Top 10 Stock Picks of Joel Ramin’s 12 West Capital

In this post, we will take a look at the top 10 stock picks of Joel Ramin’s 12 West Capital.

12 West Capital is an investment advisory firm based out of New York City, New York, United States. It offers its services to institutional investors and its client base is also located only in the U.S. The firm is headed by Mr. Joel Ramin, who is an investment banker that has worked previously at other firms before 12 West. Mr. Ramin has a Bachelor’s in Science that is focused on Finance. He received this degree from the University of Virginia’s The McIntire School of Commerce in 2000. The executive is 12 West Capital’s portfolio manager and managing member, and he has also worked as a research analyst at Bridger Management, LLC.

Mr. Ramin started his journey with his current firm in 2011 and since then, 12 West Capital’s portfolio has grown to have a value of $2.3 billion as of the second quarter of this year. This makes the fund one of the bigger players out there and its portfolio holdings are concentrated in just 16 companies. 12 West Capital is known for employing both long and short investment approaches, alongside other areas such as preferred stock, warrants, bonds, futures and fixed income securities.

The top three companies in its portfolio represent more than half of the total $2.3 billion of holdings. These three companies, in descending order, are GDS Holdings Limited (NASDAQ:GDS), 10x Genomics, Inc. (NASDAQ:TXG) and Shake Shack Inc. (NYSE:SHAK). Cumulatively, the trio accounts for almost 57% of 12 West Capital’s portfolio and other companies on Mr. Ramin’s radar include financial payments and healthcare firms.

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Our Methodology

In order to gain an understanding of Mr. Ramin and 12 West Capital’s trading strategies and stock selections, we sifted through the investment firm’s 13F filings for the second quarter.

Why pay attention to hedge fund holdings? 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 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.

Top 10 Stock Picks of Joel Ramin’s 12 West Capital

10. Sprout Social, Inc. (NASDAQ:SPT)

Mr. Ramin’s Stake Value: $77.8 million

Percentage of Mr. Ramin’s 13F Portfolio: 3.26%

Number of Hedge Fund Holders: 25

Sprout Social, Inc. (NASDAQ:SPT) is an American social media management tools provider that is headquartered in Chicago, Illinois. It allows its customers to unify their social media and workflow data under a single platform and it also provides them with analytical tools such as those for employee advocacy, automation, reporting and analytics.

By the end of the second quarter of this year, Mr. Ramin’s investment firm held 870,363 Sprout Social, Inc. (NASDAQ:SPT) shares that were worth $77.8 million and represented 3.26% of 12 West Capital’s portfolio. During the same time period, 25 of the 873 hedge funds profiled by Insider Monkey had also held stakes in the company.

Sprout Social, Inc. (NASDAQ:SPT) earned $49 million in revenue and -$0.03 in non-GAAP EPS in its third quarter, beating analyst estimates on both counts. In a September 2021 analyst note, Needham raised the company’s price target to $160 citing optimism about the Sprout Social, Inc. (NASDAQ:SPT) being able to sustain 30% growth over the next couple of years.

Sprout Social, Inc. (NASDAQ:SPT)’s largest investor by the end of this year’s third quarter was Andrew Dalrymple and Barry Mccorkell’s Aubrey Capital Management who held 72,500 shares worth $8.8 billion.

In its second quarter 2021 investor letter, ClearBridge Investments mentioned the company and outlined that:

“Sprout Social (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”

Therefore, it’s a no brainer that Sprout Social, Inc. (NASDAQ:SPT) is part of Mr. Ramin’s top stocks such as GDS Holdings Limited (NASDAQ:GDS), 10x Genomics, Inc. (NASDAQ:TXG) and Shake Shack Inc. (NYSE:SHAK).

9. Square, Inc. (NYSE:SQ)

Mr. Ramin’s Stake Value: $87.7 million

Percentage of Mr. Ramin’s 13F Portfolio: 3.67%

Number of Hedge Fund Holders: 94

Square, Inc. (NYSE:SQ) is an American financial payments provider that is known for several products such as its software application and physical products such as card readers, contactless payments platform and near field communication (NFC) platform.

