This article discusses the top 7 stock picks of BlueDrive Global Investors at the end of the second quarter.
Headquartered in London, BlueDrive Global Investors is a hedge fund founded in 2017 by British billionaire Sir Christopher ‘Chris’ Hohn’s protégé, Oscar Hattink. In 2003, Chris Hohn founded TCI Fund Management, which is considered one of the most successful institutional activist funds of all time having led fights against some of the biggest companies in Europe including Volkswagen and Deutsche Börse. It is also one of the largest (AUM over $30 billion) and most successful hedge funds based out of Europe. After suffering over 40% loss amid the 2008 financial crisis meltdown, TCI has never had a losing year and has delivered average annual returns of over 19% to its investors in the past 10 years.
The trajectory of TCI and Oscar Hattink have diverged significantly since Mr. Hattink left the former in August 2011 to join Theleme Partners, which is a firm founded in 2009 by six ex-TCI managers and analysts and is led by TCI’s co-founder Patrick Degorce. Mr. Hattink quit Theleme Partners in January 2017 and the same quarter founded BlueDrive Global Investors. Mr. Hattink holds an MA in economics and financial engineering from the University of Amsterdam. Prior to joining TCI Fund Management as a partner in August 2008, he served as an analyst at some of the most prestigious firms on Wall Street including Morgan Stanley, The Blackstone Group, and now defunct Gandhara Capital.
BlueDrive Global Investors operates on a value-based investment philosophy which is built on a detailed study of cyclical and structural industry trends and doing bottom-up research. It applies a private equity style investment approach with seven core principles including investing only in what it knows and understands, striving to deliver the best long-term risk-adjusted returns, and staying lean as a firm.
BlueDrive Global Investors’ Portfolio
According to BlueDrive Global Investors’ latest 13F filing, the aggregate value of its holdings at the end of June was $141.348 million, a significant drop from the $226.14 million that it had disclosed at the end of Q1. During the second quarter, the fund sold its entire stake in 4 companies, reduced its holdings in 5 companies and made additional purchases in just 1 stock. Furthermore, the fund didn’t initiate a new stake in any other company during that period. The top 3 stock picks of the fund at the end of June, namely Alibaba Group Holding Limited (NYSE:BABA), Lamb Weston Holdings, Inc. (NYSE:LW), and T-Mobile US, Inc. (NASDAQ:TMUS) accounted for almost 70% of the aggregate value of its 13F portfolio.
Our Methodology
The research done by Insider Monkey shows that the consensus top stock picks of hedge funds beat the returns generated by the broader market in the long term. This is why we actively track the portfolios of 895 hedge funds, closely monitoring the stocks they buy and sell. For this article, we selected BlueDrive Global Investors’ top 7 stock picks based on the firm’s most recent 13F filing submitted with the Securities and Exchange Commission (SEC).
7. Netflix, Inc. (NASDAQ:NFLX)
BlueDrive Global Investors’ Stake Value: $2,116,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 1.49%
Number of Hedge Fund Holders: 95
BlueDrive Global Investors continued to own a very small position of just 12,100 shares of Netflix, Inc. at the end of Q2. Shares of the streaming giant have been one of the worst performers among tech sector stocks this year as they trade down by over 60% year-to-date. This collapse in the stock price has also resulted in smart money investors fleeing the stock. From 121 hedge funds among those tracked by Insider Monkey disclosing a stake in Netflix, Inc. at the end of 2020, the number fell to just 95 at the end of June this year.
On August 27, Bloomberg revealed that Netflix, Inc. is on the cusp of launching its ad-supported plans. These ad-supported plans are expected to be launched in the $7 to $9 per month price change, which is almost half of what the streaming behemoth’s most subscribed $15.49 per month plan costs currently. With the growth in new subscribers flattening out and inflation taking a toll on the average consumer Netflix, Inc. has been toying with ideas to reduce the price of its offering so that it can cast a wider net and target the price-conscious consumer. However, if the pioneer of streaming will be able to strike the balance between running ads and ensuring a pleasant viewing experience on its platform remains to be seen.
