Below we take a look at The 5 Stocks Billionaire Louis Bacon Can’t Stop Buying. For our methodology and a more comprehensive list of the billionaire money manager’s highest conviction stock holdings, please see The 10 Stocks Billionaire Louis Bacon Can’t Stop Buying.
5. MGIC Investment Corporation (NYSE:MTG)
Value of Moore Capital Management‘s 13F Position: $38.2 million
Number of Hedge Fund Shareholders: 34
Louis Bacon’s Moore Capital Management took a large new stake in mortgage insurance provider MGIC Investment Corporation (NYSE:MTG) in the fourth quarter. The billionaire money manager pared back the size of the position slightly in Q1, ending the quarter with 2.82 million shares of MTG in his fund’s 13F portfolio. Arrowstreet Capital owns the largest MTG position among the funds tracked by Insider Monkey, being long 5.79 million shares on March 31.
MGIC Investment Corporation (NYSE:MTG) shares have sunk well below their book value, losing 11% this year, with the market fearful of how mortgage insurers will fare with a recession looming in addition to a housing slowdown. That prompted RBC Capital analyst Mark Dwelle to upgrade MTG shares to ‘Outperform’ from ‘Sector Perform’ last month, in the belief that they will eventually retrace towards their book value of $14.75.
The FPA Queens Road Small Cap Value Fund believes MGIC Investment Corporation (NYSE:MTG)‘s valuation is attractive enough to offset some of the aforementioned risks, saying this about the company in its Q4 2021 investor letter:
“We continued to add to mortgage insurer MGIC Investment Corp. The much-maligned private mortgage insurance market is not without its risks, most notably regulatory risk. The risks are real, but we think they are overblown and not existential. The company trades at close to our estimate of adjusted net tangible assets, which protects our downside. The company has $2.5 billion in excess capital, some of which will be used to accelerate its share buybacks. We generally aren’t supportive of large buyback programs, but we believe it’s a smart move in this situation. The company’s tangible net value and attractive valuation more than offset our concerns of increased competition and regulatory risk.”
4. Palo Alto Networks Inc (NYSE:PANW)
Value of Moore Capital Management‘s 13F Position: $54.1 million
Number of Hedge Fund Shareholders: 87
Louis Bacon was betting big on cybersecurity stocks in Q1 amid the Russian invasion of Ukraine, hiking his stake in Palo Alto Networks Inc (NYSE:PANW) by 231% during the quarter to 86,881 shares. Other hedge funds were buying up the stock as well, as their ownership stakes in PANW jumped by 22% during the first quarter. Philippe Laffont’s Coatue Management was among the group of funds adding Palo Alto to their 13F portfolios in Q1.
Palo Alto Networks Inc (NYSE:PANW) grew revenue by 29% year-over-year to $1.4 billion in its latest fiscal quarter ended April 30, while billings rose by 40% to $1.8 billion. The strong quarter and demand allowed the company to raise its full-year revenue, billings, and EPS guidance. The company generated $1.31 billion in free cash flow during the first nine months of its fiscal 2022 and is well positioned to return some of that excess cash to shareholders in the form of buybacks.
The ClearBridge Investments Large Cap Growth Strategy was thinking along the same lines as many other hedge funds, having this to say about Palo Alto Networks Inc (NYSE:PANW) in its Q1 2022 investor letter:
“The portfolio also saw solid performance from cybersecurity names Palo Alto Networks (NYSE:PANW) which is gaining prominence as the risk of global cyberattacks increases as part of the Russian offensive. On an individual stock basis, leading contributors to absolute returns in the first quarter included positions in Palo Alto Networks.”
3. CrowdStrike Holdings Inc (NASDAQ:CRWD)
Value of Moore Capital Management‘s 13F Position: $56.1 million
Number of Hedge Fund Shareholders: 80
Louis Bacon has been a shareholder of CrowdStrike Holdings Inc (NASDAQ:CRWD) since mid-2020, but the billionaire money manager took his investment in the cybersecurity company to a new level in the first quarter of 2022, increasing his stake by 646% to 246,903 shares. CrowdStrike further gained in hedge fund popularity in Q1 as it closes in on becoming one of the 30 Most Popular Stocks Among Hedge Funds.
