In this article, we discuss the top 10 stocks to buy according to billionaire James Dinan.
James Dinan is an American billionaire businessman and hedge fund manager who founded York Capital Management in 1991, which is a New York-based hedge fund with a $947.2 million Q3 2021 portfolio and discretionary assets under management of $16.7 billion.
After completing his MBA from Harvard University, James Dinan started his financial career in 1985 at Kellner DiLeo & Company, a merger arbitrage firm. After suffering significant personal financial losses in the 1987 market crash, James Dinan raised $3.6 million in seed money from his former colleagues and started his own hedge fund in 1991.
Investments at York Capital Management are primarily focused in the information technology, finance, energy, and communications sector, and the hedge fund has a top 10 holdings concentration of 82.9%, as per the 13F filings from Q3 2021. York Capital Management focuses on event-driven strategic investing, and takes advantage of ongoing mergers and acquisitions in the market, keeping a lookout for buying opportunities in distressed equities. James Dinan holds a keen interest in restructuring opportunities and special situation equity investing.
In Q3 2021, York Capital Management purchased 9 new stocks, bought additional stakes in 6 companies, sold out of 38 equities, and reduced holdings in 14 securities. The most notable stocks in the Q3 portfolio of billionaire James Dinan include Amazon.com, Inc. (NASDAQ:AMZN), Block, Inc. (NYSE:SQ), and Morgan Stanley (NYSE:MS).
James Dinan of York Capital Management
Our Methodology
We used the Q3 2021 portfolio of James Dinan’s York Capital Management to pick the top 10 stock picks of the billionaire. We have ranked the companies according to the hedge fund’s stake value in each holding.
Top Stocks To Buy According To Billionaire James Dinan
10. Humacyte, Inc. (NASDAQ:HUMA)
York Capital Management’s Stake Value: $20,590,000
Percentage of York Capital Management’s 13F Portfolio: 2.17%
Number of Hedge Fund Holders: 5
Humacyte, Inc. (NASDAQ:HUMA) is a clinical stage biotech company that develops bioengineered human tissues to assist with critical vascular conditions for complex organ disease. The company is headquartered in Durham, North Carolina. Cowen analyst Joshua Jennings on October 29 initiated coverage of Humacyte, Inc. with an Outperform rating and a $17 price target.
Billionaire James Dinan acquired a position in Humacyte, Inc. during the third quarter of 2021, buying 2.2 million shares worth $20.5 million. The stock accounts for 2.17% of his Q3 securities.
On January 31, shares of Humacyte, Inc. rose 15.3% after the company reported positive results from the first series of compassionate use cases of its investigational trial to treat critical limb ischemia and vascular trauma.
According to the hedge funds tracked by Insider Monkey in Q3 2021, 5 funds reported owning stakes in Humacyte, Inc., totaling $40.3 million.
In addition to Amazon.com, Inc., Block, Inc., and Morgan Stanley, a notable stock to look out for according to James Dinan is Humacyte, Inc..
9. Synopsys, Inc. (NASDAQ:SNPS)
York Capital Management’s Stake Value: $21,391,000
Percentage of York Capital Management’s 13F Portfolio: 2.25%
Number of Hedge Fund Holders: 43
Synopsys, Inc. (NASDAQ:SNPS) is a California-based company that specializes in electronic design automation software products, which are used to build and test integrated circuits. Synopsys, Inc. caters to the electronics, financial services, automotive, medicine, energy, and industrial markets.
James Dinan, via York Capital Management, acquired a stake in Synopsys, Inc. in Q2 2021, buying 93,648 shares worth $25.8 million. In the third quarter, James Dinan reduced his position in Synopsys, Inc. to 71,445 shares. His stake is valued at $21.3 million, representing 2.25% of the total Q3 investments.
Publishing its financial results for the quarter ending October 2021 on December 1, Synopsys, Inc. posted earnings per share of $1.82, beating estimates by $0.03. Revenue over the period jumped 12.38% year-over-year to $1.15 billion, but missed estimates by $1.24 million.
