In this article, we discuss the top 10 stock picks of Teresa Barger’s Cartica Management.
Teresa Barger is Cartica Management‘s co-founder and chief executive officer. She graduated from Harvard College and acquired her MBA degree from the Yale School of Management. In addition, Ms. Barger pursued postgraduate studies at the American University of Cairo. At McKinsey & Company, she started off as an engagement manager. Ms. Barger worked with the International Finance Corporation for 21 years, investing in businesses in emerging markets in almost every continent. She held several positions at IFC, including Director of Private Equity and Investment Funds, Deputy Director of Credit/Investment Review, and Division Manager for Africa. In addition, Ms. Barger established the first corporate governance funds for Korea and Brazil in the Emerging Markets.
Cartica Management is a majority women-owned and women-led hedge fund founded in 2009 by top executives from the World Bank’s International Finance Corporation. The hedge fund, which has its headquarters in Washington, D.C., is a US Securities and Exchange Commission registered investment advisor. It is solely dedicated to investments in the emerging markets. Ms. Barger said:
“We knew that investing in EM companies where value could be added through ESG and governance improvements could be both profitable and important for economic development. It lowers the cost of capital for companies and makes markets deeper and more transparent.”
Cartica Management’s strategy incorporates thorough fundamental analysis, comprehensive macro research, and proactive ESG involvement in each stage of its investing process. The hedge fund wants to actively work with management teams, boards, and shareholders after investing to drive sustainable improvements in corporate governance, environmental preservation, and social responsibility. Cartica Management has adhered to its purpose and is still looking for EM firms with solid or growing business models, management teams, and financial sheets more than a decade later. On November 1, Cartica Management was announced as the Best ESG Active Investor Emerging Markets 2021 winner of the Capital Finance International (CFI) awards.
At the end of Q1 2022, Cartica Management’s 13F portfolio was valued at over $348.78 million, down from $472.30 million a quarter earlier. Finance, consumer discretionary, information technology, communications, and materials sectors made up a significant portion of the hedge fund’s portfolio. Some of the prominent holdings in its portfolio included Yandex N.V. (NASDAQ:YNDX), Alibaba Group Holding Limited (NYSE:BABA), and Sea Limited (NYSE:SE).
Cartica Management owned 218,000 shares of Yandex N.V. (NASDAQ:YNDX) in the first quarter of 2022.
Alibaba Group Holding Limited (NYSE:BABA) is another large-cap stock in Cartica Management’s portfolio, in which the fund owned 248,900 shares. On July 11, Goldman Sachs analyst Ronald Keung raised his price objective on Alibaba Group Holding Limited (NYSE:BABA) from $163 to $167 as part of a more significant research note on China Internet. He reiterated a Buy rating on the stock.
Cartica Management also owned 240,071 shares in Sea Limited (NYSE:SE). Yi Sin Ngoh, an analyst with China Renaissance, initiated coverage of Sea Limited (NYSE:SE) on May 19 and assigned the company a Buy rating and a $118 price objective.
Our Methodology
With this industry outlook in mind, let’s start our list of the top 10 stock picks of Teresa Barger’s Cartica Management. We picked these stocks from the first quarter portfolio of Cartica Management.
Top Stock Picks of Teresa Barger’s Cartica Management
10. Huazhu Group Limited (NASDAQ:HTHT)
Cartica Management’s Stake Value: $18,359,000
Percentage of Cartica Management’s Portfolio: 5.26%
Number of Hedge Fund Holders: 27
Huazhu Group Limited (NASDAQ:HTHT) is a Chinese hotel management company. On June 1, Daiwa analyst Carlton Lai raised his price objective on Huazhu Group Limited (NASDAQ:HTHT) from HK$30 to HK$32 and upgraded the stock from Outperform to Buy.
Like Yandex N.V. (NASDAQ:YNDX), Alibaba Group Holding Limited (NYSE:BABA), and Sea Limited (NYSE:SE), Huazhu Group Limited (NASDAQ:HTHT) is also one of the stock picks of Teresa Barger’s Cartica Management.
