Gabriel Plotkin’s Melvin Capital Portfolio: Top 5 Picks

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In this article, we will take a look at Gabriel Plotkin’s Melvin Capital portfolio: Top 5 stock picks. If you want greater depth about him and his investment firm, then head over to Gabriel Plotkin’s Melvin Capital Portfolio: Top 10 Picks.

5. Fair Isaac Corporation (NYSE:FICO)

Mr. Plotkin’s Stake Value: $495.1 million

Percentage of Mr. Plotkin’s 13F Portfolio: 2.84%

Number of Hedge Fund Holders: 28

Fair Isaac Corporation (NYSE:FICO) is an American company that provides software and automation management solutions for companies. It operates globally by allowing its customers interconnectivity across North America, the Middle East, Asia, Europe and Latin America.

By the end of the second quarter, Mr. Plotkin held 985,000 shares of Fair Isaac Corporation (NYSE:FICO) in a stake that is worth $495 million and represents 2.84% of its portfolio. The company earned $338 million in revenue and $3.38 in non-GAAP EPS in its third quarter, beating analyst estimates on both counts.

In an October 2021 investment note, RBC Capital lowered Fair Isaac Corporation’s (NYSE:FICO) price target to $463 citing several concerns such as conservative guidance. Insider Monkey’s second quarter survey of 873 hedge funds revealed that 28 held a stake in Fair Isaac Corporation (NYSE:FICO).

The company’s largest stakeholder after Melvin Capital is Dev Kantesaria’s Valley Forge Capital who owns 671,509 shares worth 337 million.

In its third-quarter 2021 letter, Richie Capital Group, an investment management firm mentioned the company and stated:

Fair Isaac Corp (FICO – down 18.84%) – The stock price for the predictive analytics software firm has declined off of very little news outside of an article in the Wall Street Journal highlighting the increasing competitive threats. We view much of this as known. Anytime a company dominates a market in a monopoly-like manner, it will naturally attract competitors as well as customers who will attempt to push back on pricing. However, their solutions are highly predictive within the subprime market and the company continues to identify new opportunities for their software solutions. FICO reported a solid Q3 in August beating earnings and revenue estimates. The report seemed to imply slowing revenue growth, specifically in their DMS and Applications revenue. We believe the market is missing the bigger picture. FICO is transitioning from a licensing model to a subscription model. These transitions typically lead to near term growth headwinds but longerterm profitability improvement and stickier customers. FICO’s scores revenue continues to grow at a double-digit annual rate, and margins (Gross, Operating, and Net Income) are expanding which supports the premise that the company is maintaining their pricing power. We view this decline as a buying opportunity. Management seems to agree with our thinking as they announced a $500M stock repurchase program on August 18th.”


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