Was Billionaire Jorge Paulo Lemann’s 3G Capital Proper About These 10 Shares?

On this article, we talk about the highest 10 inventory picks of billionaire Jorge Paulo Lemann’s 3G Capital as of the third quarter of 2021 and assess these shares based mostly on their efficiency over the previous 12 months. If you wish to skip our detailed evaluation of those shares, go on to the Was Billionaire Jorge Paulo Lemann’s 3G Capital Proper About These 5 Shares?.

We ready the precise contents of this text in November 2021, after we analyzed the Q3 portfolio of billionaire Jorge Paulo Lemann’s 3G Capital to debate the highest 10 picks of 3G Capital at the moment. We’re publishing this text at this time as a result of it’s at all times attention-grabbing for the readers to investigate how good the so-called “good cash” is in terms of inventory choosing. After we take a look at the inventory picks/sells of hedge funds in hindsight, we are able to higher analyze their efficiency and see whether or not they had been proper or mistaken.

On this article you will note the highest 10 inventory picks of billionaire Jorge Paulo Lemann’s 3G Capital as of the third quarter of final yr.

To evaluate the efficiency of those shares and the hedge fund, now we have talked about their efficiency over the previous 12 months.

On the time of writing we had talked about analyst rankings for these shares from well-known Wall Avenue analysts. It’d be attention-grabbing for our readers to see how proper or mistaken had been these analysts’ value targets and calls.

Nonetheless, in 3G Capital’s protection, we must always add that the 2022 market crash crushed most of those shares. That does not imply the hedge fund was fully mistaken in its method. As many elite funds have long-term holding intervals, it is fairly attainable that the fund would find yourself gaining from these investments within the coming months and years, particularly as analysts consider the worst is behind us and the markets may really start to rebound in 2023.

Earlier than leaping to the precise inventory picks of the fund, let’s first see our transient primer on Jorge Paulo Lemann we wrote on the time of writing this text.

Jorge Paulo Lemann co-founded 3G Capital in 2004, which is a worldwide funding administration agency with workplaces in New York Metropolis and Rio de Janeiro, pursuing long-term worth by way of its strategic investments. 3G Capital has been concerned in well-known enterprise mixtures all through the years, and the agency’s affiliate companions embody Anheuser-Busch InBev SA/NV (NYSE:BUD) since 1989, and Lojas Americanas since 1983. In 2015, 3G Capital, in collaboration with Berkshire Hathaway, helped perform the merger between H.J. Heinz Firm and Kraft Meals Group, forming The Kraft Heinz Firm (NASDAQ:KHC). Equally, in 2014, 3G Capital accomplished the mix of Burger King and Tim Hortons, forming Restaurant Manufacturers Worldwide Inc. (NYSE:QSR). 

Jorge Paulo Lemann is a Brazilian billionaire funding banker, who accomplished his Bachelor’s from Harvard College, and his profession has left a big mark within the company governance discipline. Lemann has served as a board member and director of a number of corporations all through the years, together with DaimlerChrysler, Credit score Suisse Group AG (NYSE:CS), Swiss Reinsurance, The Gillette Firm, and Lojas Americanas. 

Earlier than establishing 3G Capital in 2004, Lemann was additionally the co-founder and accomplice of GP Investimentos, a Brazilian personal fairness agency. From 2013 until Could 2021, he was a board member of The Kraft Heinz Firm (NASDAQ:KHC), and at present, Lemann is a controlling shareholder of Anheuser-Busch InBev SA/NV (NYSE:BUD).

Top 10 Stock Picks of Billionaire Jorge Paulo Lemann's 3G Capital

Prime 10 Inventory Picks of Billionaire Jorge Paulo Lemann’s 3G Capital

10. Microsoft Company (NASDAQ:MSFT)

3G Capital’s Stake Worth: $7,048,000

Efficiency of the inventory over the previous 12 months as of November 22: -28%

Billionaire Invoice Gates’ Microsoft Company (NASDAQ:MSFT) posted Q3 outcomes on October 26. EPS within the interval totaled $2.27, beating estimates by $0.19. The $45.32 billion income was up 21.97% from the previous-year quarter, topping estimates by $1.33 billion. 

Based on Michael Turrin from Wells Fargo, Microsoft Company (NASDAQ:MSFT) has room for progress even after being one of many largest world corporations.

