In this article, we presented the 10 best tech stocks to invest in right now. Click to skip ahead and see the 5 Best Tech Stocks To Invest In Right Now.
The technology-themed investing guru and Coatue Management founder Philippe Laffont, 53, saw massive success in the past two years after ending 2018 effectively flat. The so-called ‘Tiger Cub’ has been investing heavily in the tech sector over the years, which makes up more than half of its overall portfolio. He, however, has also diversified its portfolio towards growth stocks from the media and consumer discretionary, healthcare, and energy sectors.
After spending three years at Julian Robertson’s Tiger Management hedge fund, Philippe Laffont founded Coatue Management with $45 million in initial capital. He is one of the most successful hedge fund managers of 2020 as Coatue Management has scored almost 52% gain this year, thanks to massive gains from its top ten stock holdings. The market value of Coatue’s 13F portfolio jumped from $11.3 billion in the second quarter to over $19 billion in the third quarter.
Philippe Laffont of Coatue Management
Before digging deeper into Philippe Laffont’s top stocks, let’s briefly review this Tiger cub’s investment strategies and why it’s wise to play with tech stocks.
Tech stocks have been shining over the last two decades, with expectations for more acceleration in the third decade of the 20th century.
The Nasdaq Composite soared almost 42% in 2020 compared to the broader market growth of close to 14%. Software stocks rallied almost 80% on average this year while chip stocks gained around 50% of value in 2020. Internet and digital payment companies also saw massive growth throughout this year amid the pandemic.
The tech sector includes businesses that sell services and products directly to consumers and multiple industries. World’s largest companies including Apple Inc. (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Facebook (NASDAQ: FB) also belongs to the tech sector.
Instead of focusing on past performance, Philippe Laffont says investors should chase businesses with strong future fundamentals for the next five to ten years.
Mr. Laffont said: “I truly believe that in every portfolio you need to ask yourself what is going to be more relevant five to 10 years versus today. “The most interesting trend is that technology, which used to be mostly software and semiconductors and obscure things, it’s coming everywhere, and it’s the future of cars and the future of transportation and every sector.”
Philippe Laffont likes to make changes in his portfolio to generate gains from the changing market trends.
In his September quarterly filing, one of the most successful Tiger cubs has sold out of 39 stocks while slashed its position in 18 stocks. It is important to note here selling or reducing a position in stock doesn’t mean the hedge fund saw losses. Pure growth investors always seek to capitalize on share price gains by selling stock and shifting that money towards new profit-making opportunities.
Meanwhile, Coatue Management hedge fund manager Philippe Laffont initiated a position in 24 stocks and raised his stake in 15 stocks. He doesn’t chase dividend stocks. Time held for the top ten stocks stands around 3.10 quarters on average.
While Philippe Laffont’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 78 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Philippe Laffont is one of the best hedge fund managers to follow for investors who seek to generate gains in the short-term by investing in tech stocks. Let’s start examining the 10 best tech stocks to invest in right now according to Coatue Management’s billionaire hedge fund manager Philippe Laffont.
10. Global Payments Inc. (GPN)
The payments software and technology solutions provider Global Payments Inc. (NYSE: GPN) is one of the best tech stocks to invest in, according to Philippe Laffont. After holding a position in Global Payments since the second quarter of 2019, the technology-themed hedge fund has massively raised its stake in GPN by 225% during the third quarter this year.
It is now the tenth largest stock holding of Coatue Management valued at $674 million, accounting for 3.43% of the overall portfolio. Global Payments stock price underperformed this year as shares rallied only 7% compared to double-digit broader market gains.
Artisan Mid Cap Fund highlighted Global Payments performance in a letter to shareholders. Here is what Artisan Mid Cap Fund said:
“Shares of Global Payments have been pressured amid clear indications that COVID-19 restrictions are having a disruptive impact across many of their businesses. Throughout our long holding period, we have been impressed by management’s progress in building a fast-growing, diversified, more recurring business at the intersection of many strong trends in payments and software. We believe these characteristics position it quite well to weather almost any type of recession.”
9. Netflix, Inc. (NFLX)
Although Netflix (NASDAQ: NFLX) is among the biggest beneficiaries of staying at home policies with a share price rally of 65% this year, the tech hedge fund manager sees more upside potential in the days ahead.
