In this article, we discuss the top 10 stock picks of Joe Magyer’s Lakehouse Capital.
Joe Magyer is the co-founder of Lakehouse Capital, having established the Sydney-based investment management firm in 2016. Lakehouse Capital has two primarily managed funds, namely the Lakehouse Small Companies Fund and the Lakehouse Global Growth Fund. The firm invests in small, fast-growing companies across Australia and New Zealand, as well as mid to large cap global companies in developed markets via these managed funds.
Joe Magyer holds a Bachelor’s degree in Business Administration from the University of Georgia and a Master’s in Finance from Georgia State University. He is also a chartered financial analyst. Magyer has experience in investment roles across the US and Australia, having served as the director of research at The Motley Fool Australia. In addition to that, he was the portfolio manager of Australia’s Motley Fool Pro, which is a long-only equity portfolio. Before that, Magyer was the lead advisor of Motley Fool Inside Value, and he also made several contributions to the Australian Financial Review, Livewire, CNBC, and Sky News Business.
Magyer manages a portfolio worth over $177 million at Lakehouse Capital, with a top ten holdings concentration of 91.75%. As per the Q3 13F filings, the largest holding in Joe Magyer’s portfolio is Meta Platforms, Inc. (NASDAQ:FB), which represents 13.39% of his total investments.
Lakehouse Capital’s portfolio, as of September this year, is concentrated in the information technology, industrials, finance, consumer staples, consumer discretionary, and communications sectors. The most notable stocks in Lakehouse Capital’s Q3 portfolio are Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V), among others discussed in detail below.
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Our Methodology
With this context in mind, let’s discuss the top 10 stock picks of Joe Magyer’s Lakehouse Capital. We used Lakehouse Capital’s Q3 portfolio to select the firm’s top stocks.
Top Stock Picks of Joe Magyer’s Lakehouse Capital
10. Avalara, Inc. (NYSE:AVLR)
Lakehouse Capital’s Stake Value: $9,846,000
Percentage of Lakehouse Capital’s 13F Portfolio: 5.56%
Number of Hedge Fund Holders: 29
Avalara, Inc. (NYSE:AVLR), a company offering tax compliance software, is one of Joe Magyer’s top stock picks as of September this year, with his investment firm owning 56,336 shares in Avalara, Inc. (NYSE:AVLR), worth $9.8 million. This stock represents 5.56% of Lakehouse Capital’s Q3 portfolio.
Avalara, Inc. (NYSE:AVLR) posted its Q3 results on November 4. EPS in the period totaled -$0.03, beating estimates by $0.03. The revenue came in at $181.17 million, up 41.67% from the prior-year quarter, exceeding estimates by $10.83 million.
At the end of June, 29 hedge funds reported owning stakes in Avalara, Inc. (NYSE:AVLR), down from 41 in the preceding quarter. The total value of these stakes is over $1 billion. Alkeon Capital Management is the leading stakeholder in Avalara, Inc. (NYSE:AVLR), with 2.86 million shares valued at $500.68 million.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V), Avalara, Inc. (NYSE:AVLR) is a notable stock in Joe Magyer’s Q3 portfolio.
Here is what ClearBridge Investments has to say about Avalara, Inc. (NYSE:AVLR) in its Q2 2021 investor letter:
“Also within IT, we purchased shares of Avalara, a software maker providing cloud-based solutions for transaction tax compliance across global markets. Avalara supports the growth of ecommerce by addressing the complexities of tax calculations and return processing across different tax jurisdictions. Growth drivers include partnerships with Shopify and integration of its software into Adobe and Salesforce platforms.”
9. MarketAxess Holdings Inc. (NASDAQ:MKTX)
Lakehouse Capital’s Stake Value: $12,577,000
Percentage of Lakehouse Capital’s 13F Portfolio: 7.10%
Number of Hedge Fund Holders: 31
MarketAxess Holdings Inc. (NASDAQ:MKTX) is a New York-based financial technology company that allows institutional investors and credit brokers to trade in credit instruments and financial products via its electronic trading platform. As of Q3 2021, Lakehouse Capital holds a $12.5 million stake in MarketAxess Holdings Inc. (NASDAQ:MKTX), which represents 7.1% of the firm’s total investments.
