7 Supercharged Growth Stocks Billionaires Can’t Stop Buying

Amid a flurry of earnings reports and economic data announcements, you may have missed one of the most important data releases of the entire quarter on November 14th. case Form 13F with the Securities and Exchange Commission.

A 13F offers an under-the-hood look at what some of the world’s smartest fund managers held in their portfolios at the end of last quarter — in this case, as of September 30, 2022. Even though this portfolio snapshot is more six weeks, it can still provide insight into stocks and/or trends that pique the interest of top fund managers.

Image source: Getty Images.

Despite being crushed by the 2022 bear market, growth stocks remained a popular buy for billionaire fund managers during the third quarter. What follows are seven supercharged growth stocks billionaires can’t stop buying.

1. Philippe Laffont: PayPal Holdings

The first is billionaire Philippe Laffont of Coatue Management, who oversaw the purchase of 3.47 million shares of stock-fintech PayPal Credits (PYPL -0.84%) during the third trimester. This nearly quadrupled Coatue’s stake in PayPal for just three months.

Although fintech companies have been hurt by soaring inflation and a weakening US economy, PayPal has shown incredible resilience. Total payment volume, excluding currency movements, continued to grow by a low double-digit percentage.

Perhaps most importantly, active account engagement continues to climb. On a 12-month basis, active accounts averaged 40.1 transactions at the end of 2020 and 50.1 transactions in the quarter ending September 2022. Since PayPal is primarily a transaction-driven model, this bodes well for its sales and profit growth.

Additionally, CEO Dan Schulman is tightening the company’s belt amid growing economic uncertainty and doing what he can to boost shareholder value. PayPal is targeting $1.3 billion in annual savings in 2023 and recently authorized a $15 billion share buyback program.

2. Israel Englander: intuitive surgery

For billionaire Israel Englander of Millennium Management, developer of robotic-assisted surgical systems Intuitive surgery (ISRG 0.51%) was a stock he kept buying in the third quarter. Englander’s fund picked up 567,169 shares, which increased its position by 97% in just three months.

One reason for Englander’s optimism likely has to do with Intuitive Surgical’s dominance of the industry. The company had installed 7,364 of its da Vinci systems in hospitals and surgical centers around the world by the end of September, far more than any of its competitors. Additionally, the $0.5 to $2.5 million price tag for these systems makes it unlikely that its customers will ever switch to a competitor.

Intuitive Surgical also benefits from its working model designed with razors and blades. In its early days, the company generated most of its revenue from the sale of its expensive da Vinci systems. However, these are complex systems to build, and therefore produce mediocre margins. Over time, the sale of instruments with each procedure and the maintenance of its systems became the main sources of revenue for the company, at a considerably higher margin.

3. Paul Singer: Pinterest

Billionaire activist-investor Paul Singer of Elliott Investment Management was a busy bee during the third quarter, with a notable purchase of 10 million shares of social media stock pinterest (PINS -0.57%). That tripled the Singer fund’s stake from the second sequential quarter.

Although growing recession fears have weighed on social media stocks this year, Pinterest has outperformed its peers. The company’s monthly active user (MAU) count has increased sequentially over the past two quarters.

More importantly, Pinterest had no trouble monetizing its 445 million MAUs. Average revenue per user jumped 11% globally in the last quarter, with particularly strong growth in international markets outside of Europe.

But As I’ve already said, the best aspect of Pinterest is its operating model. Since users willingly share what matters to them, changes to data-tracking apps make little difference to Pinterest. It can still deliver critical data to advertisers on a silver platter.

4. Jim Simons: Airbnb

As for billionaire Jim Simons of Renaissance Technologies, his eyes were entirely on the accommodation and stay market. Airbnb (ABNB -1.54%). Simons added more than 1.67 million Airbnb shares in the last quarter, pushing Airbnb to become Renaissance’s third-largest holding by market value.

What makes Airbnb such an exciting investment is that it is disrupting the heavy hospitality and travel industries. The number of hosts in Airbnb’s online marketplace continues to grow, and the company has about 400 million nights and experiences booked this year. Best of all, long-term stays (reservations of at least 28 days) are Airbnb’s fastest growing categorywith the rise of remote working in the wake of the pandemic, providing the company with an expanding revenue channel.

Airbnb’s Experiences segment is also starting to get its feet wet. In addition to partnering with local experts to lead travelers on adventures, I would say this division has the opportunity to further infiltrate the $8 trillion global travel industry via transportation and restoration.

A person holding a credit card above a portable point of sale device.

Image source: Getty Images.

5. Ole Andreas Halvorsen: Visa

Billionaire fund manager Ole Andreas Halvorsen of Viking Global Investors ‘charged’ in Q3 with big payment processor buy Visa (V -0.09%). Viking added 2.79 million shares of the payments giant in the quarter ended September, increasing its stake 109% from the second quarter.

Although Visa is cyclical and therefore not immune to economic downturns, it has a few tricks up its sleeve. For example, it accounts for more than half of the credit card network’s purchase volume in the United States – the world’s largest consumer market – and was the only US payment processor to significantly increase its share after the Great Recession. There is also a sustainable opportunity for Visa to expand internationally.

Additionally, Visa’s management team wisely keeps the company focused on payment processing and stays away from lending. When recessions inevitably come, lenders almost always face loan losses. Since Visa does not lend, it is not required to set aside capital to cover loan losses. Translation: he bounces back faster than the others financial stocks.

6. Chase Coleman: Snowflake

Billionaire Chase Coleman of Tiger Global Management has been a big buyer of supercharged growth stocks for years. That didn’t change in the third quarter, with Coleman overseeing the purchase of 471,324 shares of a cloud data warehousing company. Snowflake (SNOW -1.01%). This brought Tiger Global’s stake north of 2.6 million shares.

Coleman’s optimism is likely tied to Snowflake’s sustainable competitive advantages and a higher growth rate. Regarding the former, Snowflake’s infrastructure is built on top of the most popular cloud infrastructure services. This makes data sharing transparent for enterprise customers.

Additionally, Snowflake eschews subscriptions in favor of charging its customers based on the amount of data they store and the Snowflake compute credits used. It’s a transparent pricing system that its customers clearly appreciate.

When it comes to growth, Snowflake is unmatched in the cloud space. Even in a difficult economic environment, the company increased sales by 83% in the quarter ended Julywith its remaining performance obligations (i.e. backlog) up 78% to $2.7 billion.

7. Jeff Yass: Amazon

Last but not least, billionaire Jeff Yass of Susquehanna International repeatedly clicked the “buy now” button on e-commerce player Amazon (AMZN -0.75%). Yass’ fund added nearly 9.6 million shares, which increased its stake in Amazon by 63% to about 24.8 million shares.

Although Amazon is best known for its dominant online marketplace – Amazon accounted for nearly $0.40 for every dollar in online retail sales in 2022 – retail sales aren’t generating much profit or cash flow. operation for the company. It’s rather Amazon’s Auxiliary Operations that generate the bulk of its cash flow.

For example, the company had signed up over 200 million people for a Prime subscription, as of April 2021, and that number has almost certainly grown since then. Amazon Web Services (AWS) is also the world’s leading provider of cloud infrastructure, with an estimated 31% share of cloud services spending in the second quarter, according to Canalys. AWS, subscription services and even advertising services can combine to potentially triple Amazon’s operating cash flow by mid-decade.

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