In this article, we discuss the top 10 stock picks of Jack Ripsteen’s Potrero Capital Research.
Jack Ripsteen founded Potrero Capital Research in 2003, and serves as the managing member at the California-based investment management firm. Before starting his own investment firm, Ripsteen was the senior vice president at Hambrecht & Quist, from 1998 to 2002. He also worked as a senior research analyst at JPMorgan Chase & Co. (NYSE:JPM). Ripsteen graduated from UCLA, and is on the Board of Trustees for the Head-Royce School.
The discretionary assets under management at Potrero Capital Research amount to roughly $429.1 million and the firm’s 13F investment portfolio is valued at $416.19 million. Potrero Capital Research has a well-defined investment approach.
Some of the most notable stocks in Ripsteen’s Q2 portfolio are Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:FB), and Twitter, Inc. (NYSE:TWTR), among others discussed in detail below. These stocks are highly sought after by hedge funds as well.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
With this context in mind, let’s discuss the top 10 stock picks of Jack Ripsteen’s Potrero Capital Research. We compiled this list using the Q2 portfolio of Potrero Capital Research, ranking each stock according to the value of the holding in the investment portfolio.
Top Stock Picks of Jack Ripsteen’s Potrero Capital Research
10. Visa Inc. (NYSE:V)
Stake Value of Potrero Capital Research: $11,865,000
Percentage of Potrero Capital’s 13F Portfolio: 2.85%
Number of Hedge Fund Holders: 162
A multinational financial services corporation from California, Visa Inc. (NYSE:V) is best known for allowing digital transfer of money via its credit cards, debit cards, and prepaid cards, on a global scale. The company also deals with expense management, intelligence solutions, and next generation commerce. Visa Inc. (NYSE:V) is one of the top stock picks of Jack Ripsteen’s Potrero Capital Research.
Potrero Capital Research owns 50,743 shares in Visa Inc. (NYSE:V), worth $11.86 million, making up 2.85% of the firm’s Q2 portfolio.
On October 26, Visa Inc. (NYSE:V) announced Q3 earnings. The EPS at $1.62 topped estimates by $0.08. The revenue also exceeded analysts’ expectations by $45.89 million at $6.56 billion.
Visa Inc. (NYSE:V) is extremely popular with the smart money. At the end of June, 162 hedge funds tracked by Insider Monkey were bullish on Visa Inc. (NYSE:V), down from 164 in the previous quarter.
Mizuho analyst Dan Dolev kept a Buy rating on Visa Inc. (NYSE:V), but lowered the price target from $275 to $255. He believes that higher incentive payments in FY22 will seriously impact the stock, and these incentive payments are unlikely to change the payment ecosystem.
Like Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:FB), and Twitter, Inc. (NYSE:TWTR), Visa Inc. (NYSE:V) is one of the top stocks in Ripsteen’s Q2 investment portfolio.
Here is what Polen Capital has to say about Visa Inc. (NYSE:V) in its Q3 2021 investor letter:
“Visa Inc. faced pressure as some believe these “old payment infrastructure” businesses will be disrupted by newer fintech companies using blockchain, buy now, pay later (BNPL), or other innovations to provide better/cheaper payment services. However, we believe that some of these technologies have meaningful limitations which could benefit existing payment networks. For example, BNPL transactions are often funded with cards and turn a one-time transaction into many smaller ones with more transaction fees for Visa. Just like with regulation, we continually monitor for competition and technological disruption. As of now, we do not see a significant risk in the foreseeable future to this company.”
9. Twitter, Inc. (NYSE:TWTR)
Stake Value of Potrero Capital Research: $12,535,000
Percentage of Potrero Capital’s 13F Portfolio: 3.01%
Number of Hedge Fund Holders: 89
Twitter, Inc. (NYSE:TWTR) is a social networking platform that is actively used by individuals around the world, including celebrities, to express their thoughts, share memes, connect with audiences, and network. Twitter, Inc. (NYSE:TWTR) has 396.5 million users as of the second quarter of 2021, 206 million of whom are active users, engaging on the platform every day. Twitter, Inc. (NYSE:TWTR) is one of the top stocks in Jack Ripsteen’s Q2 portfolio.
Potrero Capital Research owns 182,172 shares in Twitter, Inc. (NYSE:TWTR), valued at $12.53 million, representing 3.01% of the firm’s Q2 portfolio.
Twitter, Inc. (NYSE:TWTR) reported Q3 earnings on October 26, with the EPS missing estimates by -$0.72 at -$0.54. The actual revenue exceeded estimated revenue by $1.02 million at $1.08 billion.
On October 28, BMO Capital analyst Daniel Salmon kept a Market Perform rating on Twitter, Inc. (NYSE:TWTR), but lowered the price target from $70 to $65. Even though the brand exposure resulted in a less volatile performance in Q3, the expenses for 2021 were higher than expected, resulting in lower margins for Twitter, Inc. (NYSE:TWTR).