Square, Inc. (NYSE:SQ) is a part Mr. Ramin’s best stocks, joining the likes of 10x Genomics, Inc. (NASDAQ:TXG), GDS Holdings Limited (NASDAQ:GDS) and Shake Shack Inc. (NYSE:SHAK).

In its earnings report for the third quarter, Square, Inc. (NYSE:SQ) posted $3.84 billion in revenue and $0.00 in GAAP EPS, as it missed analyst estimates for both. The company’s price target was reduced to $315 by Needham in a November 2021 note, due to the unfavorable earnings report and a miss in the Cash App segment.

Mr. Ramin and his 12 West Capital held 360,000 Square, Inc. (NYSE:SQ) shares during the second quarter, in a stake worth $87.7 million and representing 3.67% of the firm’s portfolio. During the same time, 94 of the 873 hedge funds polled by Insider Monkey had invested in the financial services company.

Square, Inc. (NYSE:SQ)’s largest shareholder is Catherine D. Wood’s ARK Investment Management, which owns 6 million shares worth $1.4 billion.

In a first quarter 2021 investor letter, RiverPark Funds mentioned Square, Inc. (NYSE:SQ) and stated that:

“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).

The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown
from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.

We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”

8. Smartsheet Inc. (NYSE:SMAR)

Mr. Ramin’s Stake Value: $102 million

Percentage of Mr. Ramin’s 13F Portfolio: 4.28%

Number of Hedge Fund Holders: 49

Smartsheet Inc. (NYSE:SMAR) is an enterprise software provider that allows its users to work using the cloud. It is headquartered in Bellevue, Washington, and its services allow its customers to coordinate between workers and managers, locate and manage devices for work purposes and let teams collaborate with each other through tools such as calendars.

Mr. Ramin’s 12 West Capital held 1.4 million shares of Smartsheet Inc. (NYSE:SMAR) during the second quarter of this year, in a stake that equaled $102 million and represented 4.28% of its overall portfolio. During the same time, 49 of the 873 hedge funds polled by Insider Monkey had holdings in the company.

Smartsheet Inc. (NYSE:SMAR)’s largest shareholder is Panayotis Takis Sparaggis’ Alkeon Capital Management who owns $238.9 million of equity through 3.3 million shares.

Like 10x Genomics, Inc. (NASDAQ:TXG), GDS Holdings Limited (NASDAQ:GDS) and Shake Shack Inc. (NYSE:SHAK), Smartsheet Inc. (NYSE:SMAR) is also a part of Mr. Ramin’s hot stocks list.

7. Procore Technologies, Inc. (NYSE:PCOR)

Mr. Ramin’s Stake Value: $132.9 million

Percentage of Mr. Ramin’s 13F Portfolio: 5.57%

Number of Hedge Fund Holders: 28

Procore Technologies, Inc. (NYSE:PCOR) is an American company headquartered in Carpinteria, California that provides a cloud based platform to companies for construction management. This enables its customers to collaborate on projects, allowing them to bring a diverse set of teams such as architects, construction workers and engineers on the same platform.

Mr. Ramin’s 12 West Capital held 1.4 million Procore Technologies, Inc. (NYSE:PCOR) shares by the end of the second quarter of this year. These were worth $132.9 million, represented 5.57% of the investment company’s portfolio and were a new addition during the quarter. Similarly, in the second quarter, out of the 873 hedge funds polled by Insider Monkey, 28 had held a stake in the company.

Oppenheimer raised Procore Technologies, Inc. (NYSE:PCOR)’s price target to $115 in a November 2021 investor note citing strong earnings performance and a raised annual guidance. The company earned $132 million in revenue and -$0.02 in non-GAAP EPS in its Q3, beating analyst estimates for both.

Chase Coleman and Feroz Dewan’s Tiger Global Management LLC is Procore Technologies, Inc. (NYSE:PCOR)’s largest shareholder, with a stake of $904 million through 9.5 million shares.