Cartica Management reduced its stake in Huazhu Group Limited (NASDAQ:HTHT) by 14% or 84,000 shares. The hedge fund’s remaining stake of 556,496 shares was worth $18.36 million as of March 31 and accounted for 5.26% of its total portfolio value. At the end of Q1 2022, 27 hedge funds owned a position in Huazhu Group Limited (NASDAQ:HTHT), down from 29 in the preceding quarter.
9. Cartica Acquisition Corp (NASDAQ:CITEU)
Cartica Management’s Stake Value: $19,998,000
Percentage of Cartica Management’s Portfolio: 5.73%
Number of Hedge Fund Holders: N/A
Cartica Acquisition Corp (NASDAQ:CITEU) was founded in the Cayman Islands as a blank check corporation to participate in a merger, share exchange, asset acquisition, share purchase, reorganization, and comparable business combination with one or more businesses.
Cartica Acquisition Corp (NASDAQ:CITEU) is run by Sanjeev Goel, CEO and managing director of Global Value Creation Partners FZE, and Asif Ramji, chairman and former chief growth officer of Fidelity National Information Services (NYSE:FIS). The business intends to target technology companies having a presence in India, concentrating on those with equity values of $1 billion or more.
Ms. Barger bought 1.98 million shares of Cartica Acquisition Corp (NASDAQ:CITEU), worth almost $20 million as of March 31. It accounted for 5.73% of Cartica Management’s total portfolio value. It ranked 9th among Teresa Barger’s Cartica Management’s top 10 stock picks and blended well with the hedge fund’s other holdings and investments. Teresa Barger’s Cartica Management was Cartica Acquisition Corp (NASDAQ:CITEU)’s most significant stakeholder.
8. Despegar.com, Corp. (NYSE:DESP)
Cartica Management’s Stake Value: $23,089,000
Percentage of Cartica Management’s Portfolio: 6.61%
Number of Hedge Fund Holders: 18
Despegar.com, Corp. (NYSE:DESP) is an internet travel firm with headquarters in Argentina. Just like Huazhu Group Limited (NASDAQ:HTHT), Cartica Management reduced its exposure to Despegar.com, Corp. (NYSE:DESP) in Q1. The hedge fund cut its stake by 24%, or 592,458 shares, bringing its total holdings down to 1.89 million units. The stake was worth $23.09 million at the end of the first quarter of 2022, accounting for 6.61% of Cartica Management’s equity portfolio.
On June 23, Cowen analyst Kevin Kopelman maintained an Outperform rating on Despegar.com, Corp. (NYSE:DESP), while lowering his price target on the stock to $10.50 from $12.50. According to the analyst, reservations in 2021 were only 43% of the 2019 levels due to the significant flying exposure of Despegar.com, Corp. (NYSE:DESP), but when travel resumed, they increased by 72%.
Quincy Lee’s Ancient Art (Teton Capital), with 3.63 million shares, was the most significant stakeholder of Despegar.com, Corp. (NYSE:DESP) in the first quarter of 2022. In addition, the number of hedge funds tracked by Insider Monkey having stakes in the firm grew to 18 in Q1 from 16 in the preceding quarter. These stakes hold a consolidated value of $155.91 million, up from $132.59 million.
7. GDS Holdings Limited (NASDAQ:GDS)
Cartica Management’s Stake Value: $23,446,000
Percentage of Cartica Management’s Portfolio: 6.72%
Number of Hedge Fund Holders: 26
GDS Holdings Limited (NASDAQ:GDS) constructs and manages data centers in China. At other sites, it establishes, runs, and relocates data centers. Joel Ramin’s 12 West Capital Management was the largest shareholder of GDS Holdings Limited (NASDAQ:GDS), with 7.34 million shares worth $288.10 million in the first quarter of 2022.
Cartica Management initially bought GDS Holdings Limited (NASDAQ:GDS) in the first quarter of 2020 as part of a broader bet on the tech industry. However, the hedge fund sliced 14% of its GDS Holdings Limited (NASDAQ:GDS) stake in Q1, unloading 94,000 shares. GDS Holdings Limited (NASDAQ:GDS) accounted for 6.72% of the hedge fund’s equity portfolio at the end of Q1 2022.