At the end of June, 89 hedge funds were bullish on Twitter, Inc. (NYSE:TWTR).
Here is what ClearBridge Investments has to say about Twitter, Inc. (NYSE:TWTR) in its Q2 2021 investor letter:
“Not every portfolio company will neatly fit into one of these four growth segments and some may move from one to another over time. Social media platform Twitter could be considered an improving growth story due to the initiatives put in place to grow and better monetize its user base. With the global return of live events and sports causing a rebound in advertising, combined with other new services beginning to thrive, this is a company with the fundamentals to be categorized as a disruptor.”
8. Talend S.A. (NASDAQ:TLND)
Stake Value of Potrero Capital Research: $13,225,000
Percentage of Potrero Capital’s 13F Portfolio: 3.17%
Number of Hedge Fund Holders: 36
Talend S.A. (NASDAQ:TLND) is a software company that specializes in pre-packaged software for businesses, big data, and cloud-based solutions. The top clients of Talend S.A. (NASDAQ:TLND) include L’Oréal S.A. (OTC:LRLCY), Domino’s Pizza, Inc. (NYSE:DPZ), Anheuser-Busch InBev SA/NV (NYSE:BUD), Toyota Motor Corporation (NYSE:TM), and Citigroup Inc. (NYSE:C), among others.
Jack Ripsteen owns 201,603 shares in Talend S.A. (NASDAQ:TLND), worth $13.22 million, making up 3.17% of his Q2 portfolio.
By the end of the second quarter, 36 hedge funds in Insider Monkey’s exclusive database reported owning stakes in Talend S.A. (NASDAQ:TLND), down from 45 in Q1.
Like Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:FB), and Twitter, Inc. (NYSE:TWTR), Talend S.A. (NASDAQ:TLND) is one of the notable stocks in Jack Ripsteen’s 13F portfolio.
7. Bally’s Corporation (NYSE:BALY)
Stake Value of Potrero Capital Research: $18,280,000
Percentage of Potrero Capital’s 13F Portfolio: 4.39%
Number of Hedge Fund Holders: 30
Bally’s Corporation (NYSE:BALY) is an American entertainment enterprise offering casinos, gambling, online sports betting, and iGaming experiences to customers. Bally’s Corporation (NYSE:BALY) owns 14 casinos in 10 states, a horse track in Colorado, and many digital platforms for sports betting and online gaming.
Jack Ripsteen’s stake in Bally’s Corporation (NYSE:BALY) as of Q2 is worth $18.28 million, which represents 4.39% of his 13F portfolio.
As of the end of the second quarter, 30 hedge funds monitored by Insider Monkey held stakes in Bally’s Corporation (NYSE:BALY), up from 18 in the previous quarter.
Goldman Sachs analyst Stephen Grambling on October 27 set a $52 price target on Bally’s Corporation (NYSE:BALY) with a Neutral rating. He believes that the stock has limited catalysts until digital assets are properly launched.
6. Meta Platforms, Inc. (NASDAQ:FB)
Stake Value of Potrero Capital Research: $18,852,000
Percentage of Potrero Capital’s 13F Portfolio: 4.52%
Number of Hedge Fund Holders: 266
Meta Platforms, Inc. (NASDAQ:FB), previously known as Facebook, is one of the top social networking sites that went through a major corporate rebranding in October 2021. The social media giant which owns popular networking platforms like Facebook, Instagram, and WhatsApp, has rebranded the parent company because Zuckerberg’s vision for the brand is to create a “metaverse”, which will include marvels of 3D virtual spaces and augmented reality, powered by the internet. Meta Platforms, Inc. (NASDAQ:FB) is one of the top stocks in the Q2 investment portfolio of Potrero Capital Research.
Ripsteen owns 54,218 shares in Meta Platforms, Inc. (NASDAQ:FB), which are valued at $18.85 million. The stock accounts for 4.52% of Ripsteen’s Q2 portfolio.
Meta Platforms, Inc. (NASDAQ:FB)’s Q3 EPS came in at $3.22, beating estimates by $0.04 as of October 25. The revenue missed analyst expectations by -$513.23 million at $29.01 billion.
Piper Sandler analyst Thomas Champion stated that the rebranding by Meta Platforms, Inc. (NASDAQ:FB) was an extremely risky and bold decision, representing the company’s commitment to the AR/VR vision for the future. While the analyst commends the bold move, on October 28, he kept a Neutral rating on Meta Platforms, Inc. (NASDAQ:FB) with a $385 price target.