On October 6, Raymond James analyst Patrick O’Shaughnessy lowered the price target on MarketAxess Holdings Inc. (NASDAQ:MKTX) to $500 from $530 and kept an Outperform rating on the shares. This rating reflects the expected Q3 results, trading volume, and fee capture trends.
MarketAxess Holdings Inc. (NASDAQ:MKTX), on October 20, reported its Q3 earnings. EPS for the third quarter equaled $1.52, beating estimates by $0.08. The $162.09 million revenue was down 1.17% as compared to the prior-year quarter, but exceeded analysts’ estimates by $0.73 million.
GuardCap Asset Management is the largest MarketAxess Holdings Inc. (NASDAQ:MKTX) stakeholder as per Insider Monkey’s records, with 1.18 million shares worth $497.8 million. Overall, 31 hedge funds in the database of Insider Monkey were long MarketAxess Holdings Inc. (NASDAQ:MKTX) at the end of June this year, with a total stake value of $605.3 million.
Here is what Baron Funds has to say about MarketAxess Holdings Inc. (NASDAQ:MKTX) in its Q3 2021 investor letter:
“Adverse stock selection in Financials, linked to the underperformance of electronic trading platform MarketAxess Holdings Inc., was somewhat offset by the Fund’s higher exposure to this top performing sector.”
8. Monster Beverage Corporation (NASDAQ:MNST)
Lakehouse Capital’s Stake Value: $14,481,000
Percentage of Lakehouse Capital’s 13F Portfolio: 8.17%
Number of Hedge Fund Holders: 46
Monster Beverage Corporation (NASDAQ:MNST) is an American beverage company that is known for its energy drinks including Monster Energy, Burn, and Relentless, among others. Magyer’s Lakehouse Capital holds a $14.4 million stake in Monster Beverage Corporation (NASDAQ:MNST), which represents 8.17% of the firm’s Q3 portfolio.
At the end of the second quarter of 2021, 46 hedge funds reported owning stakes in Monster Beverage Corporation (NASDAQ:MNST), up from 45 in the preceding quarter. The total value of these stakes amounted to $2.31 billion at the end of June. The leading Monster Beverage Corporation (NASDAQ:MNST) stakeholder is Jim Simons’ Renaissance Technologies, with a $614.2 million stake in the beverage corporation.
On November 2, Deutsche Bank analyst Steve Powers lowered the price target on Monster Beverage Corporation (NASDAQ:MNST) to $105 from $108 and kept a Buy rating on the shares. He stated that even though demand for the products remained solid, he was wary about the Q3 results, as well as the supply chain disruptions which would likely put pressure on gross margins.
Monster Beverage Corporation (NASDAQ:MNST) reported its Q3 results on November 4, with EPS for the quarter equaling $0.63, missing estimates by -$0.04. Revenue for the period came in at $1.41 billion, up 13.17% year-over-year.
7. CoStar Group, Inc. (NASDAQ:CSGP)
Lakehouse Capital’s Stake Value: $15,713,000
Percentage of Lakehouse Capital’s 13F Portfolio: 8.87%
Number of Hedge Fund Holders: 49
CoStar Group, Inc. (NASDAQ:CSGP) is a technology company from Washington D.C. that offers information, data analytics, and marketing services to the commercial property industry. The company operates in the United States, Canada, the United Kingdom, France, Germany, and Spain.
Joe Magyer, via Lakehouse Capital, holds 182,583 shares in CoStar Group, Inc. (NASDAQ:CSGP) as of Q3 2021, worth $15.7 million, representing 8.87% of the firm’s portfolio.
