Top 5 Stock Picks of Michael Pausic’s Foxhaven Asset Management

5. Twilio Inc. (NYSE:TWLO)

Foxhaven Asset Management’s Stake Value: $272 million

Percentage of Foxhaven Asset Management’s 13F Portfolio: 7.38%

Number of Hedge Fund Holders: 96

Michael Pausic’s Foxhaven Asset Management held a huge position in Twilio Inc. (NYSE:TWLO) since 2017. Its shares remained under pressure in 2021. Despite that, shares of cloud communication as a service company are up more than 500% in the past five years.

In the third quarter investor letter, RiverPark Funds, an investment management firm, mentioned a few stocks including Twilio. Here is what RiverPark Funds stated: 

“TWLO shares were also a top detractor for the quarter. Just like after 1Q, despite another quarterly beat in 2Q, management guidance–which we believe to be conservative–disappointed some investors. Second quarter revenue of $669 million was up 67% year over year, significantly exceeding management’s guidance of 47%-50% revenue growth. Management guided 3Q21 revenue to 50%-52% revenue growth, which was ahead of expectations, but due to continued investment also guided to a non-GAAP operating loss of $25 million-$30 million, which was below the Street’s forecast of a $12 million loss.

The COVID crisis has accelerated the adoption of the company’s cloud-based, integrated communications platform that allows companies in a wide range of businesses to embed digital communications capabilities (video, chat, voice, SMS, fax, and email) into their customer facing applications without needing to build back-end infrastructure and interfaces. Twilio’s total addressable market is now greater than $40 billion, which should grow by 50% over the next few years, providing a strong secular tailwind for the company. We expect the company’s gross margin to continue to expand from 54% in the second quarter toward management’s long-term goal of 60%-65%, and, as the company grows to scale, we expect its non-GAAP operating margin to expand to 25%.”