Trellus Management Piling On These Tech Stocks For Q4

#3 Facebook Inc (NASDAQ:FB)

Shares Held (as of September 30): 5,500
Total Value (as of September 30): $494,000
Percent of Portfolio (as of September 30): 0.72%

Facebook Inc (NASDAQ:FB), which was a new position for Trellus Management in the third quarter, is up by 24.4% year-to-date as its WhatsApp and Instagram acquisitions continue to grow. WhatsApp is nearing a billion users, while Instagram has surpassed Twitter Inc (NYSE:TWTR) in several key metrics. The monetization of both properties is just getting started, meaning Facebook Inc (NASDAQ:FB)’s earnings per share only has one way to go: up. Like many of its addicted users, analysts love Facebook too. 46 analysts have ‘Buy’ ratings on the stock, while three have ‘Hold’ ratings. One analyst has a ‘Sell’ rating. Among the hedge funds long Facebook is Stephen Mandel’s Lone Pine Capital.

#2 Alibaba Group Holding Ltd (NYSE:BABA)

Shares Held (as of September 30): 9,500
Total Value (as of September 30): $560,000
Percent of Portfolio (as of September 30): 0.82%

Jack Ma’s Alibaba Group Holding Ltd (NYSE:BABA) is down by 33% year-to-date as investors worry about slowing EPS growth and a weakening Chinese economy. While Alibaba’s short term financial metrics could certainly get rockier, its long-term prospects are as bright as ever. Alibaba has over three hundred million active monthly users on its platform, buying everything from pillows to cars. As China’s economy grows, those active users will spend more, and Alibaba will make more in advertising revenue. With a foward P/E of 20.8 and a 5-year expected EPS growth rate of 22.8% per year, shares look cheap.  Rob Citrone‘s Discovery Capital Management owned 6.52 million shares of Alibaba at the end of the second quarter.

On the final page we study Trellus Management’s top tech stock pick heading into the fourth quarter.