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Why ZoomInfo Technologies (ZI) Stock is a Compelling Investment Case

Baron Asset Fund recently published its second-quarter commentary – a copy of which can be downloaded here. During the second quarter of 2020, the Baron Asset Fund returned 28.02% (institutional shares). In comparison, the benchmark S&P 500 Index was up 20.54%, while the Russell Midcap Growth Index was up 30.26%. You should check out Baron Asset Fund’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, Baron Asset Fund highlighted a few stocks and ZoomInfo Technologies Inc. (NASDAQ:ZI) is one of them. ZoomInfo Technologies Inc. (NASDAQ:ZI) provides marketing solutions. Here is what Baron Asset Fund said:

“The Fund established a meaningful position in ZoomInfo Technologies Inc., which completed its IPO during the quarter. ZoomInfo operates a cloudbased information platform used primarily by sales professionals to identify and target their highest-value potential sales targets. We believe that ZoomInfo’s customers find the platform effective in uncovering new sales leads, shortening their sales cycles, and increasing their win rates. The company currently has more than 200,000 paying users across 15,000 customer companies. We believe this represents a mere 2% penetration rate of an approximately $24 billion global addressable market for the company’s current products.

ZoomInfo obtains the bulk of its data from a contributory network of user data, which the company aggregates and analyzes for its clients. We believe this approach has enabled ZoomInfo to create an unrivaled database that includes the most accurate collection of corporate emails and phone numbers spanning approximately 14 million companies and 120 million professionals. More importantly, the database also includes unique technographic data (for example, all companies with benefits plans expiring within the next six months) and advanced attributes, such as time series growth, granular department and location information, employee trends, organizational charts, news and events, hierarchy information, and funding details. In addition to employing a research team of more than 400 analysts, the company uses machine learning to score and validate its data, which it supplements with unstructured public information extracted through patented technologies.

We are optimistic that the company has a long runway for profitable growth, driven by its large addressable market, its strong competitive position, and secular trends favoring data-driven marketing. In addition, the company has the potential to introduce new products targeting areas beyond sales, such as recruiting, market research, and investing. Its revenues are virtually all subscription-based, and it has an attractive sales model resulting in exceptionally high returns on its customer acquisition expenditures. We expect the company should be able to continue growing its revenues at approximately 40% while also maintaining free cash flow margins of approximately 40%.”

Ghost Tree Capital's AUM, Returns and Holdings

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Our calculations showed that ZoomInfo Technologies Inc. (NASDAQ:ZI) isn’t ranked 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. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. 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.