In this article, we discuss the Billionaire DE Shaw’s Top 5 Stock Picks. If you want to read our detailed analysis of Shaw’s history, investment philosophy, and hedge fund performance, go directly to Billionaire DE Shaw’s Top 10 Stock Picks.
5. Alphabet Inc. (NASDAQ:GOOG)
DE Shaw’s Stake Value: $970.7 million
Percentage of DE Shaw’s 13F Portfolio: 0.83%
Number of Hedge Fund Holders: 190
Initiated in 1998, Alphabet Inc. (NASDAQ:GOOG) finds itself in the fifth position on the list of billionaire DE Shaw’s top 10 stock picks.
Jefferies set Alphabet Inc. (NASDAQ:GOOG)’s price target to $3,325 following the previous $3150, reiterating its Buy rating on September 17.
In Q2 2021, 190 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in Alphabet Inc. (NASDAQ:GOOG) totaling $26.8 billion, while 185 hedge funds held $24.6 billion in stakes until March 30.
Here is what Mawer Investment Management has to say about Alphabet Inc. in its Q2 2021 investor letter:
“Many higher growth companies reported strong results amid the pick-up in broad economic activity including Alphabet. These higher growth companies tend to have increased sensitivity to a change in discount rates and were supported as long-term interest rates stabilized over the period.”
4. Tesla, Inc. (NASDAQ:TSLA)
DE Shaw’s Stake Value: $1.1 billion
Percentage of DE Shaw’s 13F Portfolio: 0.94%
Number of Hedge Fund Holders: 60
Originated in 2003 and spearheaded in Palo Alto, California, Tesla, Inc. (NASDAQ:TSLA) cements itself as fourth on our list of billionaire DE Shaw’s top 10 stock picks according to analysts. The firm operates within the automobile industry.
By June 30, 60 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in the company worth $9.3 billion.
Here is what Worm Capital has to say about Tesla, Inc. in its Q2 2021 investor letter:
“Tesla underperformed in the quarter, but we maintain our high conviction in the long-term thesis on each business model. Much like art or writing, investment research is a continuous process—it never really ends. Prices can move in either direction in any given quarter, but our advantage often comes from knowing the businesses so well that short-term fluctuations in pricing shouldn’t affect our decision-making. On high conviction positions, this patience is often rewarded, which is why research is so valuable to our process…
..Tesla is in a class of its own. What many in the market seem to (still) not understand is that Tesla is not a car company so much as a complex manufacturing firm—with significant recurring software potential—growing, in our view, at a targeted rate of 50-100% YoY over the next several years. Unlike any other automotive firm in existence today, Tesla alone is a vertically integrated hardware and software business developing state-of-the-art manufacturing techniques that will revolutionize the auto industry (i.e. its Giga Presses, 4680 cells, etc.). It is a generational company and we anticipate it will eventually be the largest company in the world. Many of the conventional narratives around competition displacing Tesla’s lead are fundamentally flawed, and the many headlines surrounding Tesla’s approach to autonomy are frustratingly superficial. (As an aside, we highly recommend watching Andrej Karpathy’s, Tesla’s head of AI, his recent presentation from June: “Tesla details its self-driving Supercomputer that will bring in the Dojo era”)”
3. Amazon.com, Inc. (NASDAQ:AMZN)
DE Shaw’s Stake Value: $1.3 billion
Percentage of DE Shaw’s 13F Portfolio: 1.11%
Number of Hedge Fund Holders: 271
New indications by DE Shaw state that the hedge fund owned 374 thousand shares in the firm at the end of the second quarter, with a worth of $1.288 billion, amounting to 1.11% of the portfolio, increasing the fund’s stakes in the company by 11%.
Revenue of Amazon.com, Inc. (NASDAQ:AMZN) was $113 billion, in contrast to the first quarter’s $108.52 billion.
During the second quarter, 271 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in the multinational worth $60.5 billion while there were 243 hedge funds with $50.4 billion worth of stakes in the previous quarter.
Here is what L1 Capital has to say about Amazon.com, Inc. in its Q2 2021 investor letter:
“Amazon flipped from being the largest detractor from portfolio performance in the March 2021 quarter, to one of the leading contributors in the June 2021 quarter. We took advantage of negative near-term sentiment in the March 2021 quarter to add to our Amazon investment. We continue to view Amazon as one of the best positioned businesses globally, with its share price still not reflecting fair value.”
2. Microsoft Corporation (NASDAQ:MSFT)
DE Shaw’s Stake Value: $1.6 billion
Percentage of DE Shaw’s 13F Portfolio: 1.36%
Number of Hedge Fund Holders: 238
As of the second quarter, 238 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in the company worth $62.5 billion while 251 hedge funds were interested in the tech company with a stake of $58.9 billion in the previous quarter.
In the Q2 2021 Investor Letter, Baron Opportunity highlighted MSFT. Here is what the fund said:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft was a top contributor in the period because it trades at reasonable free cash flow and earnings valuations, has cloud and digital transformation tailwinds at its back, reported a solid March quarter, and beat Street expectations by a wide margin. Microsoft’s results continued to be strong across the board, with Azure cloud computing revenues up 46% in constantcurrency (“cc”) terms and commercial cloud bookings growth of 38% cc, the best in years. Microsoft also reported robust profitability growth, with operating income expanding 31% and GAAP earnings up 45%. We believe the company is well positioned for continued solid growth and profitability through market share gains as more companies look to transform and digitize their businesses as they move operations to the cloud.”
1. Apple Inc. (NASDAQ:AAPL)
DE Shaw’s Stake Value: $2.4 billion
Percentage of DE Shaw’s 13F Portfolio: 2.03%
Number of Hedge Fund Holders: 138
Apple Inc. (NASDAQ:AAPL) is the world’s largest company by market capitalization, and it engages in the production of smartphones and computers under the iPhone and Mac brands.
As of the second quarter, 138 hedge funds out of the 873 funds tracked by Insider Monkey held stakes in Apple Inc. (NASDAQ:AAPL) worth $145.5 billion versus 127 hedge funds with $131 billion worth of stakes in the previous quarter.
Here is what ClearBridge Investments has to say about Apple Inc. in its Q1 2021 investor letter:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
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