If you're keen to invest for your future but you don't know where to start, studying the recent actions of billionaire fund managers is a good place to find ideas. This is easier than you might imagine because most of the world's greatest investors, and the funds they manage, need to disclose their trading activity to the public every three months.
Legendary investors Paul Singer, David Tepper, Phillippe Laffont, and the firms they manage bought shares of some growth stocks that have lost a lot of ground lately. Here's why these stocks are getting attention from the experts despite the falling prices.
Image source: Getty Images.
1. Pinterest
Shares of Pinterest (PINS -2.15%) rocketed higher during the early days of the COVID-19 pandemic. Now that it's a lot safer to leave the house, folks have less time on their hands to find lifestyle inspiration with a smartphone application. Decelerating user trends coupled with soaring interest rates have pushed the stock down about 72% from its all-time high in early 2021.
Perhaps smelling a bargain, Paul Singer and the fund he manages, Elliott Investment Management, bought 5 million shares of Pinterest in the second quarter. Clearly, he's convinced its unique position as the social media site where people collectively window-shop is a gold mine that the company has only started digging into.
NYSE: PINS
Key Data Points
More of us spending less time stuck at home this year caused Pinterest to report a 5% year-over-year drop in global monthly active users during the second quarter. Despite fewer users, revenue rose 9% thanks to e-commerce integrations that are rapidly converting users seeking inspiration into buyers receiving packages.
Pinterest has likely just scraped the surface of its addressable market. In the U.S. and Canada, average annual revenue per user (ARPU) soared 19.5% year over year to $5.82 in the second quarter. In Europe, ARPU was $0.86, and it was just $0.10 throughout the rest of the world.
2. Salesforce
Salesforce (CRM -2.13%) stock has fallen around 41% this year, but David Tepper and the fund he runs, Appaloosa Management, expects it to make a comeback. Appaloosa bought 200,000 Salesforce shares in the second quarter. Now it makes up more than 2% of the portfolio.
NYSE: CRM
Key Data Points
Shares of Salesforce have fallen around 41% this year. Tepper expects them to come back because the company has a commanding lead in the market for cloud-based customer relationship-management (CRM) solutions. According to the latest software usage tracking report from IDC, a market intelligence firm, Salesforce's 24% share of the global CRM market is more than its four largest competitors combined.
Salesforce doesn't pay a dividend, but it generates so much cash that it started returning some to shareholders as stock buybacks. This year, the company's board of directors initiated a $10 billion share repurchase that will go a long way toward reducing its outstanding share count.
3. SoFi Technologies
SoFi Technologies (SOFI -2.51%) stock has tumbled 68.9% in 2022. Billionaire hedge fund manager Philippe Laffont and Coatue Management clearly expect it to make a recovery. The hedge fund Laffont manages acquired over 14 million shares of the all-digital bank in the second quarter.
NASDAQ: SOFI
Key Data Points
Laffont is no doubt impressed by SoFi's continued market share gains. At the end of June, there were 4.2 million members using 6.6 million products. That was 79% more products than the company was managing a year earlier.
SoFi's consumer bank operation has advantages over competitors big and small. A lack of physical branches and a heavy reliance on automation allow it to offer rates on deposits and lending products that big banks have a hard time competing with.
In 2020, SoFi bought Galileo, a technology platform that companies like Dave and Robinhood use to manage customer accounts. At the end of June, there were 117 million accounts running on Galileo.
With a consumer bank operation and a technology platform that keeps growing by leaps and bounds, Laffont and everyday investors who scoop up beaten-down shares of SoFi have a really good chance to come out way ahead in the long run.