CoStar Group, Inc. (NASDAQ:CSGP) announced earnings for the third quarter on October 26. EPS in the period came in at $0.25, beating estimates by $0.02. Revenue for Q3 totaled $499.32 million, outperforming estimated revenue by $1.35 million. The solid Q3 results led to Truist analyst Andrew Jeffrey raising the price target on CoStar Group, Inc. (NASDAQ:CSGP) to $110 from $98 and keeping a Buy rating on the shares on October 27.
At the end of June, 49 hedge funds monitored by Insider Monkey’s database of 873 elite funds were bullish on CoStar Group, Inc. (NASDAQ:CSGP), with Charles Akre’s Akre Capital Management being the leading stakeholder of the company, holding an $840 million stake.
Here is what Baron Funds has to say about CoStar Group, Inc. (NASDAQ:CSGP) in its Q3 2021 investor letter:
“Outperformance of investments in Communication Services and Industrials, higher exposure to the better performing Health Care sector, and lack of exposure to the lagging Consumer Staples sector added the most value. CoStar Group, Inc. performed well after investors cheered the company’s decision to enter the residential real estate market.”
6. MercadoLibre, Inc. (NASDAQ:MELI)
Lakehouse Capital’s Stake Value: $16,095,000
Percentage of Lakehouse Capital’s 13F Portfolio: 9.09%
Number of Hedge Fund Holders: 74
MercadoLibre, Inc. (NASDAQ:MELI) operates an online platform facilitating ecommerce and online auctions for Latin American customers. Magyer’s Lakehouse Capital holds a $16 million stake in MercadoLibre, Inc. (NASDAQ:MELI), as of September this year, which accounts for 9.09% of the hedge fund’s total 13F securities.
At the end of Q2, 74 hedge funds were long MercadoLibre, Inc. (NASDAQ:MELI), up from 69 in the preceding quarter, with the total stake value exceeding $4 billion.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V), MercadoLibre, Inc. (NASDAQ:MELI) is a notable stock in Joe Magyer’s Q3 portfolio.
Here is what Polen Capital has to say about MercadoLibre, Inc. (NASDAQ:MELI) in its Q2 2021 investor letter:
“Argentina-based MercadoLibre operates Latin America’s leading ecommerce website and digital wallet. Both e-commerce and consumer finance are underpenetrated among the nearly 400 million citizens living in the company’s three largest markets: Brazil, Argentina, and Mexico.
MercadoLibre’s digitally native solution gives more than 70 million users an easy access point for both online shopping and a digital wallet.
From humble beginnings as a third-party marketplace, MercadoLibre’s management built the business over the last twenty years by steadily expanding the platform’s reach with new services to suit both merchants and consumers. Today’s offerings include financing capabilities for buyers and sellers, logistics, loyalty programs, classifieds listings, and grocery items. We think MercadoLibre can compound earnings at a 25% rate for the next five years.”
5. Alphabet Inc. (NASDAQ:GOOG)
Lakehouse Capital’s Stake Value: $16,847,000
Percentage of Lakehouse Capital’s 13F Portfolio: 9.51%
Number of Hedge Fund Holders: 155
Alphabet Inc. (NASDAQ:GOOG) posted its Q3 results on October 26, with EPS for the quarter being $27.99, outperforming estimates by $4.75. The $65.12 billion revenue was up 41.03% from the prior-year quarter, topping estimated revenue by $1.83 billion. Following the strong Q3 performance, Jefferies analyst Brent Thill raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,500 from $3,325 and kept a Buy rating on the stock.
Joe Magyer’s Lakehouse Capital owns 6,321 Alphabet Inc. (NASDAQ:GOOG) shares, worth $16.8 million as of Q3 2021, representing 9.51% of the firm’s portfolio.
At the end of June this year, Alphabet Inc. (NASDAQ:GOOG) remained a popular stock among the smart money, with 155 hedge funds owning stakes worth $33.79 billion in the US tech giant. Of the 873 funds tracked by Insider Monkey, Chris Hohn’s TCI Fund Management is the largest Alphabet Inc. (NASDAQ:GOOG) stakeholder, with a $7.8 billion position in the company.