Alger talked about Microsoft Company (NASDAQ:MSFT) in its Q3 2021 investor letter. Right here is what the agency has to say:

“Microsoft Company was among the many prime contributors to efficiency in the course of the third quarter. Microsoft is a Optimistic Dynamic Change beneficiary of company America’s transformative digitization. Microsoft’s enterprise cloud product, Azure, is quickly rising and accruing market share. Microsoft reported that Azure grew 51% within the second quarter. This excessive unit quantity progress is a main driver of the corporate’s increased share value, however the firm’s robust working execution has enabled margin enlargement that has additionally helped to extend ahead earnings estimates. We consider Microsoft’s subscription-based software program choices and cloud computing companies have a sturdy progress profile as a result of they improve prospects’ progress initiatives and assist them to decrease prices. Moreover, traders respect Microsoft’s robust free money move technology and its return of money to shareholders within the type of dividends and share repurchases.”

9. Futu Holdings Restricted (NASDAQ:FUTU)

3G Capital’s Stake Worth: $11,378,000

Efficiency of the inventory over the previous 12 months as of November 22: -2.3%

Futu Holdings Restricted (NASDAQ:FUTU), a Chinese language tech firm providing a digital wealth administration and brokerage platform, is one among Lemann’s prime inventory picks from the third quarter. 3G Capital holds 125,000 shares in Futu Holdings Restricted (NASDAQ:FUTU), value $11.37 million, representing 2.47% of the agency’s Q3 portfolio.

Bocom analyst Jingyi Zhang on November 1 downgraded Futu Holdings Restricted (NASDAQ:FUTU) to Impartial from Purchase with a $53.30 value goal.

Right here is what Tao Worth has to say about Futu Holdings Restricted (NASDAQ:FUTU) of their Q1 2021 investor letter:

“Futu is a brand new “Opportunistic” place. It’s an HK based mostly on-line brokerage & wealth administration platform with deep roots in know-how. Futu sits within the confluence of three robust favorable forces of Meteorology, Topography & Commander, but was underpriced on the time of our entry. By way of Meteorology, there’s a enormous addressable market of Chinese language home center to higher courses’ wealth being deployed to abroad belongings allocation within the subsequent decade. Moreover, the incumbents being disrupted are extraordinarily weak of their digital transformation. On Topography, Futu’s user-centric product design constructed an intuitive entrance finish and nice consumer expertise, whereas the digital native growth framework constructed a strong & dependable again finish (together with a self-developed order routing & execution system for the HK market). It is a uncommon mixture in comparison with each offline incumbents (who lack flashy entrance finish & UX) & different new on-line disrupters (who lack strong infrastructure). On Commander issue, founder CEO Li Hua was a Tencent engineer in its early days with deep data in product design and growth. Li is claimed to be a fanatic product supervisor, to this present day nonetheless on the front-line, alpha testing any new options. Based mostly on analyses of those elements, I feel Futu may compound its income at a really excessive fee with very excessive certainty and with robust working leverage, placing our entry value very enticing in comparison with incomes energy in 3-5 years. But simply as we completed constructing a small place, the worth began to take off and greater than tripled in a month. When such value motion occurs, it’s apparent that Mr. Market has turned very euphoric to this identify. I made a decision to trim however saved an inexpensive place given its progress certainty.”

8. Block (NYSE:SQ)

3G Capital’s Stake Worth: $21,586,000

Efficiency of the inventory over the previous 12 months as of November 22: -70%

UBS analyst Rayna Kumar initiated protection of Block (NYSE:SQ), a California-based monetary companies and digital funds firm, with a Purchase ranking and a $322 value goal on November 17. The analyst expects the corporate to exceed short-term gross revenue estimates, and in line with Kumar, acquisition of the monetary know-how firm, Afterpay Restricted (OTC:AFTPY) will show extraordinarily helpful for Sq., Inc. (NYSE:SQ). 

Based on the database of elite hedge funds maintained by Insider Monkey, 98 funds had been bullish on Sq., Inc. (NYSE:SQ) as of Q3, with a complete stake worth of $8.88 billion. The main stakeholder within the firm is Catherine Wooden’s ARK Funding Administration, holding a $1.46 billion place in Sq., Inc. (NYSE:SQ). 

Right here is what RiverPark Giant Development Fund has to say about Sq., Inc. (NYSE:SQ) of their Q1 2021 investor letter:

“We established a place in main Monetary Know-how supplier Sq. in the course of the quarter. Via one built-in system, SQ is a hybrid of two companies: its Vendor Enterprise (charging small and medium-sized companies about 3% for transaction fee processing, plus different companies akin to immediate funds entry, and software program for the whole lot from buyer engagement to payroll), and its Money App (initially for person-to-person money transfers and now a rising digital monetary companies supplier for shoppers).

