In this piece, we will take a look at the top 10 stock picks of Mark Moore’s ThornTree Capital.
ThornTree Capital Partners is a global equity long/short fund located in Boston, Massachusetts. It offers investment advisory services and has been in the business for roughly six years. At the helm is the firm’s founder Mr. Mark Moore, who has more than a decade of experience working in the financial sector.
Mr. Moore, like several other of his counterparts in the hedge fund world, has a Master’s in Business Administration (MBA) from the Harvard University’s Harvard Business School. Prior to that, however, the executive attended the University of Michigan for a Bachelor’s of Science in Industrial Engineering. During his Bachelor’s, he focused on linear programming and optimization, a unique choice for someone who would go on to lead a hedge fund with a portfolio worth hundreds of millions of dollars.
By the end of the second quarter of this year, ThornTree Capital had more than $700 million in its stock portfolio, with the holdings evenly spread out over its constituent companies. The list of companies spans firms across several sectors, including social media, cloud computing and payments.
The hedge fund’s largest stakes are in Zillow Group, Inc. (NASDAQ:Z), Meta Platforms, Inc. (NASDAQ:FB) and Smartsheet Inc. (NYSE:SMAR). Together, the three companies represent less than one fifth of ThornTree Capital’s portfolio value. The firm heavily trimmed its holdings in the three companies during the second quarter of this year, reducing stakes in Zillow and Smartsheet by 22%, each.
Our Methodology
In order to determine the top stock picks of Mr. Moore’s investment fund, we took a look at ThornCpital’s Form 13-F filings for the second quarter of this year with the Securities and Exchange Commission.
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.
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Top 10 Stock Picks of Mark Moore’s ThornTree Capital
10. Azul S.A. (NYSE:AZUL)
Value of Mr. Moore’s Stake: $33.4 Million
Percentage of ThornTree Capital’s 13F Portfolio: 4.51%
Number of Hedge Fund Holders: 10
Azul S.A. (NYSE:AZUL) is a Brazilian logistics provider headquartered in Barueri, Brazil. The company uses its fleet of 162 aircraft to cover hundreds of destinations all over the world, alongside having its own investment fund and other services such as holiday packages.
During its third quarter, Azul S.A. (NYSE:AZUL) earned Brazilian R$2.7 billion in revenue and made a loss of -$1.08 non-GAAP earnings per diluted share (EPADS), beating analyst estimates on both counts. During the same period, 10 of the 873 hedge funds polled by Insider Monkey had holdings in the company.
Azul S.A. (NYSE:AZUL) price target was lowered to $25 by Citi in an investment note released in November, with the bank citing currency depreciation and soaring oil prices as negatives and vaccination rates alongside new U.S. travel guidelines as positives for the company. ThornTree Capital holds 1.2 million shares of the company that represents 4.51% of Mr. Moore’s portfolio and are worth $33.4 million.
Azul S.A. (NYSE:AZUL)’s largest shareholder is Howard Marks’s Oaktree Capital Management, which owns 1.8 million shares for a stake that is worth $49 million.
Alongside Meta Platforms, Inc. (NASDAQ:FB), Smartsheet Inc. (NYSE:SMAR) and Zillow Group, Inc. (NASDAQ:Z), Azul S.A. (NYSE:AZUL) is on the list of Mr. Moore’s top stock picks.
9. Penn National Gaming, Inc. (NASDAQ:PENN)
Value of Mr. Moore’s Stake: $33.5 Million
Percentage of ThornTree Capital’s 13F Portfolio: 4.53%
Number of Hedge Fund Holders: 40
Penn National Gaming, Inc. (NASDAQ:PENN) provides video game terminals and other gaming properties and facilities in the United States. It was founded in 1972 and is based in Wyomissing, Pennsylvania. It also provides gambling applications and horse racing tracks.
Mr. Moore’s hedge fund owned 439,108 Penn National Gaming, Inc. (NASDAQ:PENN) shares by the end of the second quarter of this year, in a stake that was worth $33.5 million and represented 4.53% of his company’s portfolio. Out of the 873 hedge funds polled by Insider Monkey during the same time period, 40 had held a stake in Penn National Gaming, Inc. (NASDAQ:PENN).
The company earned $1.5 billion in revenue and $0.52 in GAAP EPS during its third fiscal quarter, missing analyst estimates for EPS and meeting those for revenue. In a November 2021 analyst note, Deutsche Bank upgraded Penn National Gaming, Inc. (NASDAQ:PENN) to Hold from Sell and kept its price target unchanged at $31, outlining the company’s massive underperformance with respect to its peers.