Here is what Oakmark Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet, a U.S. communication services provider, was once again a top contributor for the quarter, solidifying its rank as a top contributing stock for the one-year period. The company’s financial results repeatedly exceeded expectations. In particular, its revenue grew faster than expected and its margin trends improved across all segments. In addition, management has executed $24.4 billion of stock repurchases so far in 2021. After further examination, we recently increased our estimate of Alphabet’s intrinsic value based on the company’s better than expected operating leverage and its notable efficiency improvements. As a result, we continue to believe that Alphabet is trading at a significant discount to its intrinsic value.”
4. Visa Inc. (NYSE:V)
Lakehouse Capital’s Stake Value: $16,921,000
Percentage of Lakehouse Capital’s 13F Portfolio: 9.55%
Number of Hedge Fund Holders: 162
Visa Inc. (NYSE:V) is a financial services company that facilitates the electronic transfer of funds worldwide via Visa credit, debit, and prepaid cards. Visa Inc. (NYSE:V) represents 9.55% of Joe Magyer’s Q3 portfolio, with his investment firm owning a $16.9 million stake in the company as of September 2021.
Visa Inc. (NYSE:V) is a popular stock among the hedge funds, with 162 funds being bullish on Visa Inc. (NYSE:V) at the end of Q2, with stakes worth $27.6 billion. One of the largest Visa Inc. (NYSE:V) stakeholders is Ken Fisher’s Fisher Asset Management, who owns 18.33 million shares in the company, valued at over $4 billion.
On October 26, the Q3 EPS for Visa Inc. (NYSE:V) equaled $1.62, beating estimates by $0.08. The $6.56 billion revenue was up 28.58% year-over-year, exceeding estimated revenue by $45.89 million.
UBS analyst Rayna Kumar, on November 17, assumed coverage of Visa Inc. (NYSE:V) with a Buy rating and a $275 price target. The analyst stated that Visa Inc. (NYSE:V) shares have an attractive valuation, and the company is set to gain higher global market share in the upcoming years, driving revenue growth as a result.
Here is what L1 Capital has to say about Visa Inc. (NYSE:V) in its Q3 2021 investor letter:
“In our view, the payment network company, Visa, remains very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa’s transaction volumes, however in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. Nearer term, we believe the recovery in international travel as the world gradually normalises and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
3. PayPal Holdings, Inc. (NASDAQ:PYPL)
Lakehouse Capital’s Stake Value: $17,596,000
Percentage of Lakehouse Capital’s 13F Portfolio: 9.93%
Number of Hedge Fund Holders: 143
Lakehouse Capital owns 67,624 shares in PayPal Holdings, Inc. (NASDAQ:PYPL) as of September, worth $17.5 million. The stock accounts for 9.93% of the firm’s Q3 investments. PayPal Holdings, Inc. (NASDAQ:PYPL) is a financial technology company that enables online money transfers in exchange for a service fee.
As of the second quarter of 2021, 143 hedge funds were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL), with a total stake value of $16.35 billion. Terry Smith’s Fundsmith LLP is the leading PayPal Holdings, Inc. (NASDAQ:PYPL) stakeholder, holding 12.28 million shares valued at $3.1 billion.
PayPal Holdings, Inc. (NASDAQ:PYPL) posted its Q3 results on November 8. EPS in the period equaled $1.11, beating estimates by $0.03. Revenue for the third quarter totaled $6.18 billion, missing analysts’ consensus estimates by -$51.87 million.
UBS analyst Rayna Kumar on November 17 assumed coverage of PayPal Holdings, Inc. (NASDAQ:PYPL) with a Buy rating and a $263 price target. The analyst believes that demand for PayPal Holdings, Inc. (NASDAQ:PYPL)’s services has grown majorly since the COVID-19 pandemic, and the pull back following its Q3 earnings offers an attractive buying opportunity.
