Top 10 Stock Picks of Robert Smith’s Vista Equity Partners

In this article, we discuss the top 10 stock picks of Robert Smith’s Vista Equity Partners.

Robert F. Smith is the Founder, Chairman, and CEO of Vista Equity Partners. He completed his Bachelor’s in Chemical Engineering from Cornell University in 1985. After his graduation, Robert worked at notable organizations like Goodyear Tire and Rubber and Kraft General Foods. He then completed his MBA in Finance from the Columbia Business School in 1994 and joined the investment banking division at Goldman Sachs. During his stay there, Robert completed $50 billion worth of mergers and acquisitions in the tech sector.

In 2000, Robert founded Vista Equity Partners to invest in tech businesses. With assets under management (AUM) of $86 billion, the hedge fund oversees a portfolio of over 70 tech companies. Since its inception, Vista Equity Partners has completed more than 550 deals with a cumulative value of around $212 billion. In the past 12 months, Vista Equity returned private equity and permanent capital worth $7.3 billion, while the total capital raised was valued at $9.4 billion.

Last year, Vista Equity established a Sustainability Leadership Council to work with portfolio firms on environmental, social, and governance (ESG) objectives. In accordance with its aim of being a carbon-neutral company, Vista Equity Partners acquired Verified Carbon Standard credits to offset its emissions.

In the third quarter, the hedge fund initiated a position in 4 new stocks, reduced holdings in 10 stocks, and sold out of 2 stocks. As of Q3, Robert Smith’s Vista Equity Partners has a stake in popular companies like Microsoft Corporation (NASDAQ:MSFT), Twilio Inc. (NYSE:TWLO), and Uber Technologies, Inc. (NYSE:UBER).

Our Methodology

In this article, we will take a look at the top 10 stock picks of Robert Smith’s Vista Equity Partners. These stocks have been picked from the third quarter portfolio of Robert Smith’s Vista Equity Partners.

10. Dynatrace, Inc. (NYSE:DT)

Robert Smith’s Vista Equity Partners’ Stake Value: $40,310,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 0.38%

Number of Hedge Funds: 41

Dynatrace, Inc. (NYSE:DT) is a provider of software intelligence platforms that employ artificial intelligence (AI) and automation to monitor and optimize application development, performance and security, IT infrastructure, and user experience for corporations and government organizations globally. The Massachusetts-based organization has 50 offices around the world.

In a note issued to investors on October 28, Keith Bachman at BMO Capital increased the price target on Dynatrace, Inc. (NYSE:DT) from $72 to $81 and maintained an Outperform rating on the stock.

Dynatrace, Inc. (NYSE:DT) was mentioned in the Q3 investor letter of Polen Capital. Here’s what the investment management firm said:

“Dynatrace outperformed during the quarter as the company reported earnings results that handily beat expectations. The company continues to increase its customer base and has expanded net revenues with existing customers.”

Apart from Dynatrace, Inc. (NYSE:DT), Robert Smith’s Vista Equity Partners also has a stake in popular companies like Microsoft Corporation (NASDAQ:MSFT), Twilio Inc. (NYSE:TWLO), and Uber Technologies, Inc. (NYSE:UBER) as of Q3 2021.

9. ServiceNow, Inc. (NYSE:NOW)

Robert Smith’s Vista Equity Partners’ Stake Value: $44,436,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 0.42%

Number of Hedge Funds: 87

ServiceNow, Inc. (NYSE:NOW) is a developer of a cloud computing platform that operates as a provider of Platform-as-a-Service (PaaS). The company provides technical management support like IT service management (ITSM) to other corporations. An example can be a ticketing tool that catalogs and processes requests for customer service. ServiceNow, Inc. (NYSE:NOW) also employs machine learning to optimize the data and overflow for businesses to make them efficient and scalable.

On November 16, Phil Winslow at Credit Suisse initiated coverage of ServiceNow, Inc. (NYSE:NOW) with an Outperform rating and a price target of $850.

RiverPark Funds discussed its stance on ServiceNow, Inc. (NYSE:NOW) in its Q3 2021 investor letter. Here’s what the firm said:

“NOW shares were our final top contributor for 3Q on a strong beat and raise quarter. The company reported 31% subscription revenue growth, 30% subscription billings growth, and a 19% non-GAAP FCF margin for the quarter, while raising full year subscription revenue and billings guidance to 29% and 31%, respectively, as well as raising non-GAAP FCF margin by 100 basis points to 31%.

ServiceNow is a best-of-breed provider of both IT Service Management (ITSM) and IT Operations Management (ITOM) solutions to enterprise customers. The company’s products serve mainly its clients’ internal employee base with a current focus on automating the process of IT deployment, configuration and service and management of IT assets across an organization. Both its ITSM and ITOM solutions are delivered as a software-as-a-service (SaaS), and are each leading solutions in growing markets, driven by the secular trend of enterprises transitioning all aspects of their business and operations to the cloud. As the company maintains and adds customers, upsells them, and expands into adjacent markets, we believe NOW should sustain a strong long-term revenue and FCF growth trajectory.”