Penn National Gaming, Inc. (NASDAQ:PENN)’s largest investor is Parag Vora’s HG Vora Capital Management who owned 2.5 million shares worth $191 million by the end of the second quarter of this year.
In its second quarter 2021 investor letter, investment management firm Carillon Tower Advisers, mentioned Penn National Gaming, Inc. (NASDAQ:PENN) and outlined that:
“Penn National Gaming is a diversified omnichannel provider of retail and online gaming, live racing, and sports betting entertainment. After a substantial run, Penn National Gaming sold off during the quarter, reflecting a profit taking in a number of sports and online gambling stocks. However, fundamentals are healthy in firm’s regional gaming markets and its sports betting initiatives remain strong.”
8. Williams-Sonoma, Inc. (NYSE:WSM)
Value of Mr. Moore’s Stake: $35.4 Million
Percentage of ThornTree Capital’s 13F Portfolio: 4.7%
Number of Hedge Fund Holders: 34
Williams-Sonoma, Inc. (NYSE:WSM) is a home product specialty retailer that provides cooking, dining and entertainment products. It is an old American company founded in 1956 and headquartered in San Francisco, California.
During its second quarter, Williams-Sonoma, Inc. (NYSE:WSM) earned $1.95 billion in revenue and $3.24 in non-GAAP earnings per share, beating analyst estimates on both counts. During the same period, 34 of 873 hedge funds polled by Insider Monkey had holdings in the company. ThornTree Capital holds 221,743 Williams-Sonoma, Inc. (NYSE:WSM) shares that represent 4.7% of Mr. Moore’s portfolio and are worth $35.4 million.
Williams-Sonoma, Inc. (NYSE:WSM) price target was raised to $199 by RBC Capital in an August 2021 investment note. The research firm was impressed by the company’s latest earnings report and future targets.
Williams-Sonoma, Inc. (NYSE:WSM)’s largest shareholder is Robert Joseph Caruso’s Select Equity Group, which owns 1.8 million shares for a stake that is worth $291 million.
Alongside Meta Platforms, Inc. (NASDAQ:FB), Smartsheet Inc. (NYSE:SMAR) and Zillow Group, Inc. (NASDAQ:Z), Williams-Sonoma, Inc. (NYSE:WSM) is on the list of Mr. Moore’s top stock picks.
7. DocuSign, Inc. (NASDAQ:DOCU)
Value of Mr. Moore’s Stake: $36.5 Million
Percentage of ThornTree Capital’s 13F Portfolio: 4.92%
Number of Hedge Fund Holders: 58
DocuSign, Inc. (NASDAQ:DOCU) is an American company that deals with e-signature services and solutions.
Mr. Moore held 130,662 shares of DocuSign, Inc. (NASDAQ:DOCU) that were worth $36.5 million and which constituted 4.92% of his portfolio by the end of the second quarter.
The company’s largest stakeholder is Andrew Dalrymple and Barry Mccorkell’s Aubrey Capital Management, which holds 34,600 shares worth $9.6 billion.
In a September 2021 investor note, Evercore ISI raised DocuSign, Inc. (NASDAQ:DOCU)’s price target to $320 along with an Outperform rating, citing strong results and plenty of future growth opportunities.
In its second quarter 2021 investor note, investment firm Carillon Tower Advisers mentioned DocuSign, Inc. (NASDAQ:DOCU) and outlined that:
“DocuSign provides electronic signature solutions. The firm reported an excellent quarter and investors have appreciated the strong growth combined with the excellent margins the company has posted. DocuSign has a long runway of growth ahead and we believe that it remains in a favorable position to continue gaining market share from traditional manual and paper-based signature solutions.”
6. XP Inc. (NASDAQ:XP)
Value of Mr. Moore’s Stake: $38.6 Million
Percentage of ThornTree Capital’s 13F Portfolio: 5.2%
Number of Hedge Fund Holders: 25
XP Inc. (NASDAQ:XP) is a Brazilian financial services provider that deals in pension plans and investment banking products. The company is headquartered in Sao Paulo and it was founded in 2001. It serves corporate, retail and institutional investors.
During its third quarter, XP Inc. (NASDAQ:XP) earned R$3 billion in net revenue and R$1 billion in net income, to mark for an impressive 51% annual revenue growth. By the end of the second quarter, 25 of 873 hedge funds polled by Insider Monkey had holdings in the company. ThornTree Capital held 888,326 XP Inc. (NASDAQ:XP) shares that represent 5.2% of Mr. Moore’s portfolio and are worth $38.6 million at Q2 2021 end.
