We recently published a list of 7 new stock picks in Brad Gerstner’s portfolio. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stock picks in Brad Gerstner’s portfolio.
Gerstner Expects More M&As in New Term
Strategists and investors are confident that the new administration will fuel the state of mergers and acquisitions in the United States. It is no surprise that renowned investor Brad Gerstner, founder and CEO of Altimeter Capital, believes the same. On November 6, Gerstner appeared in an interview on CNBC Television where he shared his expectations of the stock market.
Gerstner shares that the Republicans have been particularly critical of big tech companies and their “bundling powers” that happen to “crowd out startups” and “stifle innovation and startups.” He expects the new administration to scrutinize this trend heavily. He also adds that the true beauty of Silicon Valley lies in the innovation and technology bolstered by small tech and mergers and acquisitions.
Speaking of big tech, he suggests that these names have been cutting down on M&A deals and have instead directed their resources to stock repurchases, dividends, and onboarding new GPUs. He expects the new administration to alter the trend and loosen up the ability to do mergers and acquisitions.
Gertsner also suggests that the US market will be better off with a functioning mergers and acquisitions flow in Silicon Valley, which he refers to as the “heartbeat” of the place. He also shared his thoughts on the program, Invest America, which is expected to provide kids with $1,000 in seed money into investment accounts as soon as they are born. He has been working with leading lawmakers in the country to promote the program and is highly optimistic about its outcomes.
Gerstner is bullish on the program and highlighted that the move will bring a new era of enterprise, innovation, and capital management to the US economy. He added that this program will bolster the private market and likely create 3.7 million new stock market investors yearly. In addition to investors like Brad Gerstner, many large tech companies are on board with the program.
Brad Gerstner is one of the top technology investors and has had many notable transactions over the past few years through his firm. He is bullish on tech and innovation, particularly artificial intelligence. In Q3 2024, he initiated 8 new positions and also raised his stakes in 7 stocks, ending the quarter with a portfolio of $6.75 billion in 13F securities. With that, let’s discuss his top new picks as of Q3 2024.
Brad Gerstner of Altimeter Capital
Our Methodology
We scanned Altimeter Capital’s Q3 2024 portfolio and picked new additions from the fund’s top 13F holdings. Additionally, we’ve also added overall hedge fund sentiment, as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Broadcom Inc. (NASDAQ:AVGO)
Altimeter Capital’s Stake Value: $68,464,388
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) ranks third on our list of the 7 new stock picks by Brad Gerstner. He trimmed his position in NVIDIA slightly and added AVGO to his portfolio. It designs and develops a range of semiconductor products and is well known for making application-specific integrated circuits (ASICs). It also provides infrastructure software products. Some of its products include cable modems, networking processors, and storage adapters. The company serves the data center, networking, software, broadband, storage, and wireless markets.
Throughout the year, the company has launched crucial breakthrough technology for AI tasks and AI systems. On November 5, the company announced the launch of VeloRain, an AI and ML platform that enhances AI security workloads. On the same day, Broadcom Inc. (NASDAQ:AVGO) unveiled a private cloud platform, part of its VMware Cloud Foundation, improving AI autonomy and security for its customers.
Attributable to its growing stakes in AI, the company expects revenue from AI to increase 10% from the previous quarter to reach $3.5 billion. This will bring the full-year total to $12 billion. Similarly, in the third quarter of 2024, Broadcom Inc. (NASDAQ:AVGO) saw a 47% increase in consolidated revenue and a 44% increase in net income.
AVGO’s performance and growing importance in the AI sector explain why hedge funds are bullish on the stock. At the end of the third quarter of 2024, 128 hedge funds were bullish on the stock, according to Insider Monkey’s database.
ClearBridge Investments’ ClearBridge Large Cap Value Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“In IT, we bought Broadcom Inc. (NASDAQ:AVGO) as we believe the company has a long runway for growth with its custom silicon business, which should be more durable and less volatile than other components within the AI food chain. We also believe the acquisition of VMware creates another opportunity for steady, subscription-based durable growth that is still in its early innings. We believe the stock has an attractive risk/reward profile given the reasonable visibility toward mid-teens EPS growth at a low-20s P/E multiple. We made room for Broadcom by exiting Lam Research, whose shares we believed priced in a full recovery, while we grew increasingly concerned that China exposure might create an air pocket.”
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Disclosure: None. This article is originally published at Insider Monkey.
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