8. HubSpot, Inc. (NYSE:HUBS)

Robert Smith’s Vista Equity Partners’ Stake Value: $52,671,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 0.5%

Number of Hedge Funds: 48

HubSpot, Inc. (NYSE:HUBS) develops and markets customer service, inbound marketing, and sales-related software. The Cambridge, Massachusetts-based company was founded in 2006 by two Harvard students, Brian Halligan and Dharmesh Shah.

Robert Smith’s Vista Equity Partners held 77,906 shares of HubSpot, Inc. (NYSE:HUBS), worth over $52.6 million at the end of Q3 2021. The investment represents 0.5% of the overall portfolio. The hedge fund initiated a position in the stock in Q1 2016.

In a report issued on December 13, Gabriela Borges at Goldman Sachs started coverage of HubSpot, Inc. (NYSE:HUBS) with a $953 price target and a Buy rating. The analyst thinks that HubSpot, Inc.’s (NYSE:HUBS) business strategy and its execution will result in analysts increasing their revenue and earnings estimates in the next five years.

Overall, 48 hedge funds held a position in HubSpot, Inc. (NYSE:HUBS) at the end of Q3 2021, down from 54 in the preceding quarter.

7. Lightspeed Commerce Inc. (NYSE:LSPD)

Robert Smith’s Vista Equity Partners’ Stake Value: $133,759,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 1.29%

Number of Hedge Funds: 26

Lightspeed Commerce Inc. (NYSE:LSPD) is a provider of cloud-based data analytics, point of sales (POS), and e-commerce software. The Montreal, Quebec-based organization offers services to hospitality, restaurants, and retail companies. The company has undertaken acquisitions worth $2 billion since the start of 2020 to consolidate its focus on the retail and restaurant industry. Vista Equity Partners initiated a long position in Lightspeed Commerce Inc. (NYSE:LSPD) stock during Q3 FY22 with 1.39 million shares.

On November 8, Mark Palmer at BTIG maintained a Buy rating on Lightspeed Commerce Inc. (NYSE:LSPD) and reiterated a price target of $112.

6. KnowBe4, Inc. (NASDAQ:KNBE)

Robert Smith’s Vista Equity Partners’ Stake Value: $360,868,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 3.48%

Number of Hedge Funds: 18

KnowBe4, Inc. (NASDAQ:KNBE) provides training related to security awareness and a simulated phishing platform that can help overcome the ever-growing challenge of social engineering. The platform offers browser-based engaging and interactive training with unlimited fictitious scenarios related to social engineering attacks via email, phone, and text. KnowBe4, Inc. (NASDAQ:KNBE) claims to provide access to the world’s biggest database related to security awareness training in 34 languages.

On November 4, Brian Essex at Goldman Sachs upgraded the KnowBe4, Inc. (NASDAQ:KNBE) stock from Neutral to a Buy rating and also increased the price target from $33 to $34. The analyst highlighted that the company reported “another strong quarter of extension.”

In addition to KnowBe4, Inc. (NASDAQ:KNBE), Microsoft Corporation (NASDAQ:MSFT), and Twilio Inc. (NYSE:TWLO),  Uber Technologies, Inc. (NYSE:UBER) is also amongst the top 10 stock picks of Robert Smith’s Vista Equity Partners as of Q3 2021.

5. Ping Identity Holding Corp. (NYSE:PING)

Robert Smith’s Vista Equity Partners’ Stake Value: $487,355,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 4.7%

Number of Hedge Funds: 20

Ping Identity Holding Corp. (NYSE:PING) provides federated identity management and self-hosted identity access management (IAM) services. These services are used by Microsoft Azure, Amazon Web Services, Google Cloud, other forms of private cloud, and Software-as-a-Service (SaaS). Ping Identity Holding Corp. (NYSE:PING) was founded in 2002 by Andre Durand and Bryan Field-Elliot. Following multiple rounds of funding, Vista Equity Partners acquired majority ownership of the company through a leveraged buyout of $600 million in June 2016. Three years later, Vista Equity Partners decided to take the company public through an IPO.

During its investor day on December 1, Ping Identity Holding Corp. (NYSE:PING) revealed that it expects a total addressable market (TAM) of at least $50 billion by 2023. The company also shared its long-term revenue growth target of 20% to 25% until 2023 and more than 50% SaaS revenue CAGR from FY21 to FY24. Following the investor day, Patrick Colville at Deutsche Bank maintained a Hold rating on Ping Identity Holding Corp. (NYSE:PING) stock with a $25 price target. The analyst termed the targets set by the company as “impressive” but stated that it is a “show me” story that requires proof.