On January 10, KeyBanc analyst Jason Celino raised the price target on Synopsys, Inc. to $445 from $395 and kept an Overweight rating on the shares. The analyst believes a new phase of consistent double-digit electronic design automation industry growth has begun, and Synopsys, Inc. is positioned to benefit from the most durable growth areas in software.
According to Insider Monkey’s third quarter database, 43 hedge funds were bullish on Synopsys, Inc., holding stakes worth $2.3 billion. Alkeon Capital Management held the largest stake in Synopsys, Inc. during Q3 2021, owning 3.35 million shares worth $1 billion.
Here is what Harding Loevner Global Equity Fund has to say about Synopsys, Inc. in its Q3 2021 investor letter:
“To keep innovating, foundries like those operated by TSMC and Samsung rely on capital equipment made by ASML, a Dutch company that enjoys a near-monopoly in lithography, a specialized process that allows for an increase in the density of transistors and their connections on each silicon wafer. The chips, in addition to getting denser, are also getting architecturally more complex, which presents a challenge for both chip designer and fabricator alike. Computer-aided design (CAD) software from US-based Synopsys not only allows circuits to be modeled down to their most microscopic elements but also offers the capability to verify their functionality and ease of manufacturing and to optimize the performance all virtually before the design is completed.”
8. Cadence Design Systems, Inc. (NASDAQ:CDNS)
York Capital Management’s Stake Value: $21,587,000
Percentage of York Capital Management’s 13F Portfolio: 2.27%
Number of Hedge Fund Holders: 33
Cadence Design Systems, Inc. (NASDAQ:CDNS) specializes in software, hardware, technical services, and reusable integrated circuit design blocks. The company also provides services related to methodology, education, and hosted design solutions to customers internationally.
James Dinan purchased 182,251 shares of Cadence Design Systems, Inc. in Q2 2021, and reduced his stake by roughly 22% in the third quarter. He holds 142,547 shares of Cadence Design Systems, Inc., worth $21.5 million, representing 2.27% of his Q3 13F portfolio.
Cadence Design Systems, Inc. announced on December 1 a 2021 three-way collaboration with Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Microsoft Corporation (NASDAQ:MSFT), which focuses on utilizing a cloud infrastructure to accelerate digital timing signoff of over 10 billion transistor designs, which will accelerate signoff schedules and reduce compute costs for customers of Cadence Design Systems, Inc..
Wells Fargo analyst Gary Mobley on December 21 raised the price target on Cadence Design Systems, Inc. to $205 from $190 and kept an Overweight rating on the shares. The analyst believes electronic design automation and semiconductor design intellectual property are some of the least understood and most underappreciated sub-sectors within the half-trillion-dollar market for chips and chip-making tools.
In Q3 2021, 33 hedge funds monitored by Insider Monkey were long Cadence Design Systems, Inc., with stakes totaling $1.92 billion. Impax Asset Management is one of the prominent stakeholders of the company, owning over 2 million shares worth $312.4 million.
Cadence Design Systems, Inc. is gaining popularity among smart investors, just like Amazon.com, Inc., Block, Inc., and Morgan Stanley.
7. KLA Corporation (NASDAQ:KLAC)
York Capital Management’s Stake Value: $24,784,000
Percentage of York Capital Management’s 13F Portfolio: 2.61%
Number of Hedge Fund Holders: 44
KLA Corporation (NASDAQ:KLAC) is a California-based company manufacturing process control and yield management solutions for the semiconductor and nanoelectronics markets, with operations spread globally.
In the third quarter of 2021, KLA Corporation was a new arrival in James Dinan’s 13F portfolio, with the billionaire buying 74,089 shares of KLA Corporation, worth $24.7 million. The stock accounts for 2.61% of York Capital Management’s third quarter 13F securities.
In its earnings report for the fourth quarter of 2021, published on January 27, KLA Corporation posted earnings per share of $5.59, exceeding estimates by $0.14. Revenue for the period came in at $2.35 billion, up 42.51% from the prior-year quarter, outperforming estimates by $19.92 million.