Here is what Polen Capital has to say about Facebook, Inc. (NASDAQ:FB) in its Q3 2021 investor letter:
“Facebook’s stock was pressured on concerns about regulation in the quarter. We are constantly monitoring the potential regulatory risks to Facebook (and all of our holdings). At this point, we see very little chance that regulation changes Facebook’s business model in a meaningful and adverse way. Regarding the recent data shared by a former Facebook employee and the company itself on some of the unfortunate negative consequences of social media, we recognize these types of issues will inevitably linger in different forms and fashions well into the future. We have been focused on the ability of Facebook to identify and mitigate these negative consequences while amplifying the value users typically cite for its apps across a long list of use cases. We continuously monitor the vibrance of the user base on Facebook’s apps to confirm that value.”
5. Shutterstock, Inc. (NYSE:SSTK)
Stake Value of Potrero Capital Research: $19,526,000
Percentage of Potrero Capital’s 13F Portfolio: 4.69%
Number of Hedge Fund Holders: 18
Shutterstock, Inc. (NYSE:SSTK) provides stock photos, stock music, and stock videos on a global scale. Shutterstock, Inc. (NYSE:SSTK) has a rich library of millions of royalty free photos, vector graphics, video clips, music, and illustrations which can be purchased for licensing. Shutterstock, Inc. (NYSE:SSTK) is one of the top stocks in Jack Ripsteen’s Q2 portfolio.
As of the end of the second quarter, Potrero Capital Research holds 198,899 shares in Shutterstock, Inc. (NYSE:SSTK), valued at $19.52 million.
The third quarter EPS for Shutterstock, Inc. (NYSE:SSTK) was $0.70, beating estimates by $0.12, as reported on October 26. Shutterstock, Inc. (NYSE:SSTK)’s revenue for Q3 was $194.44 million, also exceeding estimated revenue by $8.60 million.
Bernie McTernan, an analyst from Needham, on October 27 kept a Buy rating on Shutterstock, Inc. (NYSE:SSTK), raising the price target from $120 to $145. He believes that product enhancements will allow Shutterstock, Inc. (NYSE:SSTK) to accelerate revenue growth in FY22 and FY23.
Here is what Bernzott Capital Advisors has to say about Shutterstock, Inc. (NYSE:SSTK) in their Q4 2020 investor letter:
“Shutterstock (SSTK): Improved financial results and signs of recovering digital advertising markets both contributed to good stock performance for this provider of stock content. Its transition to a subscription business continues to progress.”
4. Callaway Golf Company (NYSE:ELY)
Stake Value of Potrero Capital Research: $21,278,000
Percentage of Potrero Capital’s 13F Portfolio: 5.11%
Number of Hedge Fund Holders: 39
Callaway Golf Company (NYSE:ELY) manufactures sports equipment on a global scale, specifically gold apparel and equipment. Their main merchandise includes golf balls, clubs, gloves, caps, and bags. Callaway Golf Company (NYSE:ELY) has a separate subsidiary, Callaway Apparel, for its activewear and athleisure line. Callaway Golf Company (NYSE:ELY) reaches customers via its online platform, and through famous golf equipment retailers. It is one of Jack Ripsteen’s top stock picks as of the second quarter.
Potrero Capital Research owns stakes valued at approximately $21.27 million in Callaway Golf Company (NYSE:ELY), representing 5.11% of the firm’s Q2 portfolio.
As of the end of Q2, 39 hedge funds in Insider Monkey’s database of elite funds were long Callaway Golf Company (NYSE:ELY), down from 40 in Q1.
Casey Alexander from Compass Point upgraded Callaway Golf Company (NYSE:ELY) to Buy from Neutral on October 12, with a $33 price target on the stock.
Here is what Bernzott Capital has to say about Callaway Golf Company (NYSE:ELY) in its Q2 2021 investor letter:
“Callaway Golf (ELY): The company is capitalizing on strong demand for golf equipment and recovering traffic at its recently acquired Topgolf unit. Revenues and profits for Callaway and Topgolf are both expected to surpass 2019 levels.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Stake Value of Potrero Capital Research: $21,522,000
Percentage of Potrero Capital’s 13F Portfolio: 5.17%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a multinational tech conglomerate specializing in e-commerce, artificial intelligence, cloud computing, and digital streaming. Amazon.com, Inc. (NASDAQ:AMZN) was recently making headlines because employees were criticizing the overly demanding work culture, being underpaid, and a no vacation policy at the company. As a response to the employee feedback, Amazon.com, Inc. (NASDAQ:AMZN) launched Amazon FamilyFlex on November 3, a program that enables proper work life balance for employees, including parental leave, adoption assistance, the ability to create custom schedules, and swap shifts when feasible. Amazon.com, Inc. (NASDAQ:AMZN) is a top stock in Jack Ripsteen’s Q2 portfolio.
Potrero Capital Research owns 6,256 shares in Amazon.com, Inc. (NASDAQ:AMZN), valued at $21.52 million, representing 5.17% of the firm’s investment portfolio for the second quarter.
