In this article, we discuss the 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management based on Q2 holdings of the fund.
Andrew Immerman holds a Bachelor’s degree from the University of Pennsylvania and a Master’s degree from Harvard Business School. He is presently the Managing Partner at Palestra Capital Management. Formerly Andrew Immerman worked as an Analyst at Goldman Sachs. He has also worked at Francisco Partners, Clovis Capital Management LP, Viking Global Investors LP and CR Intrinsic Investors.
Jeremy Schiffman has previously worked as an Investment Banking Analyst at Goldman Sachs, an Investment Associate at TPG Global, and a Partner at TPG-Axon Capital.
New York-based Palestra Capital Management was formed in 2011 by Andrew Immerman and Jeremy Schiffman. Goldman Sachs and TPG provided startup funding to the hedge fund. In the second quarter of 2021, the total value of the Palestra Capital Management 13F portfolio is $4.64 billion, versus $4.76 billion in the previous quarter.
Some of the top technology stocks in the investment portfolio of Palestra Capital Management in the second quarter of 2021 were Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOG), and Amazon.com, Inc. (NASDAQ: AMZN), among others discussed in detail below.
Based on the latest 13F holdings for the second quarter of 2021, Palestra Capital Management owns 931,881 shares in Microsoft Corporation, worth $252.45 million. On September 17, Tigress Financial analyst Ivan Feinseth raised his price target on Microsoft Corporation to $366 from $303 and maintained a “Buy” rating on the shares. Shares of Microsoft Corporation rallied 41.89% in the last 12 months, resulting in a $2.25 trillion market capitalization.
In Alphabet Inc., Andrew Immerman and Jeremy Schiffman own 127,010 shares. The investment covers an impressive 6.67% of the fund’s portfolio. On September 17, Jefferies analyst Brent Thill raised his price target on Alphabet Inc. to $3,325 from $3,150 and kept a “Buy” rating on the shares. Alphabet Inc. currently has a $1.88 trillion market capitalization and was able to deliver 89.72% return in the past 12 months.
Amazon.com, Inc. is a new arrival on Andrew Immerman and Jeremy Schiffman’s portfolio, as their hedge fund bought about 42,265 shares of Amazon.com, Inc., worth $145.40 million. On September 14, Evercore ISI analyst Mark Mahaney raised his price target on Amazon.com, Inc. to $4,700 from $4,200 and maintained an “Outperform” rating on the shares.
Source:pexels
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With this context and industry outlook in mind, let’s start our list of the 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. We picked stocks from the Q2 portfolio of Immerman and Schiffman.
Tech Stock Picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management
10. Twilio Inc. (NYSE:TWLO)
Immerman and Schiffman’s Stake Value: $91,049,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 1.96%
Number of Hedge Fund Holders: 98
Twilio Inc. (NYSE:TWLO), located in San Francisco, is a cloud communications platform company. It was founded in 2008 and is placed tenth on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Shares of Twilio Inc. surged 45.88% in the past 12 months.
On September 16, Summit Insights analyst Srini Nandury reiterated coverage of Twilio Inc. with a “Buy” rating setting his price target at $450. On July 29, Twilio Inc. announced earnings for the second quarter of 2021. It posted earnings per share of -$0.11, beating the estimates by $0.02.
Palestra Capital Management bought 230,995 shares in Twilio Inc., worth $91.05 million, representing 1.96% of their portfolio. ARK Investment Management is the biggest stakeholder in Twilio Inc., with 3.72 million shares worth $1.47 billion.
Microsoft Corporation, Alphabet Inc., and Amazon.com, Inc. are some of the best tech stocks to buy according to Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, along with Twilio Inc..
Lakehouse Capital, in its second-quarter 2021 investor letter, mentioned Twilio Inc.. Here is what the fund said:
“The Fund held 20 positions as of the end of June and exited four during the year (including) Twilio. The companies we exited were sold almost entirely on the basis of their valuations getting stretched well past their norms and to levels where the return profile no longer offered the asymmetric upside that led us to invest in the first place. We dislike selling on valuation as great growth companies are hard to find and letting winners run is an important facet of a winning growth strategy, however, we’re not gluttons for punishment either and in each of those cases we redeployed capital towards other high-quality growth companies with less demanding valuations.”
9. PagSeguro Digital Ltd. (NYSE:PAGS)
Immerman and Schiffman’s Stake Value: $99,694,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 2.14%
Number of Hedge Fund Holders: 40
PagSeguro Digital Ltd. (NYSE:PAGS), with its subsidiaries, provides financial technology solutions and services for consumers globally. It was founded in 2006 and stands ninth on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Their bet on PagSeguro Digital Ltd. is also paying off. Shares of the company surged 42.12% over the last 12 months.