On February 2, Argus analyst Jim Kelleher raised the price target on KLA Corporation to $450 from $390 and kept a Buy rating on the shares. The analyst cites KLA Corporation’s Q4 earnings beat and strengthening demand that now exceeds pre-pandemic production levels in many markets as reasons for the lifted price target. He sees KLA Corporation shares as “attractive” at current levels.
Among the hedge funds tracked by Insider Monkey, 44 funds reported owning stakes worth $1.84 billion in KLA Corporation in the third quarter of 2021. Arrowstreet Capital is one of the leading KLA Corporation stakeholders, with 819,929 shares valued at over $274 million.
Here is what Palm Capital has to say about KLA Corporation in its Q2 2021 investor letter:
“A final example of our thinking is in the semiconductor industry. Because of the extreme complexity and significant costs in the manufacturing process, the industry has become highly specialized. It has fragmented into three types of companies – the designers of chips, the manufacturers, and those that make equipment for the manufacturers.
Revenue for designers is somewhat stable because of patents. And even when patents expire, designs are not easily copied, and customers don’t easily switch because this would typically involve a redesign of their product and the risk that the new design does not work as well. However, revenue is still dependent on the length of the lifecycle of end products they are used for, how long it takes for those products to be replaced with new technology and the success of designers’ R&D into new designs. So, while near term revenue and profit margins are typically stable, medium to long term revenue and profits are uncertain. And the large customers in this industry such as Apple, Google and Amazon are all beginning to design their own chips, raising this uncertainty…
…On the other hand, revenue and profits for the companies that design and manufacture equipment for the manufacturers are steadier. An example of a company we like in this space is KLA. KLA provides tools and solutions to help manufacturers monitor and improve their highly complex manufacturing process and reduce costs. These are critical services to the manufacturers. Their tools are found in every major manufacturer globally. And the uniqueness of these tools is evidenced by KLA’s market share which is more than four times its nearest competitor. Regardless of which design is successful in the future or which manufacturer manages to take the lead, KLA’s tools will almost certainly still be needed. Its revenues and profits are less affected by technological change and therefore less uncertain than that of the designers and manufacturers.”
6. JOYY Inc. (NASDAQ:YY)
York Capital Management’s Stake Value: $25,299,000
Percentage of York Capital Management’s 13F Portfolio: 2.67%
Number of Hedge Fund Holders: 21
Headquartered in Singapore, JOYY Inc. (NASDAQ:YY) operates social media platforms that enable users to engage and interact via various video and audio-based social networking applications. Some of JOYY Inc.’s platforms include Bigo Live, Likee, and imo, which are accessible to users in China, the United States, the Great Britain, Japan, South Korea, Australia, the Middle East, and Southeast Asia.
JOYY Inc. stock represents 2.67% of James Dinan’s third quarter investments, with the billionaire’s fund holding 461,414 shares of the company, worth $25.2 million.
On December 8, JOYY Inc. declared a quarterly per share dividend of $0.51, which was paid on December 23, to shareholders of record on December 10.
Morgan Stanley analyst Alex Poon on November 2 named JOYY Inc. as a Research Tactical Idea, citing his view that “the share price will rise in absolute terms over the next 60 days.” The stock’s recent selloff has made the short term valuation “much more compelling”, the analyst told investors in his research note. He kept an Overweight rating on JOYY Inc. shares.
According to the Q3 database of 867 elite hedge funds maintained by Insider Monkey, 21 funds were bullish on JOYY Inc., with stakes totaling $250 million. Yiheng Capital is the biggest stakeholder of the company, with more than 1 million shares worth $59 million.
Here is what Tao Value has to say about JOYY Inc. in their Q1 2021 investor letter:
“We exited YY after 3.5 years near an all-time high. The annualized return (13~%) is below expectation, especially compared to founder CEO David Xueling Li’s net worth (mainly in YY shares) ballooning from $1.1B in 2018 to $2.3B in 2021. On value realization, I think YY did a good job, acquiring Bigo, spinning off then selling Huya & selling YY Live to Baidu. But as a minority shareholder, we were treated unfairly. E.g. The Bigo deal (for buying shares from executives including Li) was done by YY stock when the price was severely depressed, causing significant dilution for our ownership. We learned our lessons and will evaluate more rigorously in management’s partnership mindset in the future.”