6. Asana, Inc. (NYSE:ASAN)

Mr. Ramin’s Stake Value: $142 million

Percentage of Mr. Ramin’s 13F Portfolio: 5.95%

Number of Hedge Fund Holders: 22

Asana, Inc. (NYSE:ASAN) is an American company headquartered in San Francisco, California and it provides an enterprise collaboration platform that allows companies to manage their workflow through software. This allows companies to allow their employees to connect their work with the organization’s overall goals and objectives.

By the end of the second quarter of this year, Joel Ramin’s 12 West Capital held 2.29 million shares of Asana, Inc. (NYSE:ASAN). These shares are worth $142 million and they represent 5.95% of the investment firm’s overall portfolio. Furthermore, out of the 873 hedge funds polled by Insider Monkey by the end of the second quarter of this year, 22 held a stake in Asana, Inc. (NYSE:ASAN).

Asana, Inc. (NYSE:ASAN) reported $89.5 million in revenue and -$0.23 in non-GAAP EPS during its second quarter, beating analyst estimates on both counts. KeyBanc raised the company’s price target to $143 in an October 2021 analyst note, outlining that its product pipeline stands to serve it well in the future.

Asana, Inc. (NYSE:ASAN)’s largest shareholder is Chase Coleman and Feroz Dewan’s Tiger Global Management LLC with 2.8 million shares worth $178 million.

In a third quarter 2021 investor letter, Carillon Tower Advisers mentioned Asana, Inc. (NYSE:ASAN) and outlined that:

“Asana is a work management software platform that helps teams collaborate and orchestrate work, from daily tasks to cross-functional strategic initiatives. A more recent addition to the portfolio, Asana saw very strong growth as collaboration software is gaining almost viral acceptance among large enterprises and the company is a leader in this space. Investors have appreciated accelerating growth in new client logos and expansion in the existing customer base, coupled with significant purchases of the stock by the CEO.”

Asana, Inc. (NYSE:ASAN) is one of Mr. Ramin’s hot stocks, joining the likes of 10x Genomics, Inc. (NASDAQ:TXG), GDS Holdings Limited (NASDAQ:GDS) and Shake Shack Inc. (NYSE:SHAK).

5. Roblox Corporation (NYSE:RBLX)

Mr. Ramin’s Stake Value: $163 million

Percentage of Mr. Ramin’s 13F Portfolio: 6.83%

Number of Hedge Fund Holders: 49

Roblox Corporation (NYSE:RBLX) is an American entertainment provider that is headquartered in San Mateo, California. It offers its users a 3D (three-dimensional) virtual environment where they can interact with each other and a platform that allows developers to build content and applications.

In its third quarter 2021 earnings report, Roblox Corporation (NYSE:RBLX) reported $509 million in revenue and -$0.13 in GAAP EPS, beating analyst estimates for EPS. Truist reduced the company’s share price target to $92 in October 2021 sharing that the firm was cautious about gaming curbs in China.

Mr. Ramin’s 12 West Capital held 1.8 million shares of Roblox Corporation (NYSE:RBLX) during the second quarter of this year, in a stake worth $163 million and 6.83% of its portfolio. During the same time, 49 of the 873 hedge funds polled by Insider Monkey had holdings in the entertainment company.

Roblox Corporation (NYSE:RBLX)’s largest shareholder is Chase Coleman and Feroz Dewan’s Tiger Global Management LLC who owns $2.4 billion of equity through 27 million shares.

In its third quarter 2021 investor letter, investment management firm Tao Value had the following to say about Roblox Corporation (NYSE:RBLX):

“Roblox is a new position of “Mindful Compounder” category and is a new breed of business that is hard to define at this point. It started with gaming but has the potential to evolve to a new being for human society. Roblox management calls it “human co-experience” and many practitioners call it “metaverse”.