The mixed enterprise has grown gross revenue at a 37% CAGR over the previous 5 years to $2.7 billion (attributable to go via prices, gross revenue is extra reflective of top-line progress) and we consider that the corporate has an unlimited long-term runway, because it has lower than a 2% share of a greater than $160 billion market. It’s our view that the corporate’s Money App (which has grown from nothing in 2015 to $1.2 billion gross revenue final yr) has a very giant alternative with its highly effective ecosystem of digital monetary companies together with digital wallets, direct deposits, inventory buying and selling, bitcoin buying and selling, and enterprise and tax companies, that are all comparatively new. The overwhelming majority of Money App’s greater than 36 million customers are youthful and, importantly, are prepared to exchange their financial institution and different monetary companies accounts with the app.

We estimate that the corporate can develop its gross revenue greater than 30% and EBITDA greater than 50% yearly for the foreseeable future, and whereas a lot of the firm’s present revenue is from its Vendor Enterprise, we consider most of Sq.’s future worth will probably be from its Money App enterprise.”

7. Snowflake Inc. (NYSE:SNOW)

3G Capital’s Stake Worth: $24,194,000

Efficiency of the inventory over the previous 12 months as of November 22: -60%

Snowflake Inc. (NYSE:SNOW) is an organization providing knowledge storage and knowledge analytics companies via a cloud-based software program. Lemann owns 80,000 Snowflake Inc. (NYSE:SNOW) shares as of the third quarter, value $24.1 million, accounting for five.26% of his Q3 portfolio. 

Credit score Suisse analyst Phil Winslow on November 16 initiated protection of Snowflake Inc. (NYSE:SNOW) with an Outperform ranking and a $455 value goal.

Brad Gerstner’s Altimeter Capital Administration is the main stakeholder in Snowflake Inc. (NYSE:SNOW) as of September, with over 21 million shares value $6.36 billion. Total, 73 hedge funds had been lengthy Snowflake Inc. (NYSE:SNOW), with the full stake worth amounting to $14.56 billion. 

Here’s what RiverPark Funds has to say about Snowflake Inc. (NYSE:SNOW) in its Q1 2021 investor letter:

“We additionally established a place in Snowflake in the course of the quarter. Snowflake affords cloud-based knowledge storage and analytics, typically termed “knowledge warehouse-as-a-service.” The information warehousing market—created by the large, rising quantity of consumer, buyer, and account knowledge and the necessity to search and analyze it—has traditionally saved its knowledge on bodily servers positioned on-premises. The cloud knowledge platform market—storing knowledge off-premises on cloud servers—is a comparatively new $70 billion+ market. Considerably, incremental warehouse knowledge capability and renewals are anticipated to be pushed by and to the cloud, with greater than 75% of databases within the cloud by 2022.

Snowflake requires completely no infrastructure administration from its customers, is totally scalable for every buyer, runs on Amazon, Microsoft, or Google cloud platforms, and most critically, Snowflake helps corporations analyze their knowledge. The corporate additionally has a novel, customer-aligned billing mannequin based mostly on utilization. All of which has led to Snowflake being among the many leaders of this extremely fragmented market, posting 124% income progress final yr. SNOW’s progress comes from the mix of extra prospects—which grew 73% final yr—and prospects shopping for extra companies—the corporate boasts a tremendous 150%+ internet buyer retention. The corporate’s rising scale has additionally led to growing gross margin and working leverage, up 1,100 foundation factors and eight,200 foundation factors, respectively, over the previous two years. The corporate has guided to FCF break-even this yr, and with the corporate’s capital expenditure-light mannequin—Snowflake makes use of the general public cloud for internet hosting—we count on FCF to develop a lot quicker than income progress, which we forecast to develop comfortably greater than 50% per yr for the subsequent a number of years. Moreover, now we have nice confidence within the SNOW administration workforce, which beforehand had an enormously profitable run guiding one among our different core Cloud software program holdings ServiceNow.”

6. DoorDash, Inc. (NYSE:DASH)

3G Capital’s Stake Worth: $24,718,000

Efficiency of the inventory over the previous 12 months as of November 22: -73%

Jorge Paulo Lemann owns 120,000 shares in DoorDash, Inc. (NYSE:DASH), an internet meals ordering and supply platform, valued at $24.71 million, representing 5.37% of his Q3 portfolio. One of many main DoorDash, Inc. (NYSE:DASH) stakeholders as of September is Philippe Laffont’s Coatue Administration, with 9.45 million shares value $1.94 billion. 

DoorDash, Inc. (NYSE:DASH) reported Q3 earnings on November 9, with EPS for the quarter being $0.43, beating estimated EPS by $0.33. 

As of the third quarter of 2021, 42 hedge funds reported proudly owning stakes in DoorDash, Inc. (NYSE:DASH), value $9.35 billion. That is in comparison with 45 funds within the earlier quarter, with a complete stake worth of $8.92 billion. 

 

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Disclosure: None. Was Billionaire Jorge Paulo Lemann’s 3G Capital Proper About These 10 Shares? is initially revealed on Insider Monkey.

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