3 hot stock billionaires can’t stop buying

It’s season 13F, that time in the middle of the quarter when top fund managers disclose their purchases and sales from the previous quarter. While you should never just buy a stock like a famous hedge fund manager does, 13Fs can also be fertile ground for ideas — some of which may be even cheaper today.

Of the top three fund managers I follow, here are three of their biggest buys from the tumultuous third quarter.

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Duquesne Capital Management fills up with Coupang

Dusquesne Capital is run by Stan Druckenmiller, a star trader who worked for George Soros. Druckenmiller has since closed his fund and now manages Duquesne Capital as a family office, but is still large enough that he has to disclose transactions to the SEC.

Druckenmiller is currently a big fan of large-cap tech stocks and was recently named a South Korean e-commerce player. Coupang (NYSE: CPNG) its largest position, increasing its stake by 47% in the last quarter, making Coupang a 14% allocation in Duquesne’s portfolio – its largest position.

It is not known when Druckenmiller bought the stock in the third quarter, but hopefully it was closer to the end of September. Coupang has struggled since its IPO in March, particularly during the summer. After hitting the markets at $ 35 per share, Coupang ended its first day of trading at nearly $ 50. But since the spring, the decline has been long and slow, starting the third quarter in the low $ 40 range, ending the quarter in the high $ 20. After rebounding in October, stocks are once again back at a price of $ 27.16 at the time of writing, following a earnings release that fell short of analysts’ expectations.

Despite the negativity, all is not lost for Coupang, and it could be a stock for future research. While growth fell short of analysts’ expectations last quarter, it was still quite strong at 48%, with a 20% increase in active customers and spend per customer up 25% year-on-year. the other. As the company continues to record heavy net losses, it is encouraging that Coupang’s gross margin has increased, with gross profits increasing 62% – a higher rate than revenues.

Coupang has been a pioneer in South Korea in terms of one-day delivery capabilities, and is investing heavily in Coupang Eats, with the aim of linking e-commerce with food delivery and making Coupang an indispensable platform. that South Koreans use every day. An encouraging KPI: Coupang Eats was the most downloaded app on iOS and the second most downloaded app on Android in South Korea in 2021. After a tough summer for e-commerce names, investors may want to to be deepened.

Appaloosa goes shopping at Macy’s and wins gold

One of the best value investors that I am is David Tepper, who also runs a family office under the name of his former hedge fund: Appaloosa. In the third quarter, Tepper stocked up on retailers Macy’s (NYSE: M) – a movement that seems terribly premonitory today.

Macy’s ended the third quarter up about 30%, and is already up 50% since the start of the fourth! Luckily for Tepper, he increased his stake in Macy’s by 93% last quarter, making it a 3.8% allocation, good for Appaloosa’s seventh position.

Why the surge? Well, it’s no surprise that many retail brick-and-mortar stocks have been depressed during the pandemic. With consumers saving money and rolling out vaccinations, the “revenge buy” was likely at stake.

But Macy’s also has other strengths. Fortunately for shareholders, activist investor JANA Partners announced a stake in Macy’s in October. JANA proposes to Macy’s to separate its high-growth e-commerce business from its brick-and-mortar stores, a move that JANA believes could generate significant shareholder value, given that pure e-commerce stocks have much higher valuations. than Macy’s today. .

In its recent earnings release, Macy’s not only exceeded analysts’ expectations for revenue and adjusted earnings per share, but management also seemed open to exploring strategic alternatives. CEO Jeff Gennette said on the conference call with analysts, “But based on how the market places value on e-commerce companies, we just added AlixPartners, which we announced this morning as an objective third-party company to really pressure test all of our analyzes. And so, we are in the middle of this work, we need to finish our analysis, and we plan to provide an update when the work is done. ”

Yet despite Macy’s incredible run over JANA’s disclosure and strong earnings, the stock is only trading around 12 times next year’s earnings estimates. Some analysts still view Macy’s as a “buy” with higher price targets today, even after its epic run. Macy’s is definitely a stock to look for for those who believe that U.S. consumer spending on clothing will remain strong as the economy reopens, or that an e-commerce spinoff may indeed occur.

Lone Pine can’t leave Twitter

Finally, Stephen Mandel’s Lone Pine Capital is a hedge fund to watch for growth-oriented stocks. In the third quarter, the company took on a name that you can actually buy for a lot less today.

During the third quarter, Lone Pine increased its Twitter (NYSE: TWTR) 117% stake, taking it from a 2.2% allocation to a 4.4% allocation, good for the fund’s seventh position. This seems like rather untimely timing, as Twitter spent much of the third quarter in the ’60s. After a tough earnings season, it is now trading around $ 48 a share.

So what happened? Twitter’s third-quarter revenue actually slightly exceeded estimates, but analysts may have been looking for a higher pace. Another worrying trend is the stagnation of Monetizable Daily Users in the United States (mDAU), which has declined since vaccines were widely distributed in the first quarter, although international growth for mDAU has remained strong.

To its credit, Twitter was able to monetize these users better than peers. Break (NYSE: SNAP) made. IOS privacy changes started to affect all direct response ads in the past quarter, and Snap was hit hard. However, while Twitter recently received only about 15% of ad revenue from direct response ads, its growth hinges on achieving a 50-50 ratio. So, iOS changes that affect DR advertising may delay this growth trajectory.

Oh, and Twitter also took a charge of $ 809.5 million to settle a class action lawsuit against allegedly deceptive investors years ago about how often users used its platform – although it is well known. end of September.

Now at a reduced price, Twitter is an interesting move, as it has quite engaged and passionate users, but hasn’t been able to scale like other social media platforms have. Management also continues to invest heavily in growth, limiting current profitability and making valuation difficult to capture.

However, management is very committed to the new targeting and personalization measures which have led to increased engagement. Additionally, CEO Jack Dorsey is a big cryptocurrency scholar and likely has new innovations on the horizon that could link Twitter more to digital e-commerce. Down by so much, Twitter may be worth investigating after its summer swoon.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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