Here is what Alger has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q3 2021 investor letter:
“PayPal Holdings, Inc. was among top detractors from performance. PayPal is a pure play on e-commerce and electronic payments which is driving the company’s high unit volume growth. As a digital payments company, it is helping to facilitate the shift to a cashless society. The coronavirus pandemic has significantly accelerated the adoption of e-commerce and the utilization of digital payments platforms. In our view, PayPal is currently positioned to benefit from the strength in e-commerce trends, including increasing net new active users and increased engagement per user. PayPal also has launched a service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account. PayPal’s vision is to become a Super App that integrates payments, commerce and financial services, as well as crypto capabilities. After outperforming earlier in the year, the performance of PayPal shares weakened in the third quarter with the company facing potentially higher transaction expenses and credit losses. The higher transaction expenses are driven by a shift by consumers to the higher cost travel and entertainment categories which skew toward less profitable credit transactions.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Lakehouse Capital’s Stake Value: $18,643,000
Percentage of Lakehouse Capital’s 13F Portfolio: 10.53%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a global ecommerce, artificial intelligence, online streaming, and cloud-based services corporation. 10.53% of Joe Magyer’s Q3 portfolio is represented by his $18.6 million stake in Amazon.com, Inc. (NASDAQ:AMZN). Tigress Financial analyst Ivan Feinseth on November 10 raised the price target on Amazon.com, Inc. (NASDAQ:AMZN) to $4,460 from $4,370, and kept a Buy rating on the shares. He stated that Amazon.com, Inc. (NASDAQ:AMZN) is well-positioned to overcome near-term supply chain bottlenecks and can achieve strong revenue growth in 2022.
At the end of the second quarter, Amazon.com, Inc. (NASDAQ:AMZN) was one of the most sought after stocks by the hedge funds, with 271 funds being bullish on the tech giant, with reported stakes worth over $60 billion. Boykin Curry’s Eagle Capital Management is one of the biggest Amazon.com, Inc. (NASDAQ:AMZN) stakeholders, with a position worth more than $2.3 billion in the company.
Amazon.com, Inc. (NASDAQ:AMZN) posted its Q3 earnings on October 28. EPS for the quarter totaled $6.12, missing estimates by -$2.78. The $110.81 billion Q3 revenue also missed estimates by -$784.89 million.
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.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Lakehouse Capital’s Stake Value: $23,714,000
Percentage of Lakehouse Capital’s 13F Portfolio: 13.39%
Number of Hedge Fund Holders: 266
Meta Platforms, Inc. (NASDAQ:FB) is the parent company of Facebook, Instagram, and WhatsApp. After the recent corporate rebranding of the company, Piper Sandler analyst Thomas Champion on October 28 kept a Neutral rating on the shares with a $385 price target, classifying the shift from Facebook to Meta Platforms, Inc. (NASDAQ:FB) as a necessary and significant move.
Meta Platforms, Inc. (NASDAQ:FB) is the largest holding in Lakehouse Capital’s Q3 portfolio, with Lakehouse Capital owning 69,873 shares in Meta Platforms, Inc. (NASDAQ:FB), worth $23.7 million, representing 13.39% of the firm’s Q3 securities.
Meta Platforms, Inc. (NASDAQ:FB) reported on October 25 its Q3 results. The Q3 EPS came in at $3.22, beating estimates by $0.04. Revenue for the period totaled $29.01 billion, missing estimates by -$513.23 million.
As of June this year, 266 hedge funds out of the 873 funds monitored by Insider Monkey were bullish on Meta Platforms, Inc. (NASDAQ:FB), with a total stake value of over $42 billion.
Here is what Polen Capital has to say about Meta Platforms, 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.”
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Disclosure: None. Top 10 Stock Picks of Joe Magyer’s Lakehouse Capital is originally published on Insider Monkey.
