August 9, 2022

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Carl Anderson’s Marcho Partners Is Investing In These 10 Stocks

In this article, we discuss the 10 stocks Carl Anderson’s Marcho Partners is investing in. If you want to skip our detailed analysis of Anderson’s history, investment philosophy, and hedge fund performance, go directly to Carl Anderson’s Marcho Partners Is Investing In These 5 Stocks.

Serving as its chief investment officer, Carl Anderson is the founder of the London-based global technology-focused hedge fund, Marcho Partners. After earning his bachelor’s degree from Princeton University and his M.B.A from the Stanford University Graduate School of Business, Carl Anderson began his career in finance and investment banking, earning over 2 decades of valuable investment experience. Prior to founding Marcho Partners in 2019, Carl Anderson served as managing director at both, Stonebrook Fund Management and Glynn Capital Management. He was also a partner at Social Capital LP.

Marcho Partners, as an investment management firm, manages more than $1.49 billion in its investment portfolio, as of the end of the second quarter. The fund’s portfolio is diversified across 5 principal sectors, with the Technology sector proving to be the heaviest one, making up 55.2% of the total portfolio value.

Some of the notable stocks in the investment portfolio of Marcho Partners at the end of the second quarter of 2021 include Shopify, Inc. (NYSE:SHOP), Sea Limited (NYSE:SE) and Unity Software Inc. (NYSE:U), among others discussed in detail below.

 

Our Methodology

With this background in mind, let us now look towards the 10 stocks Carl Anderson’s Marcho Partners is investing in. We made use of Marcho Partners’ 13F portfolio for the second quarter for this analysis.

Why should we pay attention to Carl Anderson’s stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Carl Anderson’s Marcho Partners Is Investing In These 10 Stocks

10. Ribbit LEAP Ltd. (NYSE:LEAP)

Marcho Partners’ Stake Value: $5.3 million

 

Percentage of Marcho Partners’ 13F Portfolio: 0.35%

 

Number of Hedge Fund Holders: 28

Ribbit LEAP Ltd. (NYSE:LEAP) is a California-based special purpose acquisition company that offers mergers, asset acquisition and business combination services.

After going public in September 2020, Ribbit LEAP Ltd. (NYSE:LEAO) raised around $402 million through its initial offering.

As of the second quarter of 2021, Marcho Partners has 500,000 shares in Rabbit LEAP Ltd. (NYSE:LEAP), valued at $5.3 million. Rabbit LEAP Ltd. (NYSE:LEAP) accounts for 0.35% of the 13F portfolio. Of the 873 elite funds tracked by Insider Monkey, 28 held stakes in the company, worth more than $230.5 million.

9. Farfetch Limited (NYSE:FTCH)

Marcho Partners’ Stake Value: $78.7 million

 

Percentage of Marcho Partners’ 13F Portfolio: 5.27%

 

Number of Hedge Fund Holders: 63

Farfetch Limited (NYSE:FTCH) is a UK-based company that owns and runs an online marketplace for luxury fashion apparel.

On October 4, Wedbush analyst Tom Nikic initiated coverage of Farfetch Limited (NYSE:FTCH) with a Neutral rating and $38 price target on its shares.

Latest data shows that Marcho Partners owned 1.56 million shares in Farfetch Limited (NYSE:FTCH) in the second quarter of 2021, worth $78.7 million, representing 5.27% of the portfolio. At the end of the second quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $4 billion in Farfetch Limited (NYSE: FTCH), up from 57 in the previous quarter worth $3 billion.

In its Q1 2021 investor letter, RiverPark Funds, an asset management firm, commented on the growth and profits of Farfetch Limited (NYSE:FTCH). Here is what the fund said:

“We established a small position in e-commerce company Farfetch, which is benefitting from the secular trends of growing ecommerce, the global market for personal luxury goods, and emerging market growth, particularly in China. The company is an e-commerce platform like Amazon, Mercado Libre, or Alibaba, and is the leading online luxury fashion retail platform.

Luxury fashion has much lower online penetration than general ecommerce, and Farfetch is differentiated because of its longstanding relationships with the generally family-controlled, brand-protective luxury product companies. Because of its luxury focus, Farfetch has both higher average order values and higher take rates relative to peers, driving higher gross margins.

In its recently ended fiscal 2020, Farfetch grew revenue 64% and gross profit 68%, the company should be EBITDA positive this year, and we believe the company can grow revenue more than 20% per year and EBITDA more than 50% per year for the foreseeable future. With its extremely low capital needs—capital expenditures were less than 2% of revenue last year—we expect the company’s free cash flow to grow even faster.”

8. Spotify Technology S.A. (NYSE:SPOT)

Marcho Partners’ Stake Value: $97.86 million

 

Percentage of Marcho Partners’ 13F Portfolio: 6.55%

 

Number of Hedge Fund Holders: 48

Spotify Technology S.A. (NYSE:SPOT) is a Sweden-based technology company and one of the world’s largest and most popular digital music-streaming mobile apps. With more than 365 million actives listeners, the music-streaming company comes in at eighth on our list of the 10 stocks Carl Anderson’s Marcho Partners is investing in.

Marcho Partners owned 355,095 shares in Spotify Technology S.A. (NYSE:SPOT) at the end of the second quarter of 2021, worth over $97.86 million.