In its Q2 2021 investor letter, Baron Discovery Fund shared its stance on Ping Identity Holding Corp. (NYSE:PING). Here’s what the fund said:

“Ping Identity Corporation is a software company that provides secure user identification, mainly for large enterprises. We initially invested in Ping on its IPO in the third quarter of 2019. Ping’s products address employee access as well as customer access. Examples of Ping’s products include multi-factor identification (which might use mobile text verification or a biometric identifier like a fingerprint to add to a password protected identity), and single sign-on (SSO, which allows employees of a firm to log into multiple applications simultaneously). Ping secures over 2 billion identities globally. It is a well-run company with highly visible growth prospects, a strong balance sheet, and real free cash flow. Ping also trades at a reasonable valuation multiple, far below that of its closest competitors. In our opinion, this is because it has been growing slower than its rivals (low to mid-teens revenue growth versus 40% plus at the competitors). But with new products (recognized by leading consulting firms as industry leading) and a better focus on marketing, we surmise that growth will accelerate meaningfully. There is also a significant margin-expansion opportunity. If the expected growth and margin expansion occur, Ping’s share price should substantially increase.”

4. PowerSchool Holdings, Inc. (NYSE:PWSC)

Robert Smith’s Vista Equity Partners’ Stake Value: $1,855,935,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 17.93%

Number of Hedge Funds: 11

PowerSchool Holdings, Inc. (NYSE:PWSC) provides cloud-based software for the K-12 education market. The platform is adopted by 90 out of the top 100 US districts in terms of student enrollment. PowerSchool Holdings, Inc. (NYSE:PWSC) has over 13,000 customers spread across 90 countries globally and claims to serve 70% of all K-12 students in the US and Canada.

Robert Smith’s Vista Equity Partners held over 75 million shares of the stock at the end of Q3 2021, worth $1.86 billion. Overall, 11 hedge funds out of the 867 being tracked by Insider Monkey reported owning a stake in PowerSchool Holdings, Inc. (NYSE:PWSC) at the end of the third quarter.

3. Integral Ad Science Holding Corp. (NASDAQ:IAS)

Robert Smith’s Vista Equity Partners’ Stake Value: $1,947,059,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 18.81%

Number of Hedge Funds: 19

Integral Ad Science Holding Corp. (NASDAQ:IAS) is a New York-based digital advertising corporation that looks into the placement of digital advertisements. The company went public in June 2021 and is known for catering to fraud-related issues, providing verification and viewability measures, and also has the proprietary TRue Advertising Quality (TRAQ) scoring system under its umbrella.

Robert Smith’s Vista Equity Partners initiated a position in Integral Ad Science Holding Corp. (NASDAQ:IAS) stock in the second quarter of 2021. The hedge fund owns over 94 million shares of the stock, representing 18.81% of the overall portfolio as of Q3 2021.

2. Jamf Holding Corp. (NASDAQ:JAMF)

Robert Smith’s Vista Equity Partners’ Stake Value: $2,092,225,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 20.21%

Number of Hedge Funds: 23

Jamf Holding Corp. (NASDAQ:JAMF) is a software company known for the development of Jamf Pro, formerly known as the Casper Suite, until the rebranding. The software aims to allow system administrators to automate and configure IT-related tasks on the operating systems of various Apple Inc. (NASDAQ:AAPL) devices like the iPhone, iPad, iMac, and Apple TV.

Jamf Holding Corp. (NASDAQ:JAMF) was founded in 2002. Vista Equity Partners made Jamf Holding Corp. (NASDAQ:JAMF) a subsidiary by becoming a majority shareholder in the company in December 2017. Soon after, Jamf acquired three more entities to expand its portfolio of users and services in the next two years. Following consolidation, Vista Equity Partners took the company public through an IPO and raised $468 million at a valuation of $4.6 billion in July 2020.

Brian Essex at Goldman Sachs resumed coverage of Jamf Holding Corp. (NASDAQ:JAMF) with a $38 price target and a Buy rating. The analyst highlighted the recent pullback in the stock price as an attractive entry point for investors.

1. Datto Holding Corp. (NYSE:MSP)

Robert Smith’s Vista Equity Partners’ Stake Value: $2,718,711,000

Percentage of Robert Smith’s Vista Equity Partners’ 13F Portfolio: 26.27%

Number of Hedge Funds: 11

Datto Holding Corp. (NYSE:MSP) is a Norwalk, Connecticut-based corporation providing cybersecurity and data backup services. Datto builds cloud-based software and security solutions for delivery by a managed service provider (MSP). The job of the MSP is to ensure that the IT systems of an organization are operational.

Datto Holding Corp. (NYSE:MSP), founded in 2007, was acquired by Vista Equity Partners in 2017 for $1.5 billion. Following the takeover, Datto Holding Corp. (NYSE:MSP) was merged with Autotask Corporation, another company in the Vista Equity Partners portfolio.

In a research report issued to investors on December 29, Mike Cikos at Needham reiterated a Buy rating on Datto Holding Corp. (NYSE:MSP) stock and increased the price target from $29 to $32. The analyst highlighted the relative outperformance in stock price during Q4 2021 as a reflection of management’s intent to consistently deliver 20% growth to surpass the $1 billion mark in revenues by 2024.

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Disclosure: None. Top 10 Stock Picks of Robert Smith’s Vista Equity Partners is originally published on Insider Monkey.