Twilio develops and publishes internet infrastructure solutions, offering a cloud communications platform, communications software, and services. The company has not been impacted by the coronavirus pandemic. The pandemic has highlighted a need for easier and faster digital-based access to information and data across multiple industries such as health care and education, bringing Twilio an opportunity.

Hedge Funds Are Buying

Twilio saw an increase in its aggregate share value by looking at second-quarter activity by the top hedge funds. Aggregate 13F shares held rose to about 31.9 million from 31 million, an increase of approximately 2.7%. Of the hedge funds, 61 created new positions, 34 added to existing holdings, 23 exited, and 63 reduced their stakes. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 1% to approximately 120.5 million from 121.7 million. Despite encouraging performance this year, the cloud communications company slid on the WhaleWisdom Heatmap to a ranking of 38 from 19.

(Whale Wisdom)

Mixed Multi-Year Estimates

Analysts project that earnings will decline by about 22.5% and 22.8% in 2020 and 2021, respectively. Fortunately, analysts expect a turn for the better by 2022. It is anticipated that the company will see a stunning surge in year over year growth, bringing earnings per share to $0.53 from $0.12 in 2020. Earnings are expected to continue to increase by December 2023 to $1.09 per share.

Revenue estimates are more favorable for Twilio, with continuous year-over-year growth predicted from 2020 through to 2023, bringing revenue from approximately $1.67 billion in 2020 to about $4 billion in 2023.

Acquisition Brings Optimism

A recent $3.2 billion stock deal has caught the attention of analysts. Twilio recently finalized its acquisition of customer data platform Segment, which should be a complementary addition to aid Twilio in providing its customers with valuable data, improving communication between businesses and their customers, and increasing the overall customer experience. Segment will become a division of Twilio. While third quarter results dipped into the red, there seems to be optimism for the fourth quarter earnings. Active customer accounts were up approximately 21% year over year at the end of the third quarter. The consensus from analysts is that Twilio will see approximately $432.1 million in revenue in the fourth quarter and a $0.01 loss per share.

Opportunity Ahead

While lower 2020 and 2021 earnings estimates may cause some investors to sell or reduce interest in the stock, patient investors may see it worthwhile to stay. Twilio’s upward momentum in 2020, in comparison to the S&P 500, has been impressive. Multi-year estimates from analysts and the positive impact of Twilio’s recent acquisition offer growth opportunities for the company.

Strong Results Despite Global Tensions

JD had an impressive rise in the WhaleWisdom Heatmap in the first quarter, with a ranking at one. Despite JD’s forward movement and growth in this challenging stock market, JD’s ties to China leave it partially influenced by the recent rising U.S.-China tensions related to the pandemic. While arguments over blame for the coronavirus have not had a significant impact on Wall Street, the debate and tension have nevertheless hung over the market and remains a concern for some investors.

Still, JD’s strong ranking and position on the WhaleWisdom Heatmap may be a reason for hope for the stock’s future.

(WhaleWisdom)

Institutions Are Buying

Institutions overall were buying the stock, with the number of aggregate 13F shares increasing by approximately 12.4% as of March 31, 2020, to roughly 284.2 million from about 253 million just three months earlier. For comparison, hedge funds increased their total 13F shares by about 2.9%, up to 613.7 million from 596.3 million.

(WhaleWisdom)

Analysts’ Forecast Are Favorable

AllianceBernstein Holding LP increased JD’s price target to $60 from $55. However, Bernstein is not the only one with faith that the stock will go higher, as many Wall Street analysts are bullish on the stock. Overall, 30 analysts cover the stock with an average price target of $58.08, or 16.4% higher than the equity’s price on May 22.

Currently, analysts estimate second-quarter earnings per share of about $0.35, an increase of 8% versus a year ago. Meanwhile, analysts forecast revenue of about $26.6 billion, an increase in year over year growth of approximately 24.8%. JD has seen active customer accounts rise, with a significant increase in daily monthly mobile users in March, up about 46% year-over-year.

Sustained Growth

JD has been fortunate to see benefits from coronavirus-related demand for online shopping. While JD is not cheap on a PE basis, and political tensions between the US and China remain, there is potential for sustained growth for the company. JD’s stock may still garner the attention of investors due to the longer-term potential for payoff.

Adobe has historically seen success from its multimedia and creativity software products, and its versatility in changing to meet industry demands and more recent strategy of expanding digital marketing software is also paying off.  This has resulted in investors eagerly awaiting Adobe’s first quarter 2020 results to be reported on March 12.  Hedge funds appear to be drawn to the positive momentum of earnings and revenue growth, and the stock now ranks an impressive fourth on the newly created WhaleWisdom Activist Heatmap.

