You might not realize it, but Monday, May 16, 2022, marked one of the most important dates for the investing community. It was the deadline for institutional and hedge-fund managers with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission.
In simple terms, a 13F provides an under-the-hood look at what the brightest and most successful money managers bought, sold, and held during the most recently ended quarter (in this case, the first quarter). Although the data is at least six weeks old by the time it's filed, it nevertheless provides clues as to what stocks and trends are captivating fund managers.
With market volatility picking up in a big way during the first quarter, billionaire money managers were busy. However, this volatility didn't scare billionaires away from making big investments in growth stocks. Based on a slew of 13F filings, billionaire money managers piled into these four growth stocks.
First up is Meta Platforms (META -1.23%), the company formerly known as Facebook. During the first quarter, Jeff Yass of Susquehanna International, Stephen Mandel of Lone Pine Capital, and Jim Simons of Renaissance Technologies all scooped up a significant stake in Meta. Respectively, Susquehanna, Lone Pine, and Renaissance added approximately 3.99 million shares, 3.66 million shares, and 2.27 million shares.
Although Meta is contending with a number of headwinds, including Apple's iOS privacy changes and the growing possibility of a recession in the U.S. (ad-driven companies often see revenue growth slow or reverse during recessions), billionaires clearly see value with the platform.
For example, Meta closed out the first quarter with 3.64 billion monthly active users across its family of apps (Facebook, WhatsApp, and Instagram). This means more than half of the world's adult population visits a Meta-owned asset at least once a month. Advertisers are well aware that their best chance to reach a broad audience is with Meta's ultra-popular social media sites. And this, in turn, is what often affords Meta substantive ad-pricing power.
The company is also historically inexpensive. Even with Meta's aggressive spending on the metaverse, Wall Street anticipates the company will generate over $14 in earnings per share in 2023. For a company that's consistently growing by a double-digit percentage, a forward-year price-to-earnings ratio of 14 is jaw-droppingly low.
Another growth stock billionaire money managers couldn't get enough of in the first quarter is China-based electric vehicle (EV) manufacturer Nio (NIO 1.46%). Simons' Renaissance Technologies, John Overdeck and David Siegel's Two Sigma Investments, and Ray Dalio's Bridgewater Associates were all big buyers. Respectively, these funds added approximately 5.18 million shares, 5.04 million shares, and 2.26 million shares.
Like most auto stocks, Nio is contending with enormous supply chain challenges. There have been industrywide semiconductor chip shortages, and the company has dealt with part shortages tied to COVID-19 lockdowns in various provinces within China.
But in spite of these challenges, Nio rightly has billionaires stomping on the accelerator. Late last year, the company was producing EVs at an annual run rate in excess of 120,000, demonstrating that it can quickly ramp up output once supply chain challenges ebb.
What's more, despite being a newer automaker, Nio is innovative. For example, its newly introduced sedans, the ET7 and ET5, offer premium battery options that allow for around 620 miles on a single charge. That should allow Nio's sedans to directly compete with -- and take share from -- Tesla's flagship sedans, the Model 3 and Model S.
Nio's battery-as-a-service subscription could be a long-term game changer, as well.
Billionaires were also quite excited to pile into cloud-based application monitoring and security company Datadog (DDOG 2.39%) during its first quarter sell-off. Ken Griffin's Citadel Advisors, Overdeck and Siegel of Two Sigma, and Israel Englander's Millennium Management were all active buyers. Respectively, Citadel, Two Sigma, and Millennium added approximately 614,200 shares, 203,200 shares, and 175,800 shares.
As with most growth stocks, Datadog's valuation has proved to be its own worst enemy since the beginning of the year. Even after a 51% drop from a 52-week high, the company's shares are still valued at a rich 19 times forecast sales for 2022, as well as close to 100 times Wall Street's forecast earnings for next year. When economic slowdowns and recessions strike, cyclical companies in the tech sector often feel the pinch.
The good news for Datadog and its shareholders is that the company finds itself at the center of a seemingly unstoppable trend. With businesses shifting their data online and into the cloud at an accelerated pace in the wake of the pandemic, the company is positioned perfectly to aid in that transition and help businesses better understand their customers' behavior.
It's been particularly successful courting larger customers. Datadog ended March 2022 with roughly 2,250 clients generating at least $100,000 in annual recurring revenue. That's up 60% from the prior-year period and indicates Datadog's superior growth rate is unlikely to slow anytime soon.
Biotech-stock Novavax (NVAX 1.12%) is another growth stock that billionaire fund managers bought hand over fist in the first quarter. Philippe Laffont of Coatue Management, Englander's Millennium Management, and Griffin's Citadel Advisors were all buyers. Respectively, these funds purchased 883,400 shares, 609,300 shares, and 484,600 shares in the first quarter.
Novavax's promise and peril rests with NVX-CoV2373, the company's COVID-19 vaccine. On one hand, Novavax delayed filing for emergency-use authorization in a number of key markets until late 2021. It's also been dealing with a slow vaccine production ramp up. These concerns have helped send shares more than 80% below their pandemic high.
On the other hand, Novavax appears to have a highly effective vaccine. Two large-scale clinical trials in adults last year produced vaccine efficacies of 89.7% (U.K.) and 90.4% (U.S. and Mexico). A third trial released earlier this year in adolescents featured an 80% vaccine efficacy. As one of only a few drugmakers to hit the 90% vaccine efficacy mark, Novavax should have no trouble becoming a major player in developed and emerging markets.
Additionally, Novavax has stuck by its 2022 sales projection of $4 billion to $5 billion. If the company can deliver on this forecast, it'll be valued at roughly 2 times Wall Street's projected earnings this year. Considering it also has $1.57 billion in cash and cash equivalents, Novavax looks downright cheap.