After GDS Holdings Limited (NASDAQ:GDS)’s Q1 earnings, RBC Capital analyst Jonathan Atkin reiterated an Outperform rating while cutting his price objective to $41 from $58. Even if the company’s sales and EBITDA ramp were within the range of the estimate, the analyst had a cautious outlook on it. To account for macroeconomic risks, concerns about China, and prior share instability of the company, Atkin assigned a Speculative Risk qualifier to the stock.
According to Insider Monkey’s data, 26 hedge funds were long GDS Holdings Limited (NASDAQ:GDS) at the conclusion of the first quarter of 2022, with collective stakes valued at about $645.90 million.
In its first quarter 2022 investor letter, Baron Funds mentioned GDS Holdings Limited (NASDAQ:GDS). Here is what the fund said:
“Following a 66% correction in its share price from a peak of $117 per share in February 2021, we recently reacquired shares in GDS Holdings Limited (GDS) at an average cost of $39 per share. GDS is the leading developer and operator of data centers in China. Following several years of strong share price performance, the shares of GDS corrected sharply in 2021 due to investor concerns about China’s increased regulatory scrutiny of the technology industry and a slowdown in its economy, increased competition, evidence of further tensions with U.S. regulatory agencies, and a substantial correction in technology shares broadly. At our average purchase price of $39, we believe these concerns are sufficiently discounted in the shares and remain optimistic about the company’s long-term potential to generate strong growth and increase the intrinsic value of the business.…. “(Click here to read the full text).”
6. Fabrinet (NYSE:FN)
Cartica Management’s Stake Value: $26,519,000
Percentage of Cartica Management’s Portfolio: 7.6%
Number of Hedge Fund Holders: 21
Fabrinet (NYSE:FN) supplies complex goods to original equipment manufacturers, such as optical communication components, modules, and sub-systems, as well as precise optical, electro-mechanical, and electronic manufacturing services.
On July 14, JPMorgan analyst Samik Chatterjee maintained a Neutral rating on the shares of Fabrinet (NYSE:FN) and reduced his price objective to $88 from $115. The analyst adopted a defensive stance with his networking and hardware coverage as he detected more and more indications of the hazardous macro backdrop cutting into demand patterns.
Cartica Management first took a stake in Fabrinet (NYSE:FN) in Q2 2021, and the fund grew more optimistic about the company over time. The hedge fund raised its stake in Q3 2021, Q4 2021, and Q1 2022. In the first quarter of 2022, Cartica Management increased its position in Fabrinet (NYSE:FN) by 2%, and it was worth about $26.52 million.
Steve Cohen’s Point72 Asset Management was the leading shareholder of Fabrinet (NYSE:FN), with 419,972 shares worth over $44.15 million. Among the hedge funds tracked by Insider Monkey, 21 funds were long Fabrinet (NYSE:FN) at the end of Q1 2022, compared to 24 funds in the prior quarter.
In addition to Yandex N.V. (NASDAQ:YNDX), Alibaba Group Holding Limited (NYSE:BABA), and Sea Limited (NYSE:SE), Fabrinet (NYSE:FN) is one of the stocks gaining the attention of Teresa Barger’s Cartica Management.
FPA Queens Road, in its fourth-quarter 2021 investor letter, mentioned Fabrinet (NYSE:FN). Here is what the fund said:
“Fabrinet, a manufacturer of optical communications sensors and equipment, announced better-thanexpected results on increased demand for its telecom and datacom products, despite continuing supply chain disruptions. While supply chain issues had a significant impact on the company’s automotive business, it was less than expected (automotive is a small but growing market for the company). We are impressed by the company’s execution and held a 3.4% position at quarter end.”
5. Alibaba Group Holding Limited (NYSE:BABA)
Cartica Management’s Stake Value: $27,080,000
Percentage of Cartica Management’s Portfolio: 7.76%
Number of Hedge Fund Holders: 100
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese global technology business. Alibaba Group Holding Limited (NYSE:BABA) has recently experienced an increase in hedge fund interest. At the end of the first quarter of 2022, 100 hedge funds had Alibaba Group Holding Limited (NYSE:BABA) shares in their portfolios. There were 96 hedge funds in our database with long Alibaba Group Holding Limited (NYSE:BABA) positions at the end of the previous quarter.
