March this year. As we progressed PayPal through the Mayar Checklist Process, we identified a business with a leadership position in a structurally growing market.
The company benefits from certain network effects, and faces several competitive threats at the same time. As the business profited from the move to online retail during the pandemic, as well as from the stimulus cheques handed out in the US, the stock price soared to absurd levels. As so often happens, however, the market had overcorrected by February and this quarter was offering prospective shareholders prices that assumed essentially zero growth in the business. When life gives you irrational sellers, make lemonade!”
4. Alphabet Inc. (NASDAQ:GOOG)
DE Shaw’s Stake Value: $612,254,000
Percentage of DE Shaw’s 13F Portfolio: 0.71%
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG), a communication services company, offers a range of products and platforms across the globe. The company operates through the Google Services, Google Cloud, and Other Bets segments, to offer products and services like ads, Android, Chrome, and Gmail.
Ivan Feinseth, an analyst at Tigress Financial, holds a Strong Buy rating on Alphabet Inc. (NASDAQ:GOOG) shares as of August 3. The analyst also raised his price target on the stock from $183 to $186.
In the second quarter, Alphabet Inc. (NASDAQ:GOOG) saw a revenue increase of 12.6%, bringing the company’s revenue up to $69.7 billion. The stock rose by 3.9% as a result, this July.
Our hedge fund data shows 153 hedge funds long Alphabet Inc. (NASDAQ:GOOG) in the second quarter, with a total stake value of $22.2 billion. In comparison, there were 160 hedge funds long the company in the previous quarter, with a total stake value of $29.7 billion.
L1 Capital International, an investment management company, mentioned Alphabet Inc. (NASDAQ:GOOG) in its second quarter 2022 investor letter. Here’s what they said:
“Alphabet Inc. (NASDAQ:GOOG) is by far the largest online advertising business globally, dominating Search outside of China and other protected markets. Online advertising is driven by eCommerce – not just buying online, but also omnichannel (for example, searching for a product online and then buying it instore).
Retail sales have consistently shifted online. Historically, eCommerce has increased its penetration of adjusted total U.S. retail sales by around 1% per annum. However, due to COVID-19 and associated lockdowns, eCommerce penetration stepped up by 5% in 2020 and now accounts for over 20% of adjusted retail sales (excluding food services, automotive and gas stations), up from 6% in 2010 (see Figure 6).
Alphabet has been a major beneficiary of COVID-19, with its advertising revenue increasing 43% to nearly US$210 billion in 2021. Naturally this level of growth is unsustainable particularly in a worsening macroeconomic environment and some retail activity is shifting back offline as people are less restricted by COVID-19. However, the established trend of increasing eCommerce penetration will not reverse, and we expect Alphabet’s advertising revenue to continue to increase, albeit after a period of muted growth in 2022 and 2023. There are also bright spots for Alphabet such as travel advertising, which is recovering strongly post COVID-19…” (Click here to read the full text)
3. Microsoft Corporation (NASDAQ:MSFT)
DE Shaw’s Stake Value: $1,041,996,000
Percentage of DE Shaw’s 13F Portfolio: 1.22%
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT), a big tech company, develops software, services, devices, and solutions across the globe. The company is based in Redmond, Washington.
On July 27, Wedbush analyst Daniel Ives reiterated an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) shares. The analyst also placed a $320 price target on the stock.
This August, Ives also mentioned that Microsoft Corporation (NASDAQ:MSFT) was among his firm’s top three tech stock picks going to the end of 2022. The analyst commented that the company’s Azure cloud computing platform was strong and remained so going into 2023. The platform can be a continuing source of profit for Microsoft Corporation (NASDAQ:MSFT) in the coming years.
Out of 895 hedge funds tracked in the second quarter, 258 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT). Their total stake value was $56 billion.
L1 Capital International, an investment management company, mentioned Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2022 investor letter. Here’s what they said:
“Saving the best for last, Microsoft Corporation (NASDAQ:MSFT) is the most advantageously positioned business globally for long term success. Powered by sustained growth drivers including cloud computing, security, data analytics, collaboration, artificial intelligence, automation, business productivity, low-code programming and gaming, amongst others.