Tao

The company made many “drastic and rational” decisions which shows deep mindfulness – an important trait I look for. The first thing caught my attention is management’s attitude towards security, privacy & trust. Different than Facebook, Roblox took trust and security seriously very early on. So serious that they actually report “Infrastructure and Trust & Safety“ as an accounting item in its operating expense breakdown, indicating that they see the trust & safety is an integral part of the infrastructure of the virtual world. Roblox didn’t just say it, but also did so. For example, Roblox doesn’t have voice chat functionality, which is a key engagement feature and is almost a standard setup for almost all gaming platforms. Yet it is also a feature that is very hard to moderate in real time with old day technologies and can be abused heavily. Roblox made a conscious decision to put security/trust before product stickiness and deferred the audio chat until recently (Roblox recently rolled out an alpha test moderated by AI-based technologies).

Roblox, as any other large social platforms (which becomes the human society itself), will unavoidably have the dark side of the humanity. One Wired article revealed the story about “How ‘Roblox’ Became a Playground for Virtual Fascists”. Yet it is how the platform sees and treats the problem matters. In Roblox’ case, it seems to me that they have a very strong stand on their responsibility (to be the trustee of its users). According to this article, a Roblox spokesperson said the company reviews “every single image, audio file, and video before it is uploaded.” Accordingly, Roblox disclosed that it has 3600 people (albeit outsourced) working on trust and safety, compared to only 1200 full time employees…”

4. Repligen Corporation (NASDAQ:RGEN)

Mr. Ramin’s Stake Value: $214 million

Percentage of Mr. Ramin’s 13F Portfolio: 8.99%

Number of Hedge Fund Holders: 35

Repligen Corporation (NASDAQ:RGEN) manufactures and sells technologies and systems for biological drug manufacturing. The company offers protein ligands, chromatography and filtration products.

By the end of the second quarter, Mr. Ramin held one million shares of Repligen Corporation (NASDAQ:RGEN) in a stake that is worth $214 million and represents 8.99% of his portfolio. The company earned $178 million in revenue and $0.78 in non-GAAP EPS in its third quarter, beating analyst estimates on both counts.

In an September 2021 investment note, Craig-Hallum raised Repligen Corporation’s (NASDAQ:RGEN) price target to $368 sharing that the company’s protein segment is set to benefit in the wake of the ongoing pandemic. Insider Monkey’s second quarter survey of 873 hedge funds revealed that 35 held a stake in Repligen Corporation (NASDAQ:RGEN).

Repligen Corporation (NASDAQ:RGEN)’s largest stakeholder is Robert Joseph Caruso’s Select Equity Group who owns 1.2 million shares worth $258 million.

3. Shake Shack Inc. (NYSE:SHAK)

Mr. Ramin’s Stake Value: $231 million

Percentage of Mr. Ramin’s 13F Portfolio: 9.71%

Number of Hedge Fund Holders: 20

Shake Shack Inc. (NYSE:SHAK) is an American fast food provider that is based out of New York, New York after being founded in 2001. The company is known for its hamburgers, hot dogs, shakes, beers and other food items. It operates both globally and domestically.

In its third quarter 2021 earnings report, Shake Shack Inc. (NYSE:SHAK) reported $193.9 million in revenue and -$0.06 in GAAP EPS, beating analyst estimates for both. Northcoast downgraded the company’s shares to Neutral in a November 2021 analyst note, after the earnings, citing weak Q4 guidance and a worry that the company might not be able to turn revenue into earnings.

Mr. Ramin’s 12 West Capital held 2 million shares of Shake Shack Inc. (NYSE:SHAK) during the second quarter of this year, in a stake worth $231 million and representing 9.71% of its portfolio. During the same time, 20 of the 873 hedge funds polled by Insider Monkey had holdings in the company.

Shake Shack Inc. (NYSE:SHAK)’s largest shareholder after 12 West Capital is Robert Joseph Caruso’s Select Equity Group who owns $102 million of equity through 954,928 shares.