XP Inc. (NASDAQ:XP) price target was kept at $50 by RBC Capital in an October 2021 investment note alongside a rating upgrade to Overweight.
Panayotis Takis Sparaggis’s Alkeon Capital Management is XP Inc. (NASDAQ:XP) largest shareholder by owning 4.2 million shares worth $186 million.
Alongside Meta Platforms, Inc. (NASDAQ:FB), Smartsheet Inc. (NYSE:SMAR) and Zillow Group, Inc. (NASDAQ:Z), XP Inc. (NASDAQ:XP) is on the list of Mr. Moore’s favorite stocks.
5. StoneCo Ltd. (NASDAQ:STNE)
Value of Mr. Moore’s Stake: $40 Million
Percentage of ThornTree Capital’s 13F Portfolio: 5.42%
Number of Hedge Fund Holders: 44
StoneCo Ltd. (NASDAQ:STNE) is a Brazilian electronic commerce financial services provider that was founded in 2000 and is headquartered in George Town, Cayman Islands. It offers its products and services to brick and mortar and digital merchants, among others.
During its second quarter, StoneCo Ltd. (NASDAQ:STNE) earned R$613 million in revenue and -R$0.47 in non-GAAP EPS, marking for an 8% annual revenue drop. In an October 2021 analyst note, Susquehanna lowered the company’s price target to $65 and kept a Positive rating on the shares explaining that discussions with management indicated positive performance in the third quarter.
By the end of the second quarter 2021, Mr. Moore held 599,946 shares of StoneCo Ltd. (NASDAQ:STNE). These were worth $40 million and made up for 5.42% of his portfolio. During the same time, 44 out of 873 hedge funds polled by Insider Monkey had held a stake in the company.
StoneCo Ltd. (NASDAQ:STNE) largest investor is Rishi Renjen’s ROAM Global Management who owns 149,034 shares worth $9.9 billion.
4. Affirm Holdings, Inc. (NASDAQ:AFRM)
Value of Mr. Moore’s Stake: $41.4 Million
Percentage of ThornTree Capital’s 13F Portfolio: 5.59%
Number of Hedge Fund Holders: 25
Affirm Holdings, Inc. (NASDAQ:AFRM) operates a digital and mobile commerce platform in the United States and Canada which allows its customers to access a payment solution and avail services like an application. It also has a payments network that lets its customers pay in installments.
In an investor note issued in November 2021, Mizuho raised Affirm Holdings, Inc. (NASDAQ:AFRM) price target to $180 after updating its models following earnings season. By the end of its first fiscal quarter, the company reported $269 million in revenue and -$1.13 in GAAP EPS, missing analyst estimates for EPS.
During the second quarter, Mr. Moore held 615,871 Affirm Holdings, Inc. (NASDAQ:AFRM) shares. These were worth $41.4 million and represented 5.59% of his overall portfolio. At the same time, 25 out of the 873 hedge funds polled by Insider Monkey had held a stake in the company.
Affirm Holdings, Inc. (NASDAQ:AFRM)’s largest investor by the second quarter was Joshua Kushner’s Thrive Capital who owned 3.9 million shares worth $265 million.
3. Smartsheet Inc. (NYSE:SMAR)
Value of Mr. Moore’s Stake: $44.6 Million
Percentage of ThornTree Capital’s 13F Portfolio: 6.01%
Number of Hedge Fund Holders: 49
Smartsheet Inc. (NYSE:SMAR) is an American company headquartered in Bellevue, Washington that deals in cloud based workflow software. The company’s products allow its customers to coordinate their employee activities and visibility into daily operations alongside planning and coordination.
Mr. Moore held 619,963 shares of Smartsheet Inc. (NYSE:SMAR) by the end of the second quarter. These were worth $44.6 million and represented 6.01% of his portfolio. During the same time period, 49 out of the 873 hedge funds surveyed by Insider Monkey held a stake in the company.
During its second quarter, Smartsheet Inc. (NYSE:SMAR) earned $131 million in revenue and -$0.05 in non-GAAP EPS, beating analyst estimates on both counts. The company’s price target was raised to $90 by BMO Capital in a September 2021 analyst note which highlighted that a good total addressable market and remote working trends should serve the company well.
Smartsheet Inc. (NYSE:SMAR)’s largest investor is Panayotis Takis Sparaggis’s Alkeon Capital Management who owns 3.3 million shares worth $238 million.