No company is ‘macro immune’ as Microsoft’s management has recently explicitly noted, but the business is defensive.
Despite its immense size, Microsoft has more than doubled revenue over the past 5 years and will approach US$200 billion in financial year 2022, while EPS will have compounded at over 20% over this period. To be clear we do not expect this rate of growth to continue, but we do expect Microsoft to deliver healthy growth in revenue, earnings and cashflow despite challenging economic conditions. Meanwhile Microsoft retains a AAA-rated balance sheet, one of only two companies globally to hold the highest credit rating. We expect dividends and buybacks to consistently increase as Microsoft has limited other sensible ways to deploy its excess cashflow, particularly in an environment where proposed acquisitions will be under intense regulatory scrutiny…” (Click here to read the full text)
2. Apple Inc. (NASDAQ:AAPL)
DE Shaw’s Stake Value: $1,159,739,000
Percentage of DE Shaw’s 13F Portfolio: 1.3%
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is another big tech IT company. It designs and manufactures smartphones, computers, tablets, wearables, and accessories.
An Outperform rating was reiterated on Apple Inc. (NASDAQ:AAPL) shares on September 8 by Martin Yang, an analyst at Oppenheimer. The analyst also has a $190 price target on the shares.
This September, Loup Ventures commented that Apple Inc.’s (NASDAQ:AAPL) decision to hold its iPhone pricing steady will help the company increase its market share in the smartphone space. The firm mentioned that the iPhone currently holds a global market share of 18%, which is set to increase based on Apple Inc.’s (NASDAQ:AAPL) pricing decision.
Apple Inc. (NASDAQ:AAPL) had 128 hedge funds holding stakes in it in the second quarter, with a total stake value of $143 billion. In the previous quarter, 131 hedge funds were long the stock, with a total stake value of $182 billion.
Alger Capital, an investment management company, mentioned Apple Inc. (NASDAQ:AAPL) in its second quarter 2022 investor letter. Here’s what the firm said:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact production of apple products, however the manufacturing facilities have resumed activity.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
DE Shaw’s Stake Value: $1,159,739,000
Percentage of DE Shaw’s 13F Portfolio: 1.35%
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) is a consumer discretionary company working in the retail space for the sale of consumer products and subscriptions. The company operates in North America and internationally.
On August 24, Bernstein’s Mark Shmulik reiterated an Outperform rating on Amazon.com, Inc. (NASDAQ:AMZN) shares. The analyst also has a $160 price target on the stock.
This August, Bank of America noted that Amazon.com, Inc. (NASDAQ:AMZN) saw a marked increase in its e-commerce growth rates in the third quarter. The company’s growth increased to about 17% from 5% in the previous quarter.
There were 252 hedge funds long Amazon.com, Inc. (NASDAQ:AMZN) in the second quarter, with a total stake value of $30.1 billion.
L1 Capital International, an investment management company, mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2022 investor letter. Here’s what they said:
“Amazon.com, Inc. (NASDAQ:AMZN) was the largest negative contributor to the Fund during the quarter. Q1 2022 results and Q2 2022 profit guidance were below market expectations. Amazon has been operating in an extraordinary environment since the start of the COVID-19 pandemic. Lockdowns led to an exceptionally rapid shift in retail activity online and Amazon benefitted from a dramatic increase in revenue. Management responded by doubling fulfilment and logistics capacities over a 2-year period – a response which has proven to be somewhat excessive.
Too much capacity, combined with elevated shipping and logistics costs, employee inefficiencies and a resetting of higher share-based compensation have pressured near-term profitability of Amazon’s retail (non-Amazon Web Services) operations. Management changes have exacerbated market uncertainty. We consider these issues to be real and negative to valuation, but somewhat transitory and more than reflected in Amazon’s current share price. Meanwhile Amazon Web Services (AWS) continues to deliver strong, profitable growth, ahead of our base case.
To describe our perspectives on Amazon we are reminded of the opening line in A Tale of Two Cities by Charles Dickens – “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…”. In our tale, one city is Amazon Web Services (AWS), while the other is everything else, which we will refer to as Retail and Other…” (Click here to read the full text)
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