As it plans to roll out the ad-supported plans, Netflix, Inc. has also recruited two high-profile executives from Snap Inc. (NYSE:SNAP) to oversee that operation. Jeremi Gorman, who was Snap Inc.’s (NYSE:SNAP) Chief Business Officer and also the company’s top ad executive, will be joining Netflix, Inc.’s as the new president of worldwide advertising. Along with him, Peter Naylor, the vice president of ad sales for the Americas at Snap Inc., will also be joining Netflix, Inc., resuming his earlier role and designation at the latter.
6. Uber Technologies, Inc. (NYSE:UBER)
BlueDrive Global Investors’ Stake Value: $11,746,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 8.3%
Number of Hedge Fund Holders: 129
Like Netflix, Inc., Uber Technologies, Inc. has also been one of the worst-performing tech stocks this year. Before the cab booking company reported its second-quarter results early in August, its stock had tanked and was trading down 50% year-to-date. However, it has made a noteworthy recovery since then and currently trades down by almost 35% year-to-date. During the second quarter, BlueDrive Global Investors reduced its stake in Uber Technologies, Inc. by 18% to 574,100 shares. Other hedge funds covered by us that also pruned their holdings in the company during that period included Brad Gerstner’s Altimeter Capital Management and John Smith Clark’s Southpoint Capital Advisors.
The significant decline in Uber Technologies, Inc.’s stock has made the stock trading at current levels attractive to a host of investors, which is also the reason it recently featured in Insider Monkey’s list of 10 Best Technology Stocks to Buy and 5 Stocks to Buy Now Before the Bull Market Begins. It is not only us, but several analysts on Wall Street covering the stock also seem to be turning increasingly bullish on the stock with analysts at Cowen upping their price target on it to $76 on August 9 and analysts at Atlantic Securities boosting their price target to $40 on August 22.
5. Herbalife Nutrition Ltd. (NYSE:HLF)
BlueDrive Global Investors’ Stake Value: $14,303,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 10.11%
Number of Hedge Fund Holders: 28
Like it did in Uber Technologies, Inc., BlueDrive Global Investors also reduced its stake in Herbalife Nutrition Ltd. by 18% during the second quarter. From 850,028 shares at the end of March, the fund cut its holdings down to close to 700,000 shares at the end of June.
Over the years, Herbalife Nutrition Ltd. has been embroiled in several controversies with leading investors fighting amongst themselves over the business model of the company.
Herbalife Nutrition Ltd.’s stock jumped more than 8% on August 3, a day after the company reported better than expected numbers for its fiscal year 2022 second quarter post the markets closed for trading. While analysts had projected the company to report non-GAAP EPS of $0.63 on revenue of $1.31 billion, it announced non-GAAP EPS of $0.96 on revenue of $1.39 billion for that period. Along with the earnings release, Herbalife Nutrition Ltd. also revealed that it is investing $400 million in a digital transformation growth initiative called “Herbalife One”, which will be a single platform that will provide a simplified experience to the company’s customers and distributors.
4. Amazon.com, Inc. (NASDAQ:AMZN)
BlueDrive Global Investors’ Stake Value: $14,821,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 10.48%
Number of Hedge Fund Holders: 252
Although BlueDrive Global Investors increased its stake in Amazon.com, Inc. by a whopping 15-fold, the cloud and e-retail giant still managed only the fourth spot among the fund’s most loved stocks at the end of June. Amazon.com, Inc. dropped to the second spot in the list of the most favourite stock picks of hedge funds covered by Insider Monkey at the end of the second quarter, losing its top spot to Microsoft Corp. (NASDAQ:MSFT) during that period. Nonetheless, apart from BlueDrive Global Investors several other top investors we track also showed renewed enthusiasm for Amazon.com, Inc.’s stock during Q2. Among them was billionaire Ken Fisher’s Fisher Asset Management which boosted its stake almost twenty-fold to 48.64 million shares.
Peloton Interactive, Inc. (NASDAQ:PTON), which was one of the biggest beneficiaries of the early post-COVID-19 rally in stock prices and whose shares have tanked close to 90% in the last one year, revealed on August 24 that it has finally started selling its Peloton Bike, Guide, and select accessories and apparel on Amazon.com, Inc.’s platform. This is the first time that Peloton Interactive, Inc. would be selling its products outside its own website and physical stores. Recently, shares of top game designer and distributor Electronic Arts Inc. (NASDAQ:EA) shot up over 4% on rumours that Amazon.com, Inc. is going to bid for the company. However, the stock pared those gains immediately after reports came in quashing those rumours.
