Below we present the list of Top 5 Stocks That Kayak Investment Partners is Buying. For our methodology and a more comprehensive list please see Top 10 Stocks That Kayak Investment Partners is Buying.
5. Okta, Inc. (NASDAQ:OKTA)
Kicking off the second half of our list of Kayak Investment Partners’ biggest purchases is Okta, Inc. (NASDAQ:OKTA), the identity and access management software company. The fund raised its stake in the company by 66% during the third quarter, which gave it 116,100 shares valued at $27.56 million on September 30. Hedge fund ownership of Okta has steadily risen since the company went public in 2017, rising six-fold while OKTA shares have risen ten-fold.
Hedge funds like Okta, Inc. (NASDAQ:OKTA)’s cloud workforce solutions and believe they could help Okta, Inc. (NASDAQ:OKTA) generate greater than 30% revenue growth annually over the next five years. Okta, Inc. (NASDAQ:OKTA) also appears to be facing minimal threatening competition as it successfully targets developers and IT managers with its suite of offerings.
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Kayak Investment Partners raised its stake in chipmaker Advanced Micro Devices, Inc. (NASDAQ:AMD) by 28% during the September quarter, building the size of its holding to 351,716 shares worth $36.19 million at the end of Q3. 65 of the hedge funds tracked by Insider Monkey’s database were long Advanced Micro Devices, Inc. (NASDAQ:AMD) on September 30.
Advanced Micro Devices, Inc. (NASDAQ:AMD) shares have enjoyed an incredible ride over the last six years, gaining more than 5000% while hedge fund ownership of the stock has climbed by 500% during that time. AMD earned EPS of $0.73 excluding items during Q3, topping estimated by $0.06, while its revenue of $4.31 billion was $190 million greater than expectations.
3. Airbnb, Inc. (NASDAQ:ABNB)
Kayak Investment Partners added a further 60% of shares of Airbnb, Inc. (NASDAQ:ABNB) to its 13F portfolio during Q3, giving it 234,624 shares which were valued at $39.36 million at the end of the third quarter. The property rental platform has been fairly popular with hedge funds since its Q4 2020 IPO, with 58 long ABNB on September 30.
Airbnb, Inc. (NASDAQ:ABNB) has weathered the pandemic well and appeared poised to grow sales by an impressive 33% in Q4 compared to pre-pandemic levels even as its major competitors largely remain flat or even down. Airbnb, Inc. (NASDAQ:ABNB) will face tougher comps next year but hedge funds appear to believe that with the ongoing recovery in the travel industry, Airbnb is more than capable of meeting them head-on.
Tollymore Investment Partners, an investment management firm, published its third-quarter 2021 investor letter and mentioned Airbnb, Inc. (NASDAQ:ABNB). Here‘s what the fund said:
“Today disruptors are not typically seeking to replace incumbents entirely. Rather, they break the links in the customer journey, in doing so better aligning monetisation with value creation and minimising externalities. For example, Airbnb broke the link between staying in residential property and owning it. Airbnb is a specific example of a business model innovation which separated asset use from ownership. This is hardly a novel idea; it’s called renting. Rental models lend themselves to assets which are expensive and durable, and where usage is infrequent.”
2. Warner Music Group Corp. (NASDAQ:WMG)
The second-to-last stock on our list of Kayak Investment Partners’ most bullish Q3 buys is Warner Music Group Corp. (NASDAQ:WMG), which the fund owns 924,229 shares of after raising its share ownership by 38% during Q3. Its WMG holding was valued at $39.5 million as of September 30. 29 hedge funds were long WMG on September 30, being virtually unchanged over the previous three quarters.
Investment management firm Jefferies Group took an interesting angle on Warner Music Group Corp. (NASDAQ:WMG) in its Q3 2021 investor letter, saying that Warner Music Group Corp. (NASDAQ:WMG) could do well in the metaverse, the virtual/augmented reality vision of the future being pushed forward by Mark Zuckerberg. Noting the popularity of music on many social platforms and the financial benefits to rightsholders like Warner Music, Jefferies envisions a future where social platforms like the metaverse play an even more prominent role in our lives as being potentially lucrative for Warner Music Group Corp. (NASDAQ:WMG).
1. Snowflake Inc. (NYSE:SNOW)
Topping our list of Kayak Investment Partners’ most bullish stock buys of Q3 is Snowflake Inc (NYSE:SNOW). The fund now owns 146,842 Snowflake Inc (NYSE:SNOW) shares as of the end of September, adding 37% more shares to its holding in Q3 to build a stake valued at $44.41 million. A new high of 73 hedge funds was long SNOW at the end of Q3, up from just 54 at the end of 2020.
Snowflake Inc (NYSE:SNOW)’s capital expenditure-light model was praised by RiverPark Funds in Snowflake Inc (NYSE:SNOW)’s Q3 2021 investor letter, with the fund projecting that SNOW will grow FCF much faster than revenue and could comfortably grow by more than 50% for several years. The fund also projected Snowflake’s market to grow into a $100 billion one by this year and the majority of physical databases continue to migrate to the cloud.
Luca Capital, an investment management firm, published its third-quarter 2021 investor letter and mentioned Snowflake Inc (NYSE:SNOW). Here‘s what the fund said:
“You may notice that the majority of our filters are qualitative. While we do believe that any company can be overvalued, the market has historically valued companies with durable competitive advantages below their intrinsic value because it expects the ROIC to trend towards average over time. However, the best businesses can often earn returns far and above their cost of capital for much longer than can be reasonably expected. Therefore, these businesses tend to trade at multiples that would be considered expensive by traditional metrics. However, the market can realize this opportunity and apply a much higher valuation on these companies, hence discounting their future returns to a more average return.
One example of this is Snowflake (SNOW), which recently debuted at an EV/S of over 175x. Although future returns might still be attractive, a significant amount of upside has already been captured. If we assume P/S drops 83% over the next 10 years to 30x with modest share dilution of 3.5%, in order to achieve a 15% annual return, Snowflake would have to grow sales at a ~41% CAGR to a $13B run rate. Snowflake is an exceptional company in a massive market so it might prove to be undervalued even at today’s prices, but its future returns have been greatly muted. Coca Cola is another example of a company with a wide durable moat but was so overvalued in the late 90’s it provided poor returns over the subsequent decade.”
You can also take a peek at the Top 10 High Growth Stocks To Buy in 2021 and 15 Biggest Companies That Use Shopify.