On August 13, PagSeguro Digital Ltd. declared earnings for the second quarter of 2021. It announced earnings per share of $0.16, missing the estimates by $0.05. However, revenue over the period was $451.03 million, beating the market predictions by $10.91 million. On June 7, Itau BBA analyst Marco Calvi upgraded PagSeguro Digital Ltd. to “Outperform” from “Market Perform” and gave his price target of $65.
Palestra Capital Management added this stock to its portfolio in the second quarter by buying 1.78 million shares worth $99.69 million. According to our database, the number of PagSeguro Digital Ltd. long hedge funds positions increased in the second quarter of 2021. There were 40 hedge funds that hold a position in PagSeguro Digital Ltd. compared to 33 funds in the first quarter of 2021.
Artisan Partners, in its first-quarter 2021 investor letter, mentioned PagSeguro Digital Ltd.. Here is what Artisan Partners has to say about PagSeguro Digital Ltd. in its letter:
“We also reduced our position in PagSeguro. PagSeguro is making good progress establishing a fast-growing digital bank and expanding its Brazilian payments business despite the pandemic. However, the company’s growth initiatives will require another year of heavy investment spending in 2021. This comes as Brazil’s progress combatting COVID-19 trails many major economies’, casting a cloud over the broader economic outlook. Given these potential headwinds, we trimmed our position to fund higher conviction holdings.”
8. Amazon.com, Inc. (NASDAQ:AMZN)
Immerman and Schiffman’s Stake Value: $145,398,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 3.13%
Number of Hedge Fund Holders: 271
Amazon.com, Inc., based in Seattle, Washington, specializes in e-commerce, digital streaming, cloud computing, and artificial intelligence. The company was founded in 1994 and is placed eighth on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Amazon.com, Inc. currently has a market capitalization of $1.7 trillion.
On September 21, Amazon and Lendistry unveiled Amazon Community Lending, a collaborative pilot initiative to help small and medium-sized companies sell in Amazon’s shop expand.
L1 Capital, in its second-quarter 2021 investor letter, mentioned Amazon.com, Inc. (NASDAQ: AMZN). Here is what the fund said:
“Amazon flipped from being the largest detractor from portfolio performance in the March 2021 quarter, to one of the leading contributors in the June 2021 quarter. We took advantage of negative near-term sentiment in the March 2021 quarter to add to our Amazon investment. We continue to view Amazon as one of the best positioned businesses globally, with its share price still not reflecting fair value.”
7. Workday, Inc. (NASDAQ:WDAY)
Immerman and Schiffman’s Stake Value: $151,076,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 3.25%
Number of Hedge Fund Holders: 72
Workday, Inc. (NASDAQ:WDAY) is a global provider of business cloud software. It was incorporated in 2005 and stands seventh on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Shares of Workday, Inc. surged 27.13% in the past 12 months.
On September 20, Wells Fargo analyst Michael Turrin initiated coverage of Workday, Inc. with an “Overweight” rating and gave his price target of $320. On September 8, Workday reached a formal deal to purchase Zimit. The deal’s financial specifics were not disclosed.
The stock is a new arrival on Andrew Immerman and Jeremy Schiffman’s portfolio, as their hedge fund bought about 632,805 shares of Workday, Inc., worth $151.08 million. Workday, Inc. saw an increase in hedge fund sentiment recently. The number of long hedge fund positions increased to 72 in the second quarter of 2021, compared to 69 positions in the previous quarter.
Just like Microsoft Corporation, Alphabet Inc., and Amazon.com, Inc., Workday, Inc. is one of the best tech stocks to buy according to Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management.
ClearBridge Investments, in its first-quarter 2021 investor letter, mentioned Workday, Inc.. Here is what the fund said:
“In addition to the new issue market, we have been tactically adding growth exposure. We took advantage of the selloff in disruptors that comprise a large portion of the portfolio to initiate a position in enterprise software maker Workday.”
6. Activision Blizzard, Inc. (NASDAQ:ATVI)
Immerman and Schiffman’s Stake Value: $205,154,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 4.41%
Number of Hedge Fund Holders: 78
Activision Blizzard, Inc. (NASDAQ:ATVI) is a California-based video game company. It was founded in 2008 and is placed sixth on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Activision Blizzard, Inc. currently has a market capitalization of $61.87 billion.
On August 3, Activision Blizzard, Inc. posted earnings for the second quarter of 2021. It reported earnings per share of $0.91, beating the estimates by $0.16. In addition, the revenue over the second quarter of 2021 was $1.92 billion, down 7.7% YoY, beating the market predictions by $30 million. On August 16, Truist analyst Matthew Thornton lowered his price target on Activision Blizzard, Inc. to $101 from $112 but maintained a “Buy” rating on the shares.
