Why Uber Technologies (UBER) Stock is a Compelling Investment Case

Forager Funds recently released its Q2 2020 Investor Letter, a copy of which you can download here. The International Fund’s 23.3% gain for the quarter took it to a 13.7% positive return for the full financial year, some 10.6% ahead of its benchmark. You should check out Forager’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Forager highlighted a few stocks and Uber Technologies Inc (NYSE:UBER) is one of them. Uber Technologies Inc (NYSE:UBER) is a ride-sharing company. Year-to-date, Uber Technologies Inc (NYSE:UBER) stock gained 6.6% and on August 10th it had a closing price of $32.27. Here is what Forager said:

“Uber (Nasdaq:UBER) management has had a busy start to the northern summer. Negotiations to acquire one of the three largest US food delivery players, Grubhub (NYSE:GRUB), were ended at the last minute due to disagreements on deal break fees. Antitrust was always going to be an issue, as the two companies would end up controlling over 40% of the US market, making any large break fee a big issue for Uber shareholders. The European market-leader, Takeaway.com, then lobbed its own bid for Grubhub.

While it was initially puzzling that Uber would walk away from such an important consolidation deal (even allowing for potential break fee losses), this decision became clearer recently when the New York Times reported that Uber is in talks to buy Postmates for $2.6bn.

Postmates is a nine-year-old delivery service and the smallest of the big four that are fighting for control of the US food delivery ecosystem. An Uber/Postmates combination would result in a 30% market share. The deal would pose much less regulatory risk than Grubhub, while still creating ‘metro area dominance’ across some key regions.

We continue to like Uber irrespective of any potential transaction, with the company rapidly exiting unprofitable business ventures and the whole group moving towards profitability in 2021.”


In June, we published an article revealing that Antipodes Partners is bullish about Uber Technologies Inc (NYSE:UBER) stock. The investment firm believes that in the near term the company’s ride-sharing business would be impacted due to the COVID-19 pandemic.

In Q1 2020, the number of bullish hedge fund positions on Uber Technologies Inc (NYSE:UBER) stock increased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Uber’s growth potential. Our calculations showed that Uber Technologies Inc (NYSE:UBER) is ranked #22 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.