John Clark’s Southpoint Capital is Selling These 5 Stocks

3. Nuance Communications, Inc. (NASDAQ:NUAN)

Total Number of Hedge Fund Holders: 61

Next up is Nuance Communications, Inc. (NASDAQ: NUAN), a Massachusetts-based company that provides conversational and cognitive artificial intelligence (AI) innovations, to enhance machine responsiveness to human speech.

As of the third quarter of 2021, 61 hedge funds disclosed ownership of stakes in Nuance Communications, Inc. (NASDAQ: NUAN). The combined value of these stakes was $4.86 billion.

Investment management firm Rhizome Partners recently published its Q3 investor letter. Here’s what the fund said about Nuance Communications, Inc. (NASDAQ: NUAN).

“We also exited our small position in Nuance upon Microsoft’s acquisition. Nuance is a leader in voice recognition software, with dominant market share, and its speech-to-text product is the gold standard in radiology. In addition, by eliminating the need for note taking and allowing doctors to focus on patient care, Nuance could transform the way doctors treat patients. We built a 1% position in Nuance after attending its comprehensive investor day. Our view is that if Nuance can successfully grow its voice-recognition software in doctor’s offices, it could be worth multiples of our cost basis. Microsoft’s acquisition eliminated the multi-bagger upside but also partially validates the belief that Nuance is a high-quality technology company. We exited Nuance with a 62% gain in less than a year. This example is representative of the slight adjustments we made to our portfolio construction. We will allocate to small bets on technology and high-growth companies that could increase our exposure to “right tail” upside. Rest assured that our focus is still roughly 50% real estate, 30% high-quality companies trading at cheap multiples of free cash flow, and the rest in investments with the potential for growth and higher upside.”