On September 13, Goldman Sachs analyst Eric Sheridan initiated coverage of Spotify Technology S.A. (NYSE:SPOT) with a Neutral rating and $260 price target on its shares.

In addition to Shopify, Inc. (NYSE:SHOP), Sea Limited (NYSE:SE) and Unity Software Inc. (NYSE:U), Spotify Technology S.A. (NYSE:SPOT) is a decent stock to buy.

Investment management firm Worm Capital LLC mentioned Spotify Technology S.A. (NYSE:SPOT) in its Q3 2021 investor letter. Here is what the firm said:

“The beauty of continuously accumulating marginal gains is that it has a profound compounding effect over time: If your goal as an individual, organization, investor—whatever you are—is trained on the belief that you should always be improving, there is the potential for exponential growth.

Spotify is a wonderful example of this dynamic as well.

Although the market has pummeled this position in recent months, falling more than 35% from all-time highs—and has contributed significantly to our negative year-to-date performance—the company is meeting and often exceeding our internal expectations. Spotify is expanding territory, reducing frictions for creators, enabling the next-generation of audio advertising (a high margin opportunity), and continuously experimenting to improve the experience for both creators and fans to create an essential platform.

Spotify is, in many ways, building the essential audio infrastructure for the Internet, much like Google built the search infrastructure to power Web 2.0 or Apple built the hardware infrastructure power the app economy. We think the valuation represents one of the wider deviations between price and value in the market today, but we think time will be on our side here—like all our positions, we maintain a long-term view on the company and certain theses may take multiple years to play out.

In our view, Daniel Ek’s vision for Spotify is far grander than most may realize, and we encourage you to listen to his recent podcast with Patrick O’Shaughnessy. “The value of what you are building is the sum of all the problems that you solve,” Daniel says. “I still think we’re early days with Spotify. There’s so many problems left to be solved.” (We agree.)

Two charts below that help contextualize both Spotify’s lead (largely as a result of aggregating marginal gains, and passing those gains to consumers) as well as a chart that represents just how early we are in the streaming audio era.

Like most great growth business stories, the market tends to vastly underestimate the total addressable market in its early days. We believe Spotify will ultimately prove out to be the Google of audio, and it should command a far higher multiple today. For those interested, Eric spoke in detail about our investment thesis on Spotify with John Rotonti in September – link here. Again, in terms of fund performance, we understand this year has been frustrating. And we want to again thank you for your trust and patience.”

7. Sea Limited (NYSE:SE)

Marcho Partners’ Stake Value: $112.6 million

 

Percentage of Marcho Partners’ 13F Portfolio: 7.54%

 

Number of Hedge Fund Holders: 104

Sea Limited (NYSE:SE) is a Singapore-based consumer technology company that operates in the digital entertainment, e-commerce, and financial services industries.

On October 15, Citi analyst Alicia Yap raised the price target on Sea Limited (NYSE:SE) to $424 from $335, and kept a Buy rating on the shares of the company.

As of the end of the June quarter, Marcho Partners holds 410,092 shares of Sea Limited (NYSE:SE), amounting to more than $112.6 million in worth, and representing 7.54% of the fund’s portfolio value.

Tao Value mentioned Sea Limited (NYSE:SE) in its Q2 2021 investor letter. Here is what the firm has to say:

“Sea continued to execute above expectation. The gaming business continued strong momentum, recording bookings of $1.1 billion, growing 117% y-o-y. The major franchise Free Fire showed no sign of slowing down in established ASEAN & LatAm market and received positive reception from new markets like US. On e-commerce side, Shopee demonstrated early success in expanding to Brazil, by adopting a low-price category & gamification strategy. For 2021, Shopee is now top downloaded e-commerce app in Brazil, almost 2x of the second-place local leader Mercado Libre (MELI). I also see the most promising development is in its FinTech business – SeaMoney, which more than doubled its revenue in Q1 2021 from the previous quarter! With online lending products rolling out, SeaMoney is poised to grow rapidly, becoming the 3rd growth curve for Sea.”

6. Unity Software Inc. (NYSE:U)

Marcho Partners’ Stake Value: $134.7 million

 

Percentage of Marcho Partners’ 13F Portfolio: 9.02%

 

Number of Hedge Fund Holders: 29

Unity Software Inc. (NYSE:U) is a San Francisco-based tech company that provides software solutions used in creating video games and animation. Coming in at sixth on our list of the 10 stocks Carl Anderson’s Marcho Partners is investing in, Unity Software Inc. (NYSE:U) has a market capitalization of $41.86 billion.

Carl Anderson’s Marcho Partners owned 1.2 million shares of Unity Software Inc. (NYSE:U) worth $134.7 million as of Q2 2021, accounting for 9.02% of the fund’s portfolio value. At the end of the second quarter, 29 hedge funds in the database of Insider Monkey held stakes worth $7.26 billion in Unity Software Inc. (NYSE:U), down from 39 in the preceding quarter worth $6.69 billion.

On October 14, Credit Suisse analyst Stephen Ju lowered his price target on Unity Software Inc. (NYSE:U) to $160 from $170, but kept an Outperform rating on the shares of the company.

 

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Disclosure: None. Carl Anderson’s Marcho Partners Is Investing In These 10 Stocks is originally published on Insider Monkey.

https://finance.yahoo.com/news/carl-anderson-marcho-partners-investing-092926873.html