In its third-quarter 2021 investor letter, investment firm Alger had the following to say about Shake Shack Inc. (NYSE:SHAK):

“Shake Shack, Inc. was among the top detractors from performance. Shake Shack is a modern day “roadside” burger stand serving a classic American menu of premium burgers, hot dogs, crinklecut fries, shakes, frozen custard, beer and wine. Founded by Danny Meyer’s Union Square Hospitality Group (“USHG”), Shake Shack was created by leveraging USHG’s expertise in sourcing premium ingredients, community building, hospitality, fine dining and restaurant operations. There are currently 339 locations, including restaurants in 32 U.S. states and the District of Columbia and 116 international locations in cities like London, Hong Kong, Shanghai, Singapore, the Philippines, Mexico, Istanbul, Dubai, Tokyo, Seoul and more.

Shares of Shake Shack underperformed in the third quarter due to a slower-than-expected recovery in urban locations and a lower-than-expected margin outlook. Sales at Urban locations were still down 18% year over year in July compared to a 23% decline in May, a modest improvement but less than expectations. We believe a delay in return to work has caused a temporary stalling in the company’s margin recovery, but this should improve as urban mobility increases and tourism from foreigners normalizes. On margins, the company guided to 15%-17% restaurant-level margins, which was below expectations of 18.9%. This margin outlook factored in higher wage inflation, which the company will begin to offset with a 3.5% price increase in the coming months. We believe margin recovery can potentially follow a sales recovery so near-term revenue choppiness may result in margin weakness but we believe the company is well positioned for when the environment normalizes as the pandemic winds down. Ultimately, we believe the pandemic accelerated Shake Shack’s digital efforts, so the company is currently positioned to benefit from a strong online presence. Digital was only 12% of sales in the early months of 2020, but that increased to 47% as of the second quarter of this year.”

2. 10x Genomics, Inc. (NASDAQ:TXG)

Mr. Ramin’s Stake Value: $376 million

Percentage of Mr. Ramin’s 13F Portfolio: 15.77%

Number of Hedge Fund Holders: 28

10x Genomics, Inc. (NASDAQ:TXG)’s largest shareholder is Catherine D. Wood’s ARK Investment Management who owns 4.3 million shares worth $842 million.

In its third quarter 2021 earnings report, 10x Genomics, Inc. (NASDAQ:TXG) reported $125 million in revenue and -$0.15 in GAAP EPS, beating analyst estimates for both. BofA downgraded the company’s shares to Neutral in a September 2021 analyst note with a $180 price target, sharing that a ‘negative tone’ during earnings cast a shadow on the company’s future.

1. GDS Holdings Limited (NASDAQ:GDS)

Mr. Ramin’s Stake Value: $749 million

Percentage of Mr. Ramin’s 13F Portfolio: 31.43%

Number of Hedge Fund Holders: 38

GDS Holdings Limited (NASDAQ:GDS) is a Chinese company headquartered in Shanghai, China and founded in 2001. It operates data centers in the Asian country and provides services such as consulting to several industries such as finance, internet and cloud.

GDS Holdings Limited (NASDAQ:GDS)’s biggest hedge fund holder after Mr. Ramin is Chase Coleman and Feroz Dewan’s Tiger Global Management LLC, which holds 2.5 million shares that are roughly worth $201 million.

By the end of the second quarter of this year, Mr. Ramin’s 12 West Capital held 9.5 million shares of GDS Holdings Limited (NASDAQ:GDS) with the stake equaling $749 million and representing 31.43% of the investment firm’s portfolio. At the same time, 38 of 873 hedge funds polled by Insider Monkey held shares of GDS Holdings Limited (NASDAQ:GDS).

GDS Holdings Limited (NASDAQ:GDS) reported $288 million in revenue for its second quarter, alongside GAAP EPS of -$0.03 as it met analyst estimates for revenue and beat them for EPS. In a November 2021 analyst note, RBC Capital lowered the company’s price target to $82 and kept an Outperform rating for GDS Holdings Limited (NASDAQ:GDS) shares, highlighting that it expected strong operating performance but regulatory uncertainty was creating headwinds.