Palestra Capital Management holds 2.15 million shares in Activision Blizzard, Inc., worth $205.15 million, representing 4.41% of their portfolio. The hedge fund has decreased its stake in Activision Blizzard, Inc. by 4% in the second quarter of 2021. Marcio Appel’s Adam Capital is a leading stakeholder in Activision Blizzard, Inc., with 1.39 million shares worth $216.67 billion.
In addition to Microsoft Corporation, Alphabet Inc., and Amazon.com, Inc., analysts are paying attention to Activision Blizzard, Inc. amid the company’s long-term growth potential.
Cooper Investors, in its first-quarter 2021 investor letter, mentioned Activision Blizzard, Inc.. Here is what the fund said:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates) …” (Click here to see the full text)
5. Uber Technologies, Inc. (NYSE:UBER)
Immerman and Schiffman’s Stake Value: $211,649,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 4.55%
Number of Hedge Fund Holders: 135
Uber Technologies, Inc. (NYSE:UBER) is a ride-hailing firm that also provides package delivery, food delivery, freight transportation and couriers services. It was incorporated in 2009 and stands fifth on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Uber Technologies, Inc. currently has a market capitalization of $74.9 billion.
On September 13, Goldman Sachs analyst Eric Sheridan initiated coverage of Uber Technologies, Inc. with his “Buy” rating and gave his price target of $64.
Palestra Capital Management holds 4.22 million shares in Uber Technologies, Inc., worth $211.65 million, representing 4.55% of their investment portfolio. The hedge fund has increased its stake in Uber Technologies, Inc. by 5% in the second quarter of 2021. There were 135 hedge funds in our database that held stakes in Uber Technologies, Inc. in the second quarter of 2021, compared to 130 funds in the previous quarter.
RiverPark Funds, in its second-quarter 2021 investor letter, mentioned Uber Technologies, Inc.. Here is what the fund said:
“UBER was our top detractor for the quarter. Delivery growth remains strong, and ride sharing has started to recover, though still down year over year (vs. pre-COVID results). Gross bookings grew 24% year over year, driven by 166% Delivery growth.
Despite the COVID disruption, UBER remains the undisputed global leader in ride sharing, with greater than 50% share in every major region in which it operates. The company is also a leader in food delivery (64% of 1Q21 revenue), where it is number one or two in the more than 25 countries in which it operates. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its more than 100 million users (by comparison, Amazon Prime has 130+ million members) and penetrate new markets of ondemand services, such as grocery delivery, truck brokerage and worker staffing for shift work. Its New Verticals (non-food delivery such as grocery, convenience, and alcohol) business hit a $3 billion annualized run rate in March, up 77% quarter over quarter.
UBER, at its current $91 billion market capitalization, trades at 4x next year’s revenue from its two core businesses. Additionally, the company has substantial, unrecognized, value in its several nascent development businesses and another $13 billion in equity stakes in synergistic businesses around the world.”
4. Microsoft Corporation (NASDAQ:MSFT)
Immerman and Schiffman’s Stake Value: $252,447,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 5.43%
Number of Hedge Fund Holders: 238
On September 14, Microsoft Corporation declared a quarterly dividend of $0.62 per share, a 10.7% increase from the prior dividend of $0.56.
Palestra Capital Management owns 931,881 shares of Microsoft Corporation, worth $252.45 million. This represented 5.43% of the investment portfolio of Palestra Capital Management. There were 238 hedge funds in our database that held stakes in Microsoft Corporation in the second quarter of 2021, compared to 251 funds in the previous quarter.
Baron Opportunity Fund, in its second-quarter 2021investor letter, mentioned Microsoft Corporation. Here is what the fund said:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft was a top contributor in the period because it trades at reasonable free cash flow and earnings valuations, has cloud and digital transformation tailwinds at its back, reported a solid March quarter, and beat Street expectations by a wide margin. Microsoft’s results continued to be strong across the board, with Azure cloud computing revenues up 46% in constantcurrency (“cc”) terms and commercial cloud bookings growth of 38% cc, the best in years. Microsoft also reported robust profitability growth, with operating income expanding 31% and GAAP earnings up 45%. We believe the company is well positioned for continued solid growth and profitability through market share gains as more companies look to transform and digitize their businesses as they move operations to the cloud.”
3. Alphabet Inc. (NASDAQ:GOOG)
Immerman and Schiffman’s Stake Value: $310,132,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 6.67%
Number of Hedge Fund Holders: 155
Alphabet Inc. based in California, is an American multinational technology company that specializes in internet-related services and products, which include online advertising technologies, a search engine, cloud computing, software, and hardware. It was founded in 1998 and is placed third on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Alphabet Inc. shares have offered investors more than 89.72% in returns over the course of the past 12 months.
Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management owns 127,010 shares of Alphabet Inc., worth $310.13 million. Hedge fund sentiment decreased for Alphabet Inc. in the second quarter of 2021. Insider Monkey’s data shows that 155 hedge funds held stakes in the company in the second quarter of 2021, down from 159 funds a quarter earlier.