CrowdStrike Holdings Inc (NASDAQ:CRWD) is bullish on its market opportunity, anticipating its total addressable market will top $100 billion by 2025. Cybersecurity spending certainly appears to be under no threat given cyberattacks were ranked as the top concern among CEOs surveyed by PwC, even more so than inflation or a potential recession.
CrowdStrike has had no trouble attracting new customers, growing that mark by 65% to 16,325 in its fiscal 2022 year. It’s also retaining those customers and growing the revenue they generate at impressive rates (98% and over 120% respectively).
The Carillon Eagle Mid Cap Growth Fund likes CrowdStrike Holdings Inc (NASDAQ:CRWD)’s prospects in a hostile global environment, discussing the company in its Q1 2022 investor letter:
“CrowdStrike (NASDAQ:CRWD), a security software platform designed to protect information technology assets and cloud workloads, delivered strong earnings results with solid recurring revenue, customer growth, and profitability. We expect strong demand to continue, largely in part due to the elevated cyber security threat environment as Russia may seek to attack governments and enterprises in retaliation for economic sanctions imposed in response to its attack on Ukraine.”
2. Luminar Technologies Inc (NASDAQ:LAZR)
Value of Moore Capital Management‘s 13F Position: $63.3 million
Number of Hedge Fund Shareholders: 16
Louis Bacon hiked his fund’s stake in autonomous vehicle software company Luminar Technologies Inc (NASDAQ:LAZR) by 12% during Q1 to 4.05 million shares. Bacon began building a stake in the company in the second quarter of 2021, a few months after it went public via an SPAC merger, and the stock has rapidly become one of his favorites. Hedge fund ownership of LAZR dipped by 24% during the first quarter.
Luminar Technologies Inc (NASDAQ:LAZR), which joined the Russell 2000 index in late June, has developed an advanced light detection and ranging (LIDAR) system that carmakers with autonomous driving ambitions are keen on. The company has deals with eight of the top ten carmakers in the world and more than 40 other commercial partners.
Citi analyst Itay Michaeli has a ‘Buy’ rating on Luminar Technologies Inc (NASDAQ:LAZR) shares, but lowered his price target on them to $24 from $31 in early May following the company’s Q1 business update. Given management’s commentary, the analyst now anticipates greater operating losses for the company in 2022 than previously expected.
1. Fisker Inc (NYSE:FSR)
Value of Moore Capital Management‘s 13F Position: $109 million
Number of Hedge Fund Shareholders: 16
Billionaire Louis Bacon’s top stock pick by a substantial amount is electric carmaker Fisker Inc (NYSE:FSR), which Moore Capital owned 8.45 million shares of on March 31, up 1% quarter-over-quarter. Other hedge funds were pulling their money out of the company in Q1, as there were just 16 hedge funds long FSR at the end of the quarter, down from 21 at the start of it. Billionaire George Soros’ Soros Fund Management was among the funds selling off their positions in FSR during the first quarter.
Fisker Inc (NYSE:FSR) shares are down by 47% this year due to a confluence of market-related and other factors, most notably the decreased investor appetite for risk. The company also disappointed investors in May when it announced that it would raise $350 million through a share sale, which came at a time when shares were already down by 40% this year.
Fisker Inc (NYSE:FSR) plans to start production of its Fisker Ocean all-electric SUV in November, for which it has already surpassed 50,000 orders. Fisker expects to deliver its 5,000 launch edition Fisker Ocean Ones by next September, and has reportedly begun asking early reservation holders for non-refundable $5,000 deposits. The company has another planned EV that will be revealed in the latter half of next year, with production of that vehicle starting up in 2024.
For more of the latest stock picks worth considering for your portfolio, check out 10 Best Monthly Dividend Stocks to Buy in July and 10 Stocks to Buy According to Stephen DuBois’ Camber Capital Management.
Disclosure: None.
