In this article, we discuss the top 10 stock picks of Frank Fu’s CaaS Capital.
Frank Fu’s early career was devoted to methods of trading that relied on arithmetic rather than networking. He then shifted to the United States in the early 2000s to study at Cornell University, where he earned a bachelor’s degree in management research and industrial engineering as well as a master’s degree in financial engineering in 2006, after which he worked for two years at Susquehanna International Group.
Frank Fu, a former partner at Laurion Capital for over 11 years, started Caas Capital, a New York-based hedge fund, in May 2019. The word “CaaS” is an abbreviation for “capital as a service”. It invests in practically every industry. CaaS Capital’s basic investment philosophies include pragmatism and evidence-based investment judgments. Before making an investment choice, the hedge fund uses machine learning and quantitative analysis to sort through the firms’ data.
The three most prominent companies that the hedge fund has invested in as of the first quarter of 2022 include Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Adobe Inc. (NASDAQ:ADBE).
CaaS Capital has 314 shares of Tesla, Inc. (NASDAQ:TSLA) as of Q1 2022. On June 1, Goldman Sachs analyst Mark Delaney decreased his price objective on Tesla, Inc. (NASDAQ:TSLA) from $1,200 to $1,000 while maintaining a Buy rating. In addition, he lowered auto and industrial technology estimates and pricing targets in the United States to represent future supply chain constraints in the short term accurately and worsening demand in the medium term.
Photo by Nicholas Cappello on Unsplash
Microsoft Corporation (NASDAQ:MSFT) is a new arrival in Frank Fu’s Q1 portfolio, as his hedge fund bought about 831 shares of the company, valued at $256,000. Microsoft Corporation (NASDAQ:MSFT) shares are up 9.94% over the last 12 months as of June 3.
Another stock that was added in the first quarter to Frank Fu’s portfolio was Adobe Inc. (NASDAQ:ADBE), where he purchased 165 shares. With deteriorating economic headwinds and the approaching possibility of a recession, Jefferies analyst Brent Thill decreased his price objective on Adobe Inc. (NASDAQ:ADBE) to $550 from $570 while maintaining a Buy recommendation on May 23.
Our Methodology
With this context in mind, let’s start our list of top 10 stock picks of Frank Fu’s CaaS Capital. We selected these stocks from the Q1 portfolio of Fu’s hedge fund.
Top Stock Picks of Frank Fu’s CaaS Capital
10. Kyndryl Holdings, Inc. (NYSE:KD)
CaaS Capital’s Stake Value: $12,058,000
Percentage of CaaS Capital’s 13F Portfolio: 0.49%
Number of Hedge Fund Holders: 25
Kyndryl Holdings, Inc. (NYSE:KD) is a holding corporation. Its subsidiaries deliver apps, data, AI, cloud, core enterprise, digital workplace, security, and other related services. Kyndryl Holdings, Inc. (NYSE:KD) and Cisco Systems, Inc. (NASDAQ:CSCO) announced a technical agreement on June 2 to help enterprise clients accelerate their shift to data-driven enterprises by integrating Cisco technology with Kyndryl managed services.
Even though Frank Fu’s hedge fund slashed its stake in Kyndryl Holdings, Inc. (NYSE:KD) by 44% in the first quarter of 2022, it still owned 919,085 shares of the company, worth $12.06 million. Kyndryl Holdings, Inc. (NYSE:KD) has featured on Fu’s portfolio since the fourth quarter of 2021.
Elite hedge fund managers reduced their net holdings slightly in Kyndryl Holdings, Inc. (NYSE:KD) at the end of the first quarter. As a result, 25 hedge funds in the database of Insider Monkey held stakes worth $119.30 million in Kyndryl Holdings, Inc. (NYSE:KD) at the end of the first quarter of 2022, down from 27 the preceding quarter worth $186.90 million.
Kyndryl Holdings, Inc. (NYSE:KD) is one of the notable stock picks of Frank Fu’s CaaS Capital, just like Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Adobe Inc. (NASDAQ:ADBE).
9. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS)
CaaS Capital’s Stake Value: $12,703,000
Percentage of CaaS Capital’s 13F Portfolio: 0.52%
Number of Hedge Fund Holders: 36
Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is a clinical-stage biopharmaceutical company that develops novel therapeutics and immunotherapies to treat complement-dependent autoimmune and inflammatory diseases. As of the first quarter, Frank Fu’s CaaS Capital held a $12.70 million stake in Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), which accounted for 0.52% of the firm’s Q1 investment portfolio.
Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) declared on June 1 that it has submitted an NDA to the FDA for intravitreal pegcetacoplan, an experimental targeted C3 therapy, to treat geographic atrophy caused by age-related macular degeneration. Following the Q1 results, Raymond James analyst Steven Seedhouse cut his price objective on Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) to $102 from $114 and maintained a Strong Buy rating on the stock. According to Seedhouse, Apellis’ current mood is upbeat, based on the company’s recent marketing meetings on the West Coast.
At the end of the first quarter of 2022, 36 hedge funds in the database of Insider Monkey reported owning stakes in Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), up from 26 funds in the previous quarter. The total value of these stakes is over $1.29 billion. Kurt Von Emster’s VenBio Select Advisor is the leading Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) stakeholder, with 9.45 million shares valued at $480.16 million.
8. Match Group, Inc. (NASDAQ:MTCH)
CaaS Capital’s Stake Value: $14,119,000
Percentage of CaaS Capital’s 13F Portfolio: 0.58%
Number of Hedge Fund Holders: 55
Match Group, Inc. (NASDAQ:MTCH) is an American internet and technology firm that owns and manages over 45 worldwide dating sites, including Tinder, Match.com, Meetic, OkCupid, Hinge, PlentyOfFish, Ship, and OurTime. In Q1 2022, Frank Fu owned 129,842 shares in Match Group, Inc. (NASDAQ:MTCH). The investment covered 0.58% of the fund’s portfolio.
Matt Farrell of Piper Sandler maintained an Overweight rating on Match Group, Inc. (NASDAQ:MTCH) on May 20. According to the analyst, Alphabet Inc. (NASDAQ:GOOG)’s concessions are a positive step toward Match’s long-term aim of a healthier App Store ecosystem. In addition, on May 22, Google and Match Group, Inc. (NASDAQ:MTCH) negotiated an interim arrangement that would enable Match Group’s applications to stay on the Google Play Store while accepting other payment methods.
Hedge funds are becoming hopeful. In the first quarter of 2022, the number of long hedge fund bets on Match Group, Inc. (NASDAQ:MTCH) increased to 55 compared to 53 in the previous quarter.
In its fourth quarter 2021 investor letter, Arch Capital Management mentioned Match Group, Inc. (NASDAQ:MTCH). Here is what the fund said:
“We are long Match Group stock because it is the dominant player in online dating, giving it immense and growing power over the population of single people worldwide. This may seem like a callous way to describe the business, but it is the proper way to look at it from an investment lens.
For those that are unaware, Match Group owns every popular online dating property outside of Bumble, Badoo, and Grindr. Its apps and services include Tinder, Hinge, Match.com. BLK, Chispa, and many others…
In conjunction with this letter, we have published a report on Match Group. You can find it here: https://www.archcapitalfund.com/letters”
7. Analog Devices, Inc. (NASDAQ:ADI)
CaaS Capital’s Stake Value: $15,740,000
Percentage of CaaS Capital’s 13F Portfolio: 0.64%
Number of Hedge Fund Holders: 67
Analog Devices, Inc. (NASDAQ:ADI) is a high-performance semiconductor firm that designs, develops, manufactures, and markets integrated circuits (ICs) worldwide. Analog Devices, Inc. (NASDAQ:ADI)’s price objective was lifted to $203 from $194 on May 19 by Truist analyst William Stein. He also assigned a Buy rating to the stock after the company revealed an excellent first quarter highlighted by cyclical performance and M&A.
By the end of the first quarter of 2022, Frank Fu’s CaaS Capital held 95,292 Analog Devices, Inc. (NASDAQ:ADI) shares worth $15.74 million and represented 0.64% of its portfolio. During the same period, 67 out of the 912 hedge funds tracked by Insider Monkey held a stake in Analog Devices, Inc. (NASDAQ:ADI).
Egerton Capital Limited was the most significant shareholder of Analog Devices, Inc. (NASDAQ:ADI), with a stake worth $615.90 million as of the end of March 2022. Trailing Egerton Capital Limited was First Eagle Investment Management, which amassed a stake valued at $569.33 million.