2. Meta Platforms, Inc. (NASDAQ:FB)
Value of Mr. Moore’s Stake: $46 Million
Percentage of ThornTree Capital’s 13F Portfolio: 6.24%
Number of Hedge Fund Holders: 266
Meta Platforms, Inc. (NASDAQ:FB) is perhaps the world’s most famous social media firm, which is headquartered in the American state of California. Initially starting out as a simple platform that lets its users connect with each other and share their life updates, Meta Platforms, Inc. (NASDAQ:FB) now owns several services and operates its own marketplace in addition to its other venues.
During its third quarter, Meta Platforms, Inc. (NASDAQ:FB) brought in $29 billion in revenue and $3.22 in GAAP EPS, beating analyst estimates for the EPS. Rosenblatt upgraded the company’s shares to Buy and kept the price target unchanged at $400, sharing cautious optimism about capital expenditure in an October 2021 analyst note.
Mr. Moore’s ThornTree Capital held 133,045 Meta Platforms, Inc. (NASDAQ:FB) shares that were worth $46 million and represented 6.24% of his total portfolio value by the end of the second quarter. During the same time period, 266 of the 873 hedge funds polled by Insider Monkey held stakes in the company.
Meta Platforms, Inc. (NASDAQ:FB)’s largest shareholder is Alexander Becker’s Codex Capital who owns 27,950 shares worth $9.6 billion.
In its third quarter investor letter, Wedgewood Partners had the following to say about Meta Platforms, Inc. (NASDAQ:FB):
“Facebook detracted from performance despite posting a staggering +56% growth in advertising revenues. Much of the stock’s underperformance was driven by nonoperating concerns that we view as mostly political in nature. The Company’s digital properties command a massive audience of over 2.7 billion daily users, so any government or state actor would be able to wield tremendous power by controlling that audience and it should not be a surprise when those actors attempt to do that. However, Facebook has invested aggressively in its content curation capabilities that address many of the concerns raised by media and political critics. We continue to carry Facebook at our maximum weighting as the stock is trading in line with a market multiple despite unrivaled competitive positioning and rapid growth, representing one of the best risk-rewards available in the market.”
1. Zillow Group, Inc. (NASDAQ:Z)
Value of Mr. Moore’s Stake: $47.6 Million
Percentage of ThornTree Capital’s 13F Portfolio: 6.43%
Number of Hedge Fund Holders: 76
Zillow Group, Inc. (NASDAQ:Z) is an American company headquartered in Seattle, Washington that provides its customers with the means to conduct transactions and other services in the real estate sector. These include buying, selling, insurance, financing and more.
Mr. Moore held 390,266 shares of Zillow Group, Inc. (NASDAQ:Z) by the end of the second quarter. These were worth $47.6 million and represented 6.43% of his portfolio. During the same time period, 76 out of the 873 hedge funds surveyed by Insider Monkey held a stake in the company.
During its third quarter, Zillow Group, Inc. (NASDAQ:Z) earned $1.74 billion in revenue and -$0.95 in non-GAAP EPS, missing analyst estimates on both counts. The company’s price target was reduced to $95 by Craig Hallum in a November 2021 analyst note which highlighted that while some company initiatives failed miserably, others carry a good chance of performing well.
Zillow Group, Inc. (NASDAQ:Z)’s largest investor is Catherine D. Wood’s ARK Investment Management who owns 10 million shares worth $1.2 billion.
In a third quarter 2021 investor letter, Third Avenue Management had the following to say about Zillow Group, Inc. (NASDAQ:Z):
“In the past, we have railed against the failure of inflation statistics to capture important developments related to housing costs. If that point was debatable then, it certainly is not now. In August, Zillow reported that its Home Value Index3 had risen 17.7% year-over-year. S&P Case Shiller has not yet reported its August home price figures but, in July, the index measured a 19.7% year over year increase, which had been preceded by an 18.7% increase in June and 16.9% in May, each a record at the time. Zillow’s Observed Rent Index rose by 11.5% year over year in August. Meanwhile, the U.S. Bureau of Labor Statistics calculated that “rent of primary residence” rose 2.1% year over year in August while “owners’ equivalent rent of residences” rose by 2.6%. If one were to accept Zillow’s Observed Rent Index data as a reasonably accurate depiction of the pace of rental rate increases—and it is similar to several other independent sources of national home rental data—the incorporation of that data into the CPI weighting system in August would have caused CPI to be measured at something like 8.1% rather than 5.3%.”
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Disclosure. None. Top 10 Stock Picks of Mark Moore’s ThornTree Capital is originally published on Insider Monkey.