Adobe’s Impressive Climb

Adobe’s climb to 4 from 34 on the WhaleWisdom Heatmap is an impressive feat, and recent global market events shouldn’t overshadow that.   The latest 13F filings for the fourth quarter of 2019 saw seven of the top Hedge Funds holding the stock, with six of them increasing their holdings.

(WhaleWisdom)

Favorable Results Are Expected

Analysts anticipate promising results in the first quarter of 2020 from Adobe, with earnings expected to have grown by roughly 31% to $2.24 per share and revenue estimated to have increased by 17.3% to approximately $3.1 billion.  Earnings and revenue are predicted to continue to rise year over year in 2020, climbing by 45.2% from $9.81 per share, with revenue increasing by almost 18% to $13.2 billion.

 Analysts Are Optimistic

Adobe has its share of fans, and actions by analysts offer one more sign of positive trends.  Jennifer Lowe at UBS Group AG raised the price target on the stock to $430 from $360 and maintained UBS’s buy rating.  Meanwhile, Morgan Stanley’s analyst, Keith Weiss, also raised the firm’s price target on Adobe to $450 from $410 and maintained an overweight rating on the stock.

Hedge funds continue to add and expand Adobe’s stock within their portfolios, based upon past trends and in anticipation of the shares’ improving outlook.  While Adobe’s stock isn’t cheap, the company’s history of savvy business decisions helps to contribute to its favorable outlook.  Investors that take note of the past performance and act on upcoming forecasts are likely to see a positive payoff in 2020 and 2021.

Hedge funds were actively buying the stock in the third quarter ahead of the company’s strong performance, which also resulted in the equity being added to the WhaleWisdom Heatmap, ahead of the company’s better than expected fiscal third quarter results and analysts boosting their outlooks.

Strong Results

Salesforce’s third quarter subscription and support revenue were up 34% to $4.24 billion, with professional services revenue up 22% to $274 million. Fiscal third quarter earnings of $0.75 beat forecasts by $0.09, while revenue of $4.5 billion beat estimates by $60 million. For the fiscal year 2020, the company maintained its revenue guidance of $16.9 billion to $17 billion and increased its earnings guidance to a range of $2.89 to $2.90 per share.

Hedge Funds Are Active

Hedge funds were buying the shares in the third quarter, helping it to land on the WhaleWisdom Heatmap with a ranking of 21.  During the quarter, the aggregate 13F shares held by hedge funds increased to 65.9 million from 41.5 million, an increase of almost 59%. While not quite as eye-popping as the hedge fund increase, overall institutions increased their aggregate holdings by nearly 10%, to 708.4 million from 646.5 million. Overall, 46 hedge funds created new positions, 69 added to an existing holding, 15 sold out, and 37 reduced their shares.

Analysts Provide Positive Outlooks

RBC Capital Markets upgraded Salesforce to a Top Pick from Outperform and raised its price target to $215 from $200. Cowen, Inc. views Salesforce as having a highly attractive valuation, with the company’s software creating a strong position in the technology sector. Cowen maintains an Outperform rating and a $195 price target. Additionally, Jeffries Group LLC raised its price target on the stock from $195 to $210.

Currently, analysts’ consensus estimates forecast Salesforce to grow earnings by 25.7% and revenue to rise by 19.4% from 2021 to 2022.  It means that Salesforce’s stock isn’t cheap, trading with a one-year forward PE ratio of 59. But when adjusting for growth, it may prove to be a bit rich for some investors. However, should the company continue to deliver strong results, there is potential for the stock to go on to rise and for shareholders to be rewarded.

Crowd Strike saw its stock surge following its IPO in June, finally peaking in August as valuations in the software and cybersecurity sector came into question. Shares came under more pressure in September, despite delivering better than expected earnings and forward guidance. However, the results were not good enough, and that sent the stock sharply lower. The final blow came to the company when its name popped up on a conference call between President Trump, and President Zelensky of Ukraine, in the lead up to President Trump’s impeachment investigation.

13G Filing

Still, a recent 13G filing on January 7 showed that Point72 increased its position in Crowd Strike to approximately 2.17 million shares from just 117,146 shares at the end of the third quarter of 2019. It gives the investment firm control of a 5.3% stake in Crowd Strike.

(WhaleWisdom)

Block Trade

It seems that Point72 may have picked up their stake in the equity following a block trade conducted by Credit Suisse on January 6. The trade was for a 5 million share block of stock from an unknown shareholder. The block trade transaction would have made it very easy for a firm such as Point72 to establish a large position in the equity.

Slowing Growth Rates

Analysts’ consensus estimates forecast revenue growth for Crowd Strike to be very fast in 2020, rising by almost 87% in to $466.9 million. However, that rate of growth is estimated to slow dramatically in 2021 and rise by 46% to $680.6 million. It will then slow again by 2022 and increase by approximately 30% to $884.6 million.