Qualivian Investment Partners, in its second-quarter 2021 investor letter, mentioned Alphabet Inc.. Here is what the fund said:
“The opportunity in online advertising remains very attractive for Alphabet’s subsidiary Google. In the recent June quarter, Google’s ad sales grew 69%. Alphabet’s subsidiary YouTube’s ad revenue soared 84%, to $7 billion, in the second quarter, putting the business on par with Netflix, which reported quarterly revenue of $7.3 billion. Netflix is expected to grow sales by 19%, to $29.7 billion this year, while YouTube’s ad revenue is forecast to rise 45%, to $28.7 billion.
Alphabet slashed operating losses for the Google Cloud by more than half, as the business continues to scale, growing at 50%+ clips. Furthermore, the company continues to have potentially new growth options via its investments in autonomous driving (Waymo) and various healthcare businesses such as Verily and Calico.”
2. Fidelity National Information Services, Inc. (NYSE:FIS)
Immerman and Schiffman’s Stake Value: $314,647,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 6.77%
Number of Hedge Fund Holders: 72
Fidelity National Information Services, Inc. (NYSE:FIS) is a technology company that provides services to merchants, banks, and capital markets businesses. It was founded in 1968 and is placed second on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Fidelity National Information Services, Inc. shares have gained about 43.75% over the last 12 months.
On August 17, JPMorgan analyst Tien-Tsin Huang raised his price target on Fidelity National Information Services, Inc. to $160 from $153 and kept an “Overweight” rating on the shares. On August 4, Fidelity National Information Services, Inc. announced earnings for the second quarter of 2021. It posted earnings per share of $1.61, beating the market predictions by $0.06. Revenue over the period was $3.48 billion, surpassing the estimates by $90 million.
The hedge fund managed by Andrew Immerman and Jeremy Schiffman owns 2.22 million shares in Fidelity National Information Services, Inc., worth $314.65 million, representing 6.77% of their portfolio. Palestra Capital Management has increased its stake in the firm by 4% in the second quarter of 2021. There were 72 hedge funds in our database that held stakes in Fidelity National Information Services, Inc. in the second quarter of 2021, compared to 74 funds in the previous quarter.
Baron Funds, in its fourth-quarter 2020 investor letter, mentioned Fidelity National Information Services, Inc. (NYSE: FIS). Here is what the fund said:
“Weakness in IT was largely due to share price declines from payment services provider Fidelity National Information Services, Inc. Fidelity National’s stock underperformed because of revenue headwinds from the pandemic as reduced travel and spending activity led to lower payment processing volumes. Management believes these headwinds are temporary and expects growth to accelerate next year.”
1. Alliance Data Systems Corporation (NYSE:ADS)
Immerman and Schiffman’s Stake Value: $350,945,000
Percentage of Andrew Immerman and Jeremy Schiffman’s 13F Portfolio: 7.55%
Number of Hedge Fund Holders: 34
Alliance Data Systems Corporation (NYSE:ADS) is a data-driven marketing, loyalty, and payment solutions provider for big consumer-based businesses. The company was founded in 1996, and it stands first on the list of 10 tech stock picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. Alliance Data Systems Corporation presently has a market capitalization of $4.8 billion and was able to deliver 112.44% return in the past 12 months.
On August 31, BofA analyst Mihir Bhatia upgraded Alliance Data Systems Corporation to “Buy” from “Neutral” and gave his price target of $121.
In the second quarter of 2021, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management owned 3.37 million shares in Alliance Data Systems Corporation, worth $350.95 million. The huge investment covers an impressive 7.55% of the fund’s portfolio. Alliance Data Systems Corporation saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions reduced to 34 in the second quarter of 2021 compared to 36 positions in the previous quarter.
Alphyn Capital Management, in its fourth-quarter 2020 investor letter, mentioned Alliance Data Systems Corporation (NYSE: ADS). Here is what the fund said:
“My investment in Alliance Data Systems was a mistake, as mentioned in my Q1 letter. I allowed myself to be drawn to management’s narrative and was not critical enough of their excuses for poor performance. I was also heavily influenced by the notion that the valuation appeared cheap on a price-to-free cash flow basis. As I should have better remembered from my investment banking days in the early 2000’s when I was involved with IPOs, the stock market seeks growth and does not attribute high terminal value to stagnating companies, especially when management teams have lost the market’s confidence. While this seems obvious in hindsight, the lesson is to act more decisively in cutting a “bad” position in the future.”
You can also take a peek at 15 Best New Tech Stocks to Buy Now and 10 Best Tech Stocks to Buy According to Japanese Billionaire Masayoshi Son
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This article is originally published at Insider Monkey.
