Crosslink Capital is as vertically integrated as investing gets: the fund invests in companies at all stages from seed financing to the public markets (as such, its stock holdings tend to be in the technology sector or have some tie to technology. Co-founder Michael Stark serves as the portfolio manager for Crosslink’s publicly traded investments. Stark worked at Intel, and then at tech-focused investment bank Robertson Stephens, before co-founding Crosslink with Sy Kaufman. Crosslink discloses many of its positions in publicly traded stocks in 13F filings. Research their publicly traded investments or read on for our discussion of the fund’s top five holdings.
The largest position reported on Crosslink’s 13F was its 35 million shares of Pandora Media Inc (NYSE:P). The company IPO’d in June of last year and has since slumped 37%. Pandora is unprofitable, though the Street expects that next fiscal year (ending in January 2014) it will squeak into the black with earnings per share of 8 cents. At the current market capitalization of $1.8 billion, this yields a forward P/E of 136. Looking at its premium, growth-assuming valuation another way, its enterprise value is five times trailing revenue (the company has negative EBITDA, so an EV/EBITDA multiple is not meaningful). Pandora is widely shorted with a short ratio of almost 7. We looked at Pandora earlier this month (read our article on Pandora).
Another of the fund’s top picks was Ancestry.com Inc (NASDAQ:ACOM); it reported a total of 2.1 million shares of the $1.3 billion market cap ancestry research and networking site in its portfolio. Ancestry.com reported substantial increases in its revenue and earnings last quarter compared to the same period in the previous year: revenue rose 18%, driving earnings up by 21%. The company now trades at 20 times trailing earnings and 16 times forward estimates- not particularly low, but certainly more of a value stock compared to some other Internet companies (and certainly a good value if its growth continues).
Crosslink also liked credit card issuer Visa Inc (NYSE:V), which has about doubled the S&P 500’s performance over the last year. The fund increased its Visa stake by 13% to a total of about 250,000 shares. Visa trades at 19 times forward earnings estimates and has seen good growth in recent quarters; its beta is 0.8, which is not particularly low but its price movements are not as correlated with the broader market as might be expected. Billionaire Ken Fisher’s Fisher Asset Management increased its holdings of Visa during the second quarter as well, closing June with 3.3 million shares in its portfolio.
QUALCOMM, Inc. (NASDAQ:QCOM) was another of Stark and his team’s favorite stocks as the fund owned about 530,000 shares. Qualcomm, like Ancestry.com, is becoming an intriguing “growth at a reasonable price” stock as it trades at 19 times trailing earnings but saw its net income increase 17% last quarter versus the same period last year. That level of growth is not sustainable, but the company only needs low growth to justify the current stock price and only moderate growth to prove undervalued. Qualcomm also pays a modest 1.5% dividend yield to investors.
Finally, the fund reported owning about 160,000 shares of Equinix Inc (NASDAQ:EQIX). The data center services company’s stock has more than doubled in the last year, bringing its market capitalization up to $9.6 billion. It is now priced for very high growth, with its forward P/E being 52 and its five-year PEG ratio being 2.3. The company has shown earnings growth in the recent past, with earnings increasing 19% in its most recent quarter over a year ago, but that five-year PEG assumes an annualized earnings growth rate of 32% and still comes out looking rather high.