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In this article, we discuss 10 technology stocks to buy according to Kevin Mccarthy’s Breakline Capital. If you want to skip our detailed analysis of Mccarthy’s history, investment philosophy, and hedge fund performance, go directly to 5 Technology Stocks to Buy According to Kevin Mccarthy’s Breakline Capital.
Kevin McCarthy, a former portfolio manager at Citadel, founded Breakline Capital in May 2017, which is a New York-based hedge fund. The hedge fund has a 13F portfolio valued at approximately $74.15 million as of Q4 2021, down from $121.80 million the previous quarter. For its investments, the hedge fund uses a long/short equity strategy, focusing on equities in the technology, finance, and consumer discretionary sectors during the fourth quarter of 2021.
However, in this article, we will lay emphasis on the tech stocks in Kevin Mccarthy’s Breakline Capital portfolio.
Some of the large-cap tech stocks in the portfolio of Breakline Capital as of the fourth quarter of 2021 include Applied Materials, Inc. (NASDAQ:AMAT), NVIDIA Corporation (NASDAQ:NVDA), and Marvell Technology, Inc. (NASDAQ:MRVL).
Even though the hedge fund trimmed its stake in Applied Materials, Inc. (NASDAQ:AMAT) by 83% in the fourth quarter of 2021, it still owns 12,343 shares of the company, worth $1.94 million. Following the in-line performance, Citi analyst Atif Malik boosted his price objective on Applied Materials, Inc. (NASDAQ:AMAT) to $180 from $178 and reaffirmed a Buy rating on the stock on February 17.
The fund also has a significant stake in NVIDIA Corporation (NASDAQ:NVDA). In addition, on March 23, Citi analyst Atif Malik kept a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) with a price target of $350.
Marvell Technology, Inc. (NASDAQ:MRVL) is another tech stock in Breakline Capital’s portfolio. Susquehanna analyst Christopher Rolland boosted his price objective on Marvell Technology, Inc. (NASDAQ:MRVL) from $100 to $105 on March 7 and maintained a Positive rating on the stock.
Our Methodology
Considering all these points, let’s start our list of 10 technology stocks to buy according to Kevin Mccarthy’s Breakline Capital. We compiled this list using information from Mccarthy’s 13F portfolio as of Q4 2021. Insider Monkey’s fourth quarter database of 924 prominent hedge funds was used for this investigation.
Technology Stocks to Buy According to Kevin Mccarthy’s Breakline Capital
10. QUALCOMM Incorporated (NASDAQ:QCOM)
Breakline Capital’s Stake Value: $2,937,000
Percentage of Breakline Capital’s 13F Portfolio: 3.96%
Number of Hedge Fund Holders: 75
QUALCOMM Incorporated (NASDAQ:QCOM) creates and sells the core technology and products that are utilized in wireless devices. At the end of the fourth quarter of 2021, 75 hedge funds in the database of Insider Monkey held stakes worth $4.80 billion in QUALCOMM Incorporated (NASDAQ:QCOM), up from 70 the preceding quarter worth $3.52 billion.
On February 4, Baird analyst Tristan Gerra boosted his price objective on QUALCOMM Incorporated (NASDAQ:QCOM) from $200 to $250 and maintained an Outperform rating. The various growth layer prospects in non-handsets, according to Gerra, were impressive.
QUALCOMM Incorporated (NASDAQ:QCOM) announced the formation of a new fund on March 22 that would invest up to $100 million in firms focused on core technologies, XR, and data enabling the metaverse. On the other hand, Kevin Mccarthy disclosed a decreased stake in QUALCOMM Incorporated (NASDAQ:QCOM) by 52%. This leaves the investment value at $2.94 million and 16,058 shares.
Similar to Applied Materials, Inc. (NASDAQ:AMAT), NVIDIA Corporation (NASDAQ:NVDA), and Marvell Technology, Inc. (NASDAQ:MRVL), QUALCOMM Incorporated (NASDAQ:QCOM) is a notable tech stock in Kevin Mccarthy’s Q4 portfolio.
In its Q1 2021 investor letter, Alger, emphasised a few stocks and QUALCOMM Incorporated (NASDAQ:QCOM) was one of them. Here is what the fund said:
“Long position Qualcomm Inc. were among the top detractors from performance. QUALCOMM Incorporated (NASDAQ:QCOM) is a leading semiconductor company with strong positions in telecommunications end markets that position the company as a primary beneficiary of the innovative 5G network standard rollout. Qualcomm is acknowledged as having the best technology specs for 5G chip sets as evidenced by signing up all 75 major OEMs including Apple. Additionally, beyond handsets, QUALCOMM Incorporated (NASDAQ:QCOM) has meaningful growth drivers, including the Internet of Things, automobiles, industrials and gaming that provide the company with potential for generating increased earnings.
While Qualcomm was a notable positive contributor to the portfolio’s absolute and relative returns in 2020, during the first quarter, the share price declined and the position detracted from performance. Market demand for chips has been strong; however, QUALCOMM Incorporated (NASDAQ:QCOM) hasn’t been able to fully exploit the demand as it is capacity constrained. Expectations were high for QUALCOMM Incorporated (NASDAQ:QCOM) and while the quarter generally exceeded consensus estimates and forward estimates did rise, the street was anticipating a stronger positive surprise. We believe the product
ion capacity constraints should abate in the second half of this year.”