However, the big problem for Crowd Strike will continue to be its valuation, with a market value of $11.7 billion. It leaves the stock trading with a one-year forward price to sales ratio at a very high 14.5 times estimates. Meanwhile, with the company is not expected to earn a profit until 2022, and with earnings of $0.07, the stock’s earnings multiple is even more extreme at 787.

Whether Point72 took a stake in Crowd Strike as a long-term holding investment for the company’s long-term growth potential, or a trade, is yet to be seen. It is something worth keeping an eye on in future filings.

Overall, Pershing’s holding in Howard Hughes rose to roughly 6.4 million shares from 1.2 million shares at the end of the third quarter. It means that Pershing now has a 14.8% holding in the company. The filing reveals that the company is allowing Pershing the ability to buy up to 26% of the common stock.

Not an Investor Favorite

The sharp rise in Pershing’s holding in the company seems surprising, given that the stock was not popular among investors during the third quarter. During that quarter, the aggregate 13F shares were unchanged at 36.3 million. Overall, 74 firms increased their holdings, and 31 created new positions. Additionally, 29 firms exited the stock and 91 reduced their holdings.

The stock certainly hasn’t had a stellar 2019, with shares rising by 26.2%. That’s less than the S&P 500’s gains of 28.5%. But still, it hasn’t held Pershing back from significantly increasing its stake in the company. One can only speculate as to why the hedge fund increased its position by so much.

Concentrated Holdings

The holding isn’t even a small one, with the total position worth roughly $740 million. It makes the stock the seventh-largest holding in the hedge fund manager’s portfolio. But here’s the catch, there are only eight stocks in the portfolio.

(WhaleWisdom)

Recent Success

However, it is hard to argue with Ackman’s recent performance. According to data compiled by WhaleWisdom, the fund has seen its holding, and most significant position in Chipolte Mexican Grill, Inc. (CMG), more than double since they first took a stake in the stock in the third quarter of 2016. Meanwhile, its second-largest position, Restaurant Brands International Inc. (QSR), rose by over 66% since the fourth quarter of 2018. Also, the firm’s third-largest holding, Hilton Worldwide Holdings Inc. (HLT), climbed by 54% since the fourth quarter of 2018.

Pershing’s big plunge into Howard Hughes is undoubtedly noteworthy and eye-catching, considering the prospects for future growth seem lumpy at best. Analysts estimate that earnings will fall by 68% next year to $0.58 per share, and then surge to $4.62 per share in 2021. The lumpy earnings outlook would certainly be enough to scare off any ordinary investor, but Bill Ackman is no ordinary investor.

RH is a distributor of products such as home furnishing, lighting, and bathware. The surprise filing by Berkshire sent RH’s stock soaring by as much as 8% on November 15, when it was revealed that the investment firm had taken a stake.

Moving into RH

The investment was small, valued at about $205 million, ranking it at 41 by market value in Berkshire’s portfolio, which holds 48 equity positions.  However, it does make Berkshire a top 10 shareholder in RH, with an ownership stake of greater than 6%.

Big Gains

RH’s stock has risen by around 54% in 2019, more than double that of the S&P 500 gain of 24%. Still, the big gains of 2019 did not stop Berkshire from throwing its hat into the ring and getting involved with the company. It has been a volatile year for RH, with the stock plunging by over 25% through May, followed by a rapid rise starting in June.

Big Growth Ahead?

Analysts are projecting big growth for RH through fiscal 2022, with earnings climbing to $13.74 per share. That is an increase of more than 61% from RH’s fiscal 2019 earnings of $8.54 per share. It comes to a compound annual earnings growth rate of 17.2% and it leaves the stock trading at roughly 15.4 times fiscal 2021 earnings estimates of $12.33 per share. When adjusting the equity for its compound annual growth rate, it gives the stock a PEG ratio of less than one at 0.89. This could suggest that the stock is cheap.

The stock’s valuation and prospects for future earnings growth, could have been one of the main drivers for Berkshire’s purchase of RH, despite the stock already having a big push higher in the third quarter of 2019.

It isn’t clear if Berkshire is finished buying RH or has plans to acquire more of the stock. It will make watching for future filings all the more important. However, it seems entirely possible that watching the performance of the stock may yield an underlying clue.

Microsoft and Facebook have seen big comebacks in 2019, rising dramatically off their lows in the fourth quarter of 2018. Microsoft has jumped by over 41%, while Facebook has increased by almost 48%, versus the S&P 500’s gain of about 22%. Amazon has been the laggard, which is surprising given the stock’s big gains over the last few years, rising by just 19.2%.

Microsoft

Microsoft is owned by three Tiger Cubs, Coatue Management LLC, Joho Capital LLC, Lone Pine Capital LLC, and Tiger Management. The stock makes up a significant portion of the four firms’ portfolios, representing between 6 and 16%. In total, the four funds own about $39.23 billion worth of the stock. Additionally, during the second quarter, three of the funds were adding to their position and just one was selling its position.