3. Alibaba Group Holding Limited (NYSE:BABA)
BlueDrive Global Investors’ Stake Value: $21,190,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 14.99%
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited’s stock might have started its downward journey at the end of 2020, losing over two-thirds of its value in the process, but if you were tracking smart money flows as we do, you could have anticipated this move all the way back in 2019. The popularity of Alibaba Group Holding Limited among funds tracked by us peaked at the end of 2019 when 177 funds disclosed a stake in the Chinese e-tailer. It has dwindled to only 106 funds reporting a stake in the company at the end of June this year.
On August 31, Reuters reported that Alibaba Group Holding Limited is going to be among the first mainland China-based companies that will go through audit inspection by US regulators. Several investors and regulators, over the years, have raised concerns about the audit and financial regulatory practices followed by Chinese companies. In addition, there have always been concerns over the variable interest entity (VIE) structure under which most companies based in China raise capital from foreign investors and list on exchanges like the NYSE. According to the report, Alibaba Group Holding Limited has already been notified that its audit will be inspected by the Public Company Accounting Oversight Board (PCAOB), a non-profit established by the United States Congress that oversees the audits of public companies.
2. Lamb Weston Holdings, Inc. (NYSE:LW)
BlueDrive Global Investors’ Stake Value: $38,586,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 27.29%
Number of Hedge Fund Holders: 35
Founded in 1950, Lamb Weston Holdings, Inc. is one of the largest producers and processors of waffle fries, frozen french fries, and other frozen potato products in the world. BlueDrive Global Investors first reported initiating a stake in the company in a regulatory filing for the fourth quarter of 2020. Although Lamb Weston Holdings, Inc.’s stock hasn’t appreciated since then, it is currently trading up by approximately 25% year-to-date. During the second quarter, legendary trader and billionaire Steve Cohen’s Point72 Asset Management increased its stake in the company by a whopping 886% to 1.4 million shares while Michael Gelband’s ExodusPoint Capital initiated a fresh stake in the company by purchasing 191,073 shares.
On July 27, Lamb Weston Holdings, Inc. reported its fiscal year 2022 fourth quarter and full-year earnings. For the full year, analysts were projecting the company to report non-GAAP EPS of $1.95 on revenue of $4.02 billion, which the company managed to beat by $0.13 and $80 million, respectively. Earlier in the year, Jefferies Financial Group’s analyst Robert Dickerson released a note to clients in which he reiterated his ‘Buy’ rating but dropped the price target on Lamb Weston Holdings, Inc.’s stock to $75 from $80.
1. T-Mobile US, Inc. (NASDAQ:TMUS)
BlueDrive Global Investors’ Stake Value: $38,586,000
Percentage of BlueDrive Global Investors’ 13F Portfolio: 27.29%
Number of Hedge Fund Holders: 96
BlueDrive Global Investors cut its stake in T-Mobile US, Inc. by 32% to 286,800 shares during the second quarter, but the telecom giant continued to remain the fund’s top stock pick at the end of that period. Beating almost all of its peers in the telecommunications industry in the US, T-Mobile US, Inc.’s stock has appreciated the most in the last 10 years, rising over 700% during that time.
On August 26, T-Mobile US, Inc.’s announced a new partnership with Elon Musk’s Starlink, whereby the former will use large antennas on the latter’s second-generation satellites to transmit signals directly to consumers’ cellphones in an effort to eliminate “dead zones.” Although the signals transmitted won’t have the bandwidth a Starlink terminal provides, it will be enough to send texts and even images. 11 of the 16 analysts who cover T-Mobile US, Inc.’s stock on Wall Street currently have a ‘Buy’ rating on it with a consensus price target of $169.09, representing a potential upside of 17.5% from the stock’s last closing price.
You can also look at Billionaire Carl Icahn’s Latest Portfolio: Top 10 Stock Picks and 10 Best Stocks to Buy According to Billionaire Mario Gabelli
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This article is originally published at Insider Monkey.