5. Sea Limited (NYSE:SE)
York Capital Management’s Stake Value: $32,103,000
Percentage of York Capital Management’s 13F Portfolio: 3.38%
Number of Hedge Fund Holders: 117
Sea Limited (NYSE:SE), a provider of digital entertainment, e-commerce, and digital financial services, is one of the top stocks to buy according to billionaire James Dinan, who elevated his position in the company by 26% and holds a $32.1 million stake in Sea Limited as of Q3 2021.
On January 4, Sea Limited was among top losers in a broadly lower tech market, falling 11.4% after Tencent Holdings (OTC:TCEHY) moved to sell $3 billion worth of the stock. Tencent Holdings had looked to unload 14.5 million shares in a price range of $208-$212 each, and ended up selling to Morgan Stanley (NYSE:MS) at $208 per share. Although Sea Limited took a hit, investors are processing that the news may not be what the headlines suggest, and Tencent may just be looking to free up some cash to focus on its own new business areas, or this sell off may be in response to China’s antitrust regulations and tech crackdown.
Citi analyst Alicia Yap on January 31 views the 43% year-to-date selloff in shares of Sea Limited as overdone and believes investors wanted to wait for the Q4 print and 2022 guidance “before feeling comfortable to step in”. The analyst expects that Sea Limited management will work on user engagement and step up new game release effort, and consequently reiterated a Buy rating on the shares with a $386 price target.
Sea Limited caught the interest of smart investors in Q3 2021. According to Insider Monkey’s Q3 data, 117 funds were bullish on Sea Limited, up from 104 funds in the preceding quarter. Chase Coleman’s Tiger Global Management held the largest stake in Sea Limited in the third quarter of 2021, with 10.4 million shares worth $3.3 billion.
Here is what ClearBridge Large Cap Growth Strategy has to say about Sea Limited in its Q3 2021 investor letter:
“Over the last year, we have sought to improve the up capture of the portfolio by expanding exposure to the select bucket of companies growing revenues and earnings at meaningfully above-average rates and targeting large total addressable markets. Newer names in the select bucket like Sea Limited have been strong contributors to relative performance over this period. We believe that owning a broader group of IT and Internet companies with different drivers to the businesses helps manage some of the risk in this relatively more expensive subsector.”
4. New Frontier Health Corporation (NYSE:NFH)
York Capital Management’s Stake Value: $53,775,000
Percentage of York Capital Management’s 13F Portfolio: 5.67%
Number of Hedge Fund Holders: 16
New Frontier Health Corporation (NYSE:NFH) is a private healthcare provider based in Beijing, China. Its platform consists of a network of seven private hospitals and affiliated outpatient clinics, serving customers in eight metropolitan Chinese cities.
James Dinan, as of Q3 2021, elevated his position in New Frontier Health Corporation by 106%, holding 4.7 million shares worth $53.7 million. The stock accounts for 5.67% of the third quarter 13F portfolio at James Dinan’s York Capital Management.
On January 11, New Frontier Health Corporation reported that it had received a notice from the New York Stock Exchange of a possible delisting since New Frontier Health Corporation did not timely publish its financial results for the half year ended June 30, 2021. New Frontier Health Corporation stated that it had not timely filed the financial results since it has focused its resources on its previously announced going private transaction, which is expected to close during the first quarter of 2022. If consummated, the privatization would result in New Frontier Health Corporation becoming a privately held company and its ordinary shares and warrants would no longer be listed on the NYSE.
According to Insider Monkey’s Q3 data, 16 hedge funds were bullish on New Frontier Health Corporation, with stakes totaling $403.70 million. Vivo Capital held the largest stake in New Frontier Health Corporation as of Q3 2021, holding 14.30 million shares worth $160.5 million.
