In this article, we discussed billionaire Masayoshi Son’s top 5 stock picks for 2021. For a comprehensive list and portfolio performance please see Billionaire Masayoshi Son’s Top 10 Stock Picks for 2021.
5. Taiwan Semiconductor Mfg Co Ltd (NYSE: TSM)
Shares of Taiwan Semiconductor (NYSE: TSM) accelerated the upside momentum into 2021 on the back of strong demand for its products. TSM stock price is up 8% this year, extending twelve-months gain to 143%. SB Management held 11.9 million shares of Taiwan Semiconductor at the end of the latest quarter, up 278% compared to the previous quarter.
Bonsai Partners, which posted a return of 247% for the fourth quarter, highlighted the strong growth prospects for Taiwan Semiconductor in the Q4 investor letter. Here is what Bonsai Partners stated:
“Taiwan Semiconductor is the world’s largest outsourced foundry of logic semiconductor chips. TSMC’s shares appreciated 34.5% during the quarter. Taiwan Semiconductor continues to see unprecedented demand, albeit at a slightly less rapid growth rate than earlier in 2020. At the time of writing, TSMC announced strong fourth-quarter results and staggering growth in their expected capital expenditures for 2021 – growing from $17B in 2020 to $25B to $28B in 2021. Forward-looking capital expenditures are the key leading indicator of their medium-term growth rate expectations, and I expect TSMC management will continue to earn excellent returns on these colossal investments.
TSMC’s capital expenditure growth is likely due to investment in their new U.S. manufacturing footprint, rapid investment in their cutting edge process technology, as well as generally high levels of customer demand. Lately, we’ve seen semiconductor shortages in some of their less advanced process technologies, emphasizing the current state of the semiconductor supply-demand imbalance.”
Masayoshi Son of SB Management
4. Alphabet (NASDAQ: GOOG)
Masayoshi Son raised his stake in Google-parent Alphabet (NASDAQ: GOOG) during the fourth quarter by 460% to 785,000 shares. It is ranked fourth-largest stock holding of SB Management portfolio, accounting for 7.77% of the overall portfolio. Shares of Alphabet have been rallying at a sharp pace since the beginning of this year amid prospects for economic reopening and expectations for higher ad revenue.
In a Q4 investors’ letter, Bretton Fund anticipates strong stock performance from Alphabet in 2021. Here is what Bretton Fund stated:
“Google (aka Alphabet) was one of our best performing stocks last year, returning 30.9%, while its earnings per share increased 19%. As lockdowns first went into place in the spring, many advertisers hit pause on their campaigns, waiting—like a lot of us—to see what the world would look like. And then—like a lot of us—advertisers adjusted. Travel companies cut back their campaigns, while ads for other goods, like athleisure wear and video games, picked up the slack. Google had a rough second quarter, but was back in the swing of things by the next quarter.”
3. PayPal Holdings, Inc. (NASDAQ: PYPL)
SB Management increased its stake in PayPal Holdings (NASDAQ: PYPL) by 386% during the fourth quarter to 6.1 million shares, making it the third-largest stock holding of the 13F portfolio. Shares of PayPal have extended the upside momentum into 2021. Its stock price is up 6% year to date, enlarging twelve months gains to 158%.
In its Q4 investor letter, Polen Capital Management forecasted double-digit growth for PayPal in the years ahead. Here is what Polen Capital Management stated:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
2. Facebook Inc (NASDAQ: FB)
The shares of social media giant Facebook (NASDAQ: FB) are struggling to trade in green this year. SB Management, however, looks optimistic about Facebook’s future fundamentals. The firm raised its position by 41% in the latest quarter to 18.13% of the overall 13F portfolio. It ranks 2nd on the list of Masayoshi Son’s top 10 stock picks for 2021.
Kinsman Oak Capital Partners Inc., an independent Toronto-based boutique investment firm, highlighted a few stocks including Facebook in the Q4 investors’ letter. Here’s what Kinsman Oak Capital Partners stated:
“Our view on Facebook (FB) may be somewhat controversial. The bear case for FB boils down to antitrust risk and valuation. Facebook, although to a lesser degree, is a relative value bargain as well. We believe the company possesses an element of platform risk that Alphabet does not but, compared to the rest of the market, the stock still seems undervalued. We compared Facebook to the Russell 2000, an index full of cyclical businesses that are considered no-brainers at the beginning of a recovery and popular re-opening stocks that are poised to go higher after the vaccine is distributed (Appendix E). Facebook is significantly cheaper, growing faster, has a larger economic moat, superior margin profile, and requires less capex.
1. Amzon.com (NASDAQ: AMZN)
Amzon.com (NASDAQ: AMZN) is the largest stock holding of Japanese billionaire Masayoshi Son’s SB Management portfolio, according to the latest filings. The firm held 2.2 million shares of Amazon at the end of the latest quarter, accounting for 41% of the 13F portfolio.
L1 Capital International Fund, which returned 5.1% for the quarter, stated in the Q4 investor letter that Amazon is likely to perform well ahead amid its strong business model. Here’s what L1 Capital International Fund stated:
“Several investments in the technology sector were trimmed on valuation grounds with the proceeds used to increase our investment in Amazon. Amazon’s successful flywheel business model and Amazon Web Services are well known. However, we believe the current share price under‑appreciates:
- The consistency and longevity of Amazon’s growth potential in its key businesses;
- The importance of additional revenue streams such as advertising which are high margin and growing rapidly; and
- The strengthening barriers to competition and competitive advantages arising from Amazon’s stepped‑up investment in logistics and other infrastructure.”
You can also take a peek at Billionaire Lee Ainslie’s Top 10 Stock Picks and Billionaire Steve Cohen’s Top 10 Stock Picks.