Facebook

Just 2 Tiger Cubs own shares of Facebook, Coatue, Viking Global Investors LP, and then Tiger Management. Facebook represents between 6 and 10% of their respective portfolios, a smaller weighting than that of Microsoft. Additionally, the three firms hold in total $21.5 billion worth of the stock. During the second quarter, two of the firms were buying the stock and just one was selling.

Amazon

Lone Pine, Valinor Management LP, Viking Global, and Tiger Management all own shares of Amazon. The stock represents between 5 and 8% of the firms’ individual portfolios. In total, the four firms own about $25 billion worth of the stock. During the second quarter, only one firm was buying the stock, while two were selling it, and one was unchanged.

The Tiger Cubs appear to like the three companies in a big way, as so far they have largely been rewarded for owning these three stocks. Each of the three companies is the dominant force in their respective industries, and in the case of Amazon and Microsoft, are fierce competitors in cloud computing.

Given the big holdings among this elite group of investors it seems they may only continue to flourish in the future.

Shares of Seattle Genetics Inc. (SGEN) have soared by more than 81% in 2019, while Acadia Pharmaceuticals, Inc. (ACAD) has seen its stock rise by more than 150%. With the two stocks soaring, so too has the Baker’s profits.

(WhaleWisdom)

Seattle Genetics

At the end of the fourth quarter of 2018, the Bakers held 51.0 million shares of Seattle Genetics, with a market value of about $2.9 billion. The stock has soared since the end of September, following the reporting of positive data on two of its cancer drugs in development. Currently, the stock trades for around $102.70, which is up from $56.65 at the end of 2018. Despite selling about 990,000 shares in the second quarter of 2019, the Bakers still own about 50 million shares worth an approximate $5.1 billion, a profit of nearly $2.2 billion.

Acadia Pharmaceuticals

Acadia Pharmaceuticals’ stock has jumped even more. The Bakers held 39.7 million shares of Acadia at the end of 2018, a position with a market value of about $642 million. Shares of the bio-pharmaceutical company have risen from roughly $16.15 to $41.55 on October 25. The stock took a massive leap higher in early September, after the company announced positive results for its drug in development for dementia-related psychosis. Not only that, but the Bakers bought more shares of the stock in a secondary offering following those positive results, increasing their stake in the company to 41.1 million shares, while the market value has soared to around $1.63 billion. Of course, not all of the $1 billion gain is profit, because the Bakers bought more stock, but this is still a massive gain.

Overall, it is hard to deny that the investment advisor is having a stellar year. Not only that, but the firm’s second-largest holding, Incyte Corp. (INCY), is having a decent year too, up by more than 22%. Meanwhile, Alexion Pharmaceuticals Inc. (ALXN) is up about 8% and BeiGene Ltd. (BGEN) is down about 1% to round out their top 5 holdings.

Not a bad year for the investment firm. Not a bad year at all.

Now, the chipmaker is scheduled to report second-quarter results on July 30 after the close of trading. Expectations are low, with consensus analysts’ estimates forecasting earnings to decline by 44% versus a year ago, to $0.08 per share. Meanwhile, revenue is expected to have dropped by 13% to $1.523 billion.

Hedge Funds Up Holdings

During the first quarter, the number of shares held by hedge funds increased by over 28% to total shares held of 36.6 million from 28.58 million.  During that time, there were a  total of 23 funds that created new positions, while ten funds added to their existing positions. However, there was also a total of 18 funds that closed out their holdings while 23 reduced them.  In total, the number of 13F shares held among institutions increased by over 3% to 657 million shares from 636 million shares.

Strong Sector

The company has reported mixed results in recent quarters, with both revenue and earnings topping estimates in just two of the previous four quarters. However, this quarter’s earnings have been notably strong across the semiconductor sectors with many companies reporting results that came in ahead of analysts’ expectations. Additionally, they have also been reporting better than expected outlooks. Companies such as Intel Corp. (INTC), Teradyne Inc. (TER), and Micron Technology Inc. (MU) are just a few of the more recent companies.

Expectations Are Building

The better than expected results and outlook across the sector have resulted in expectations building for AMD to deliver strong results as its quarterly report approaches.  Since the beginning of July, the equity has increased by 12%, which is better than the sector as measured by the VanEck Vectors Semiconductor ETF’s (SMH) increase of only 9%, and much stronger than the S&P 500’s gain of almost 3%.

Based on previous trends observed in 13F filings, it wouldn’t be surprising to see hedge funds piling into the stock again before AMD’s next round of results.  Now the same investors will need to hold their breaths, wait for the numbers, and hope they get strong results.