The hedge fund has raised its stake in the streaming company by 1% to 1.4 million shares valued at $712 million. It is the ninth-largest stock holding of Coatue Management, accounting for 3.62% of the portfolio.
Hedge funds are bullish on Netflix. Here’s what Ensemble Capital said about Netflix in an investor letter:
“Netflix, Inc. (8.5% weight in portfolio): We’ve discussed our Netflix thesis in the past, but now we are going to highlight the competitive and financial strengths that Netflix has demonstrated since we last discussed the business a couple of years ago, especially in light of the expected competition that has finally arrived from traditional media companies launching their own streaming services, such as Disney. In addition, the emergence of the COVID-19 pandemic around the world has led to accelerating benefits for digital entertainment and global production.
8. Anaplan, Inc. (PLAN)
PLAN ranks 8th in our list of the 10 best tech stocks to invest in right now. The software-as-a-service (SaaS) enterprise planning software provider Anaplan, Inc. (NYSE: PLAN) is among the most favorite stocks of Philippe Laffont.
The tech-heavy hedge fund has been holding Anaplan since 2018. However, the hedge fund manager looks more optimistic about future fundamentals. This is evident from the 40% increase in position during the September quarter this year.
Anaplan is the eighth-largest stock holding of the Coatue Management stock portfolio. Shares of the cloud-based connected planning platform surged 33% this year. We recommended a position in PLAN in 2019 in our quarterly newsletter and said the following:
“Anaplan (PLAN) is SAAS company that offers connected planning that enables collaborative, dynamic, and intelligent planning. The smart money is in the stock because it is growing fast, with annual subscription revenue rising from $144 million in FY18 to $209 million in FY19 (45% growth) and the company’s annual billings rising from $204 million in FY18 to $290 million in FY19. For Q1 of fiscal year 2020, PLAN’s sales growth actually accelerated from 2019, rising 47.1% year over year. For FY20, management sees sales of $326-$331 million versus the estimate of $313.04 million. Wall Street is bullish on the company’s growth. Heather Bellini of Goldman Sachs sees a ‘high likelihood’ of the company achieving the ‘Blue Sky scenario’ in 2020, where deal sizes grow and the company’s expansion accelerates due to increasing productivity. Goldman has a $62 price target. Some analysts still think PLAN is a M&A target.
7. Square, Inc (SQ)
The digital payment transfer company Square (NYSE: SQ) is on the list of the 10 best tech stocks to invest in, according to Philippe Laffont.
He has substantially raised his stake in the fintech company by 40% to $895 million in the September quarter. The hedge fund has first initiated a stake in Square during the second quarter of 2019. Square is among the biggest beneficiaries of staying at home policies and consumers shift towards online platforms.
“Square’s consumer-oriented Cash App grew from a project that created the U.S.’s first instant and direct bank-to-bank transfer service. Today, it has grown into a full-service, multiproduct consumer finance business. We believe its frictionless, low-cost offerings represent a strong value proposition for the 60 million U.S. adults currently unbanked or underbanked. We believe Square will sustain above-market volume growth via share gains and upmarket expansion, with margin expansion driven by sales & marketing and R&D efficiency.”
6. Snowflake Inc (SNOW)
The cloud-based data startup Snowflake Inc (NYSE: SNOW) is among the new stock picks of Philippe Laffont. The firm initiated a big position in Snowflake during the third quarter this year by purchasing shares worth more than $1 billion. It is the sixth-largest stock holding of Coatue Management, representing 5.92% of the overall portfolio.
“Snowflake Inc. provides a data-warehouse platform for large-scale data analytics and storage. The company is leveraging its cloud-native architecture to offer low-cost storage, scalability, and ease of use that are lacking in many competitive solutions. We participated in the company’s September IPO and the stock has performed well in the after-market. We believe Snowflake has a significant growth runway within its large addressable market given its differentiated technology, platform approach, and highly experienced management team. Snowflake’s CEO Frank Slootman and CFO Michael Scarpelli have successfully partnered at several public technology companies, including ServiceNow, a long-term Fund investment.”
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Disclosure: No Position. 10 best tech stocks to invest in right now is originally published on Insider Monkey.