Cartica Management bought 288,500 shares in Alibaba Group Holding Limited (NYSE:BABA), worth almost $34.27 million as of the first quarter of 2022. However, the hedge fund in Q1 reduced the stake by 14% by unloading 39,600 shares of the company. The remaining 248,900 shares in Alibaba Group Holding Limited (NYSE:BABA) were worth $27.08 million as of March 31.
Ken Fisher’s Fisher Asset Management held the largest stake in Alibaba Group Holding Limited (NYSE:BABA) during Q1 2022, consisting of 14.45 million shares worth over $1.57 billion.
Here is what Longleaf Partners Fund has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q1 2022 investor letter:
“We took advantage of price volatility to add to three of our most heavily discounted European businesses, including new purchases in 4Q 2021 and we reinitiated a position in Alibaba (NYSE:BABA), as the shares became even more heavily discounted amid broad China volatility in the period.”
4. Sea Limited (NYSE:SE)
Cartica Management’s Stake Value: $28,758,000
Percentage of Cartica Management’s Portfolio: 8.24%
Number of Hedge Fund Holders: 77
Sea Limited (NYSE:SE) works with its subsidiaries throughout Southeast Asia, Latin America, the rest of Asia, and all over the world in the digital entertainment, e-commerce, and financial services categories. Tiger Global Management was the leading shareholder of Sea Limited (NYSE:SE), with 13.52 million shares worth over $1.62 billion. Next on the list was Kora Management, which owned 3.49 million shares of Sea Limited (NYSE:SE), worth over $418.45 million. Overall, at the end of the first quarter of 2022, Sea Limited (NYSE:SE) was in 77 hedge fund portfolios, down from 108 in the previous quarter.
Cartica Management gave a large vote of confidence to Sea Limited (NYSE:SE) in Q1 2022. The hedge fund upped its position by an impressive 116% or 128,900 shares. Cartica Management’s total stake was worth $28.76 million as of March 31, representing 8.24% of its portfolio.
Here is what Baron Funds has to say about Sea Limited (NYSE:SE) in its Q1 2022 investor letter:
“Sea Limited, a global digital gaming and e-commerce company, detracted from performance for the period held. Similar to other online consumer businesses, Sea faced significant multiple compression in the quarter, exacerbated by a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil. We exited our position as we lost confidence in the long- term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.”
3. XP Inc. (NASDAQ:XP)
Cartica Management’s Stake Value: $38,851,000
Percentage of Cartica Management’s Portfolio: 11.13%
Number of Hedge Fund Holders: 31
XP Inc. (NASDAQ:XP) is a Brazilian asset management company offering fixed income, equities, investment funds, private pension packages, wealth management, and other financial services. On June 7, Thiago Batista of UBS upgraded XP Inc. (NASDAQ:XP) to Buy while cutting his price objective from $37 to $31. According to a research note from Batista to investors, XP Inc. (NASDAQ:XP) shares fell 20% year-to-date, which made its value appealing and less expensive than comparable high-growth Brazilian stocks.
Cartica Management also strengthened its position in XP Inc. (NASDAQ:XP) by purchasing an additional 85,000 shares. This made its stake in XP Inc. (NASDAQ:XP) total 1.29 million shares worth $38.85 million. The stock accounted for 11.13% of the fund’s total 13F portfolio.
Among the hedge funds being tracked by Insider Monkey, Greenwich-based investment firm Viking Global was the leading shareholder of XP Inc. (NASDAQ:XP), with 9.44 million shares worth more than $284.24 million. At the end of the first quarter, 31 hedge funds in Insider Monkey’s database held stakes in XP Inc. (NASDAQ:XP), a decrease compared to 33 funds in the preceding quarter.
Here is what Harding Loevner has to say about XP Inc. (NASDAQ:XP) in its Q4 2021 investor letter:
“Shares of another new Brazilian holding, XP, the country’s premier online investment platform, also sold off as tough economic conditions outweighed management’s optimism about prospective growth from new business lines in pensions, credit cards, and loans. Performance was helped by stock selection and our underweight in China.”
2. Globant S.A. (NYSE:GLOB)
Cartica Management’s Stake Value: $45,276,000
Percentage of Cartica Management’s Portfolio: 12.98%
Number of Hedge Fund Holders: 31
Globant S.A. (NYSE:GLOB) offers global technology services. Ken Fisher’s Fisher Asset Management was the biggest stakeholder of Globant S.A. (NYSE:GLOB) as of the end of March this year, holding 952,083 shares worth almost $249.51 million.