Amazon.com, Inc. (NASDAQ:AMZN) announced Q3 EPS on October 28, valued at $6.12. The actual EPS missed estimates by -$2.78. Amazon.com, Inc. (NASDAQ:AMZN)’s revenue was $110.81 billion, also missing analysts’ consensus estimates by -$784.89 million.
Citi analyst Jason Bazinet on November 2 kept a Buy rating on the stock, while lowering Amazon.com, Inc. (NASDAQ:AMZN)’s price target from $4,175 to $4,100. Even though the analyst sees potential for growth in Amazon.com, Inc. (NASDAQ:AMZN)’s B2B services, the price target was lowered to reflect the poor Q3 performance.
Amazon.com, Inc. (NASDAQ:AMZN) is the most popular stock among the hedge funds. At the end of the second quarter, 271 funds were long Amazon.com, Inc. (NASDAQ:AMZN), up from 243 in the first quarter.
Here is what Polen Capital has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter:
“Amazon has also lagged as its revenue growth is slowing on the very difficult comparisons from last year when this behemoth was growing revenue by over 40%. We still expect exceptional long-term growth and significant margin expansion as the fastest growing (and now large) segments of Amazon are also generating the highest margins.”
2. Alphabet Inc. (NASDAQ:GOOG)
Stake Value of Potrero Capital Research: $24,389,000
Percentage of Potrero Capital’s 13F Portfolio: 5.85%
Number of Hedge Fund Holders: 155
Alphabet Inc. (NASDAQ:GOOG) is a tech conglomerate holding company, with subsidiaries like Google, Calico, Sidewalk Labs, Verily, and DeepMind, among others.
Potrero Capital Research owns 9,731 shares in Alphabet Inc. (NASDAQ:GOOG), worth $24.38 million, making up 5.85% of the firm’s Q2 portfolio. Overall, 155 hedge funds owned stakes in the tech conglomerate at the end of June.
The third quarter earnings were reported on October 26 by Alphabet Inc. (NASDAQ:GOOG). The Q3 EPS came in at $27.99, exceeding analysts’ expectations by $4.75. Alphabet Inc. (NASDAQ:GOOG)’s Q3 revenue also beat estimates by $1.83 billion at $65.12 billion.
Morgan Stanley analyst Brian Novak on November 2 raised Alphabet Inc. (NASDAQ:GOOG)’s price target from $3,000 to $3,200 with an Overweight rating. He stated that Q3 performance exceeded expectations, and the free cash flow at Alphabet Inc. (NASDAQ:GOOG) will be sufficient even if the company continues to make expensive investments.
Here is what Alger has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet Inc. was among the top contributors to performance during the third quarter. Alphabet is a leading internet search provider and is a beneficiary in the share shift of advertising dollars from traditional mediums like television, radio and newspapers to digital platforms. The company is a leader in implementing Al, autonomous vehicles and cloud computing it and owns the highly trafficked YouTube property. Alphabet contributed to performance due to a strong quarterly report highlighted by revenue growth that beat consensus expectations across segments. The company’s core search revenues have increased 10% over the past two years, with cloud computing increasing 8%. Results from YouTube also exceeded expectations. When discussing quarterly results, Alphabet management said retail, entertainment and travel were end markets that were particularly strong. The fixed cost structure of Alphabet’s search service resulted in profitability resulting from the increase in revenues being better than expected.”
1. NortonLifeLock Inc. (NASDAQ:NLOK)
Stake Value of Potrero Capital Research: $25,260,000
Percentage of Potrero Capital’s 13F Portfolio: 6.06%
Number of Hedge Fund Holders: 36
NortonLifeLock Inc. (NASDAQ:NLOK) is a cybersecurity company that has been in business for over four decades to prevent identity theft and secure digital data. NortonLifeLock Inc. (NASDAQ:NLOK) has cyber safety products for gamers such as Norton360, Norton AntiVirus, and Norton Secure VPN, among others. It is the largest holding in the investment portfolio of Potrero Capital Research, and ranks first on our list of the top stock picks of Jack Ripsteen.
Ripsteen owns 928,006 shares in NortonLifeLock Inc. (NASDAQ:NLOK), worth $25.26 million, making up 6.06% of his Q2 portfolio.
At the end of June, 36 hedge funds were bullish on NortonLifeLock Inc. (NASDAQ:NLOK), up from 32 in the previous quarter.
You can also take a look at 10 Stocks to Buy in 2021 According to Guy Spier’s Aquamarine Capital and Billionaire Stephen Mandel’s Top 10 Stock Picks.
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Disclosure: None. Top 10 Stock Picks of Jack Ripsteen’s Potrero Capital Research is originally published on Insider Monkey.