9. Palo Alto Networks, Inc. (NASDAQ:PANW)
Breakline Capital’s Stake Value: $3,166,000
Percentage of Breakline Capital’s 13F Portfolio: 4.26%
Number of Hedge Fund Holders: 73
Palo Alto Networks, Inc. (NASDAQ:PANW) is a corporation that monitors the network for businesses, service providers, and government organisations. In the fourth quarter, Breakline Capital raised its position in Palo Alto Networks, Inc. (NASDAQ:PANW) by 42% to 5,686 shares, accounting for just over 4.26% of the overall portfolio.
73 out of the 924 hedge funds held stakes in Palo Alto Networks, Inc. (NASDAQ:PANW) in the fourth quarter of 2021, worth $6.48 billion, compared to the same number of funds in the previous quarter, holding stakes in Palo Alto Networks, Inc. (NASDAQ:PANW) valued at $5.90 billion.
As part of a more prominent research note revising values in the Infrastructure and Security software sectors, Truist analyst Joel Fishbein boosted his price target on Palo Alto Networks, Inc. (NASDAQ:PANW) to $675 from $600 and reaffirmed a Buy rating on the shares on March 24.
8. Jabil Inc. (NYSE:JBL)
Breakline Capital’s Stake Value: $3,409,000
Percentage of Breakline Capital’s 13F Portfolio: 4.59%
Number of Hedge Fund Holders: 26
Jabil Inc. (NYSE:JBL) offers electronic manufacturing services and solutions worldwide, including repair, electronics design, production, and product management. On March 16, Jabil Inc. (NYSE:JBL) reported earnings for FQ2 2022, posting earnings per share of $1.68, exceeding estimates by $0.21. The quarterly revenue was up 10.61% from the prior-year quarter, amounting to $7.55 billion.
In a research note, Citi analyst Jim Suva informed investors that Jabil Inc. (NYSE:JBL) posted sales that beat the market by 2% and earnings that outperformed the market by 14%. Therefore, the analyst maintained a Buy recommendation on Jabil Inc. (NYSE:JBL), with a price objective of $90 on March 17.
Breakline Capital has a $3.41 million investment in Jabil Inc. (NYSE:JBL) as of Q4 2021, consisting of 48,460 shares. Hedge fund sentiment has slightly fallen for Jabil Inc. (NYSE:JBL). Long hedge fund positions fell to 26 at the end of the fourth quarter, compared to 27 at the end of the previous quarter.
7. Micron Technology, Inc. (NASDAQ:MU)
Breakline Capital’s Stake Value: $3,619,000
Percentage of Breakline Capital’s 13F Portfolio: 4.88%
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) is a computer memory and data storage company in the United States. Its products include dynamic random-access memory, flash memory, and USB flash drives. Breakline Capital added Micron Technology, Inc. (NASDAQ:MU) to its portfolio in the fourth quarter by buying 38,850 shares.
In the fourth quarter, fund managers increased their holdings in Micron Technology, Inc. (NASDAQ:MU). As of the end of the fourth quarter, 83 hedge funds in Insider Monkey’s database held stakes in Micron Technology, Inc. (NASDAQ:MU), an increase compared to 63 funds in the preceding quarter.
Micron Technology, Inc. (NASDAQ:MU) was upgraded to Outperform from Underperform by Bernstein analyst Mark Li on March 16, with a price objective of $94, up from $58. He pointed out that worldwide memory valuations had dropped, resulting in a good risk/reward ratio.
In its Q3 2021 investor letter, Hazelton Capital Partners mentioned Micron Technology, Inc. (NASDAQ:MU). Here is what the fund said:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
6. salesforce.com, inc. (NYSE:CRM)
Breakline Capital’s Stake Value: $4,933,000
Percentage of Breakline Capital’s 13F Portfolio: 6.65%
Number of Hedge Fund Holders: 110
salesforce.com, inc. (NYSE:CRM) is a software corporation that links businesses and customers all over the world. At the end of the fourth quarter of 2021, 110 hedge funds in the database of Insider Monkey held stakes in salesforce.com, inc. (NYSE:CRM), down from 119 in the preceding quarter.
Breakline Capital owned 19,411 salesforce.com, inc. (NYSE:CRM) shares during the fourth quarter of 2021. This amounted to a $4.93 million stake, representing 6.65% of its portfolio. The hedge fund reduced its stake in salesforce.com, inc. (NYSE:CRM) by 27% in the fourth quarter of 2021.
Canaccord analyst David Hynes decreased his price objective on salesforce.com, inc. (NYSE:CRM) from $315 to $260 on March 2 and kept a Buy recommendation on the stock. According to the analyst, the stock was inexpensive, and it had the potential to become a software industry mainstay.
salesforce.com, inc. (NYSE:CRM), like Applied Materials, Inc. (NASDAQ:
AMAT), NVIDIA Corporation (NASDAQ:NVDA), and Marvell Technology, Inc. (NASDAQ:MRVL), is a notable technology stock on the radar of Kevin Mccarthy.
Polen Capital, in its fourth quarter 2021 investor letter mentioned salesforce.com, inc. (NYSE:CRM). Here is what the fund said:
“Salesforce reported solid revenue growth, including accelerated growth in the company’s largest and most mature product, Sales Cloud. However, shares underperformed due to unexpected weakness in the company’s MuleSoft application integration business that we believe is attributable to temporary missteps in the company’s selling efforts. The company also provided slightly weak guidance for billed but not earned business growth. In our experience, this metric can be influenced by timing issues and is often not fully representative of underlying demand for the company’s offerings.”
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Disclosure: None. 10 Technology Stocks to Buy According to Kevin Mccarthy’s Breakline Capital is originally published on Insider Monkey.
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