On May 20, Cowen analyst Bryan Bergin maintained an Outperform rating on Globant S.A. (NYSE:GLOB) while trimming his price objective from $305 to $240. Despite macro market concerns, the analyst said they delivered good first-quarter performance and highlighted a record pipeline as evidence.
Securities filings reveal that Cartica Management trimmed its stake in Globant S.A. (NYSE:GLOB) by 9% during the first quarter of 2022. The fund owned 172,762 shares of Globant S.A. (NYSE:GLOB) worth over $45.28 million, representing 12.98% of the portfolio. According to Insider Monkey’s Q1 data, 31 hedge funds were bullish on Globant S.A. (NYSE:GLOB), up from 26 funds in the earlier quarter.
Baron Funds, an asset management firm, in its first-quarter 2022 investor letter, mentioned Globant S.A. (NYSE:GLOB). Here is what the fund said:
“We also initiated a position in Globant, S.A., a provider of outsourced software development, design, and digital marketing services for business customers. Globant helps companies such as Disney (NYSE:DIS), Electronic Arts (NASDAQ:EA), and Banco Santander (NYSE:SAN) pursue digital transformations using a highly skilled workforce of over 23,000 software engineers and consultants primarily based in Latin America. These employees are trained in the latest technologies, including cloud infrastructure, cybersecurity, data analytics, artificial intelligence, digital marketing, enterprise software platforms, blockchain, connected devices, and metaverse. The company was founded in 2003 by four friends in Argentina who still run the company, including Chairman and CEO Martín Migoya. Globant serves over 1,100 customers across a variety of sectors, but its largest vertical is financial services. The company helps financial institutions adopt digital lending practices, improve operational efficiency, optimize risk management practices, comply with changing regulations, and launch new payment and open banking solutions…. “(Click here to read the full text)”
1. MercadoLibre, Inc. (NASDAQ:MELI)
Cartica Management’s Stake Value: $49,937,000
Percentage of Cartica Management’s Portfolio: 14.31%
Number of Hedge Fund Holders: 63
MercadoLibre, Inc. (NASDAQ:MELI), an Argentine firm with its headquarters in Buenos Aires and a U.S. incorporation, runs mercadolibre.com and other online markets for e-commerce and online auctions. David Blood and Al Gore’s Generation Investment Management held a notable stake in MercadoLibre, Inc. (NASDAQ:MELI) at the end of the first quarter of 2022, worth $525.19 million.
63 hedge funds were bullish on MercadoLibre, Inc. (NASDAQ:MELI) in the first quarter of 2022, down from 74 in the preceding quarter. In Q1, Ms. Barger lessened Cartica Management’s exposure to one of her top stock selections. As a result, the hedge fund shed 800 shares, or 2% of its stake, in MercadoLibre, Inc. (NASDAQ:MELI). The move followed an increase in Q4 when Cartica Management purchased an additional 3913 shares.
On July 6, New Street analyst Soomit Datta maintained a Buy rating on MercadoLibre, Inc. (NASDAQ:MELI) while reducing his price objective from $1,700 to $1,100. The analyst claimed that, following a generally stronger-than-expected Q1 for both Nu Holdings Ltd. (NYSE:NU) and MercadoLibre, Inc. (NASDAQ:MELI) in particular, the harsher cycle would likely catch up with the digital banks/wallets in Brazil more in Q2.
Here is what ClearBridge Investments had to say about MercadoLibre, Inc. (NASDAQ:MELI) in its Q1 2022 investor letter:
“Most of our selling over the last several quarters has occurred among emerging growth companies, where we have reduced our exposure to under 5% to better manage risk. Latin America e-commerce platform MercadoLibre (NASDAQ:MELI) has also experienced an unwind of COVID-19-induced demand while high inflation and high interest rates in Brazil create new headwinds for consumer purchasing power, which will likely mean slower sales of high-ticket items on the company’s platform and led to the sale of the position.”
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Disclosure: None. Top 10 Stock Picks of Teresa Barger’s Cartica Management is originally published on Insider Monkey.