3. GDS Holdings Limited (NASDAQ:GDS)
York Capital Management’s Stake Value: $99,696,000
Percentage of York Capital Management’s 13F Portfolio: 10.52%
Number of Hedge Fund Holders: 24
GDS Holdings Limited (NASDAQ:GDS) is a Shanghai-based company that operates data centers and provides colocation, managed hosting, managed cloud services, and consulting services to the cloud, internet, and banking industries.
York Capital Management boosted its position in GDS Holdings Limited by 244% in the third quarter of 2021, holding 1.76 million shares worth $99.6 million. The stock represents 10.52% of the total Q3 13F portfolio at York Capital Management.
On January 31, RBC Capital analyst Jonathan Atkin lowered the price target on GDS Holdings Limited to $65 from $80, turning more cautious on the name due to regulatory uncertainties in both China and the United States. The analyst stated that these uncertainties could impact the stock’s performance and lend themselves to heightening price volatility. He still kept an Outperform rating on GDS Holdings Limited, citing its attractive multiples relative to its peers, along with its “robust and varied demand”.
In the third quarter of 2021, 24 hedge funds in the database of Insider Monkey were long GDS Holdings Limited, down from 38 funds in the preceding quarter. 12 West Capital Management held the largest stake in the company as of Q3, with 8.1 million shares worth $463.5 million.
Here is what Baron Asset Fund has to say about GDS Holdings Limited in its Q3 2021 investor letter:
“GDS Holdings Limited is a leading data center operator focused on Tier 1 Chinese cities. Its shares fell in concert with a widespread sell-off in Chinese technology-related companies. This occurred in response to tightening regulations against businesses that may not be perceived as aligned with the Chinese government’s goals. Given the uncertainty about future governmental actions, we exited our position.”
2. Enovix Corporation (NASDAQ:ENVX)
York Capital Management’s Stake Value: $139,802,000
Percentage of York Capital Management’s 13F Portfolio: 14.75%
Number of Hedge Fund Holders: 23
Enovix Corporation (NASDAQ:ENVX), which is a California-based manufacturer of lithium-ion batteries, is one of the top stocks to buy according to billionaire James Dinan. Dinan, via York Capital Management, holds a $139.8 million position in Enovix Corporation, which accounts for 14.75% of his total Q3 investments.
On January 11, Piper Sandler analyst Greg Tuttle lowered the price target on Enovix Corporation to $35 from $39 and kept an Overweight rating on the shares.
In Q3 2021, 23 hedge funds tracked by Insider Monkey were bullish on Enovix Corporation, holding stakes equaling $661.8 million. Park West Asset Management is the largest stakeholder of Enovix Corporation as of the close of the third quarter of 2021, with 12.7 million shares worth $228.7 million.
1. NextDecade Corporation (NASDAQ:NEXT)
York Capital Management’s Stake Value: $148,885,000
Percentage of York Capital Management’s 13F Portfolio: 15.71%
Number of Hedge Fund Holders: 12
NextDecade Corporation (NASDAQ:NEXT) is a liquified natural gas development company based in Houston, Texas. The company is actively working on the Rio Grande LNG project in the Port of Brownsville, and brings innovative solutions to the global LNG market.
James Dinan acquired NextDecade Corporation in the third quarter of 2017, buying 53.1 million shares valued at $275.8 million. He elevated and reduced his stake in NextDecade Corporation over the years, and as of Q3 2021, holds a $148.8 million position in the company. The stock represents 15.71% of billionaire James Dinan’s third quarter investments.
According to the Q3 database of Insider Monkey, 12 hedge funds were long NextDecade Corporation, with stakes equaling $223.3 million. Valinor Management LLC is a notable shareholder of the company, owning 14.7 million shares worth approximately $41 million.
You can also take a look at 10 Stocks to Invest in Today According to Robert Richards’ Heathbridge Capital and Billionaire Stephen Mandel’s Portfolio: 8 New Stock Picks.
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originally published on Insider Monkey.