6. TriNet Group, Inc. (NYSE:TNET)
CaaS Capital’s Stake Value: $19,672,000
Percentage of CaaS Capital’s 13F Portfolio: 0.8%
Number of Hedge Fund Holders: 26
TriNet Group, Inc. (NYSE:TNET) provides small and mid-sized enterprises with human resources solutions. TriNet Group, Inc. (NYSE:TNET) is one of the latest acquisitions of CaaS Capital in Q1 2022. The hedge fund purchased shares worth over $19.67 million in the company, representing 0.8% of its 13F portfolio.
William Von Mueffling’s Cantillon Capital Management held almost 3.59 million shares of TriNet Group, Inc. (NYSE:TNET) in the first quarter of 2022, making his investment firm the leading stakeholder of TriNet Group, Inc. (NYSE:TNET) as per Insider Monkey’s records.
By the end of the first quarter of 2022, Insider Monkey found TriNet Group, Inc. (NYSE:TNET) to be a part of 26 hedge fund portfolios. These funds’ total stakes in the firm are worth $584.05 million, compared to $531.74 million with 29 positions in the previous quarter.
Apart from TriNet Group, Inc. (NYSE:TNET), Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Adobe Inc. (NASDAQ:ADBE) are notable companies that captured CaaS Capital’s interest.
5. Enphys Acquisition Corp. (NYSE:NFYS)
CaaS Capital’s Stake Value: $19,788,000
Percentage of CaaS Capital’s 13F Portfolio: 0.81%
Number of Hedge Fund Holders: N/A
Enphys Acquisition Corp. (NYSE:NFYS) was founded as a blank check corporation to execute a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or other similar business combination with one or more enterprises. Jorge de Pablo, Carlos Guimarães, Pär Lindström, and Matas de Buján founded the company on March 3, 2021. While Enphys Acquisition Corp. (NYSE:NFYS) may pursue a business combination target in any industry or geographic location, it plans to concentrate on companies in Ibero-America that have an energy transition and sustainability strategy, particularly renewable energy.
Enphys Acquisition Corp. (NYSE:NFYS) announced the pricing of its initial public offering (IPO) of 30 million shares at $10.00 per unit on October 5, 2021. Enphys Acquisition Corp. (NYSE:NFYS) is one of the top stock picks of Frank Fu as of Q1, with his hedge fund owning 2.05 million shares worth $19.79 million, representing 0.81% of CaaS Capital’s total investments.
4. The Charles Schwab Corporation (NYSE:SCHW)
CaaS Capital’s Stake Value: $21,813,000
Percentage of CaaS Capital’s 13F Portfolio: 0.89%
Number of Hedge Fund Holders: 78
The Charles Schwab Corporation (NYSE:SCHW), a savings and loan holding company, provides wealth management, securities brokerage, banking, asset management, custody, and financial advising services. CaaS Capital added The Charles Schwab Corporation (NYSE:SCHW) to its portfolio in the first quarter by buying 258,720 shares.
Analyst Brian Bedell of Deutsche Bank assigned the stock a Buy rating on May 19 but cut his price objective on The Charles Schwab Corporation (NYSE:SCHW) to $84 from $98. According to Bedell, fresh buying opportunities are emerging in the brokerage, asset management, and exchange sectors despite the stock market’s decline.
The Charles Schwab Corporation (NYSE:SCHW)’s largest investor is Natixis Global Asset Management’s Harris Associates, with 12.04 million shares worth $1.01 billion. During the first quarter of 2022, a poll of 912 hedge funds conducted by Insider Monkey revealed that 78 had held a stake in The Charles Schwab Corporation (NYSE:SCHW), up from 72 in the preceding quarter.
Baron Funds, in its Q1 2022 investor letter, mentioned The Charles Schwab Corporation (NYSE:SCHW). Here is what the fund said:
“Outperformance of the Fund’s investments in Communication Services, Financials, and Industrials and lower exposure to the lagging Consumer Discretionary sector added the most value. Within Financials, higher exposure to this outperforming sector and gains from online brokerage firm The Charles Schwab Corp (NYSE:SCHW) bolstered relative results. Schwab’s shares gained because of the positive impact higher interest rates will have on its future earnings.”
3. Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR)
CaaS Capital’s Stake Value: $22,298,000
Percentage of CaaS Capital’s 13F Portfolio: 0.91%
Number of Hedge Fund Holders: 27
Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) is a biopharmaceutical business that develops drugs to cure diseases that are difficult to treat by silencing the genes that cause them. Among the hedge funds tracked by Insider Monkey, 27 funds reported owning stakes worth $221.66 million in Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) at the end of Q1 2022, an increase as compared to 26 funds in the previous quarter, holding stakes in the company valued at approximately $186.38 million.
H.C. Wainwright analyst Patrick Trucchio maintained a Buy rating on Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) and boosted his price objective to $110 from $100 on June 3. According to Trucchio, Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) gave helpful information on pulmonary targeted RNA interference therapies candidates for muco-obstructive illnesses, disruptive inflammatory pulmonary diseases, and chronic pulmonary fibrosis.
Marc Schneidman’s Aquilo Capital Management is the biggest shareholder of Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR), with 1.05 million shares worth $48.17 million. In addition, Frank Fu initiated a new stake in Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) in the first quarter of 2022, buying 484,849 shares of the bio-pharma company, worth $22.30 million.
Here is what Carillon Tower Advisers has to say about Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) in its Q3 2021 investor letter:
“Arrowhead Pharmaceuticals develops gene silencing medicines used in the treatment of intractable diseases. Shares of the company’s stock fell after the company announced it was immediately pausing its phase 1/2 clinical study of a drug to be used for the treatment of cystic fibrosis, following a preliminary update that showed signs of local lung inflammation in a chronic toxicology study performed on rats.”
2. Constellation Energy Corporation (NASDAQ:CEG)
CaaS Capital’s Stake Value: $27,460,000
Percentage of CaaS Capital’s 13F Portfolio: 1.12%
Number of Hedge Fund Holders: 47
Constellation Energy Corporation (NASDAQ:CEG) generates, distributes, and sells clean and renewable energy products and solutions. On May 12, Constellation Energy Corporation (NASDAQ:CEG) published earnings for the first quarter of 2022, announcing a revenue of $5.59 million, up 0.5% year over year.
Wells Fargo analyst Neil Kalton decreased his price objective on Constellation Energy Corporation (NASDAQ:CEG) from $75 to $70 on May 13 while maintaining an Overweight rating. Despite lowering his price target, he maintained his optimistic stance in the wake of the first quarter report, advising investors to take advantage of the stock’s low price.
By the end of the first quarter of 2022, Insider Monkey identified 47 hedge funds that had stakes in Constellation Energy Corporation (NASDAQ:CEG). The total value of these stakes was over $1.12 billion. Frank Fu’s hedge fund held 488,181 shares of Constellation Energy Corporation (NASDAQ:CEG) as of the end of the first quarter of 2022, which were worth $27.46 million and represented 1.12% of his portfolio.
1. Albertsons Companies, Inc. (NYSE:ACI)
CaaS Capital’s Stake Value: $33,250,000
Percentage of CaaS Capital’s 13F Portfolio: 1.36%
Number of Hedge Fund Holders: 39
Albertsons Companies, Inc. (NYSE:ACI) operates a grocery and pharmacy chain. Ivan Feinseth, a Tigress Financial analyst, boosted his price objective on Albertsons Companies, Inc. (NYSE:ACI) to $32 from $27 on April 29 and reiterated a Neutral rating on the stock.
Among the hedge funds tracked by Insider Monkey, 39 funds were bullish on Albertsons Companies, Inc. (NYSE:ACI), with collective stakes worth approximately $5.66 billion, up from 29 funds in the prior quarter, holding stakes in the company valued at roughly $4.93 billion.
CaaS Capital held 1 million shares in Albertsons Companies, Inc. (NYSE:ACI) as of the first quarter of 2022. The hedge fund’s investment in the company accounted for 1.36% of its portfolio in the first quarter, up from 0.28% in the fourth quarter of 2021. Also, as of the first quarter of 2022, Cerberus Capital Management is the leading stakeholder of Albertsons Companies, Inc. (NYSE:ACI), with over 151.82 million shares.
You can also take a peek at 10 Stocks to Buy According to GuardCap Asset Management and 9 Stocks to Buy in 2022 According to Mark Massey’s AltaRock Partners
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Disclosure: None. Top 10 Stock Picks of Frank Fu’s CaaS Capital is originally published on Insider Monkey.
