One of Wall Street's most important data reveals of the quarter occurred last week, and you might have missed it.
May 16 marked the deadline for money managers with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission. A 13F provides a snapshot of what the most successful fund managers were buying, selling, and holding in the most-recent quarter (in this case, the first quarter). Despite the drawbacks associated with 13Fs -- they're over six weeks old when filed -- they can be quite useful in identifying trends and stocks that are piquing the interest of money managers.
Not surprisingly, the volatility of the first quarter encouraged billionaire money managers to buy growth-oriented stocks in the Nasdaq 100 -- an index comprised of the largest nonfinancial companies listed on the Nasdaq exchange. What follows are four Nasdaq 100 stocks billionaires absolutely piled into during the first quarter.
The first Nasdaq 100 stock billionaires bought hand over fist is biotech company Moderna (MRNA -3.00%). According to 13Fs, Philippe Laffont of Coatue Management purchased 2.64 million shares, Jim Simons of Renaissance Technologies added 1.98 million shares, and Jeff Yass of Susquehanna more than tripled his funds' stake with a nearly 355,000-share buy.
If the company's name sounds familiar, it's because Moderna is one of the most-successful COVID-19 vaccine developers. Spivevax (also known scientifically as mRNA-1273) generated a 94.1% vaccine efficacy (VE) in a large-scale U.S. trial in late 2020. As one of only a few drug developers to hit this 90% or higher VE mark, Moderna's vaccine became an instant winner. In 2022, the company has reiterated its forecast for $21 billion in global contracted net sales.
However, competition is picking up in the COVID-19 treatment space. We've witnessed the emergence of oral treatments for those infected with the SARS-CoV-2 virus, and are likely to see regulators approve new vaccines for initial inoculations and booster shots. In other words, this might be as good as it gets for Moderna.
Additionally, the company is generating virtually all of its revenue from its COVID-19 vaccine. Considering Moderna sports $57 billion market cap, this is a lot of weight to place on a single therapy. Even with $19.3 billion in cash and cash equivalents on its balance sheet, Moderna is a potentially risky bet for a deep value stock.
Billionaire money managers also used the market's first quarter correction as an opportunity to pile into semiconductor specialist Broadcom (AVGO -0.65%). Ken Fisher of Fisher Asset Management, Ken Griffin of Citadel Advisors, and Steven Cohen of Point72 Asset Management, respectively purchased around 669,000 shares, 326,000 shares, and 250,000 shares.
The beauty of Broadcom's operating model is its predictability. The company ended last year with a record backlog of $14.9 billion, and according to CEO Hock Tan, Broadcom has been booking production well into 2023. This provides transparency to the company's operating cash flow -- and Wall Street does love transparency.
The big catalyst for Broadcom through at least the midpoint of the decade looks to be telecom companies upgrading their infrastructure to handle 5G speeds. Broadcom generates most of its revenue from the next-gen wireless chips that go into smartphones. Because it's been around a decade since wireless download speeds were noticeably improved, 5G should encourage a steady consumer and enterprise device replacement cycle.
Broadcom's ancillary sales channels are intriguing, too. This is a company that provides connectivity and access chips to data centers, as well as solutions used in next-gen automobiles. As businesses accelerate the shift of data online and into the cloud in the wake of the pandemic, I can only imagine that demand for data center solutions will continue to grow.
Zoom Video Communications
Cloud-based Web-conferencing company Zoom Video Communications (ZM 2.06%) is another popular Nasdaq 100 stock billionaires bought in droves in the first quarter. Simons' Renaissance, Fisher's Fisher Asset Management, Yass' Susquehanna, and John Overdeck's and David Siegel's Two Sigma Investments, were all buyers. Respectively, these funds bought approximately 2.44 million shares, 2.13 million shares, 1.96 million shares, and 1.22 million shares.
The bullishness surrounding Zoom is likely indicative of some bargain-hunting. Shares of the company are more than 80% below their all-time high. But following its tumble, Zoom is now valued at just 22 times forward-year earnings, and a considerably more reasonable multiple of just over five times Wall Street's forward-year sales forecast. With 20% of its market cap in cash, cash equivalents, and marketable securities, billionaires might feel Zoom is heavily de-risked here.
The big unknown, at least in the eyes of the investment community, is what happens now with one of the pandemic's biggest winners? On one hand, Zoom's Web conferencing solutions have demonstrated the ability to keep projects moving in remote-work environments. "Zoom" has even become its own verb in the workplace. But on the other hand, the days of triple-digit growth are long gone, and investors are antsy as to where the next big catalyst will come from.
The real wildcard here is Zoom's cash. With such a robust cash hoard, the company could easily go shopping to compliment or transform its existing products. It could also just as easily be acquired at its reduced (and reasonable) valuation.
As long as founder and CEO Eric Yuan remains a large and heavily involved shareholder, my expectation is that we'll see Zoom Video's valuation eventually rise.
Finally, billionaires used the Nasdaq's bear market swoon to buy shares of Meta Platforms (META -0.43%), the company formerly known as Facebook. Yass' Susquehanna, Stephen Mandel's Lone Pine Capital, and Simons' Renaissance, respectively purchased approximately 3.99 million shares, 3.66 million shares, and 2.27 million shares.
Despite contending with multiple headwinds, such as high inflation and Apple's iOS privacy changes, there's a good chance these billionaire money managers are getting an incredible bargain by purchasing Meta shares at a discount. The company's current forward-year price-to-earnings ratio of 14 is by far the lowest it's been since becoming a publicly traded company in 2012.
What makes Meta so special is its social media assets: Facebook, Instagram, WhatsApp, and Facebook Messenger. These are consistently among the most-downloaded social sites globally, and are what helped Meta reach 3.64 billion monthly active users during the first quarter across its family of apps. With more than half the world's adult population visiting a Meta-owned asset monthly, it's no surprise that the company maintains exceptional ad-pricing power.
Investors should also appreciate all of the levers Meta can still pull. Neither WhatsApp nor Facebook Messenger have been meaningfully monetized, as of yet. Should the advertising spigot be opened for either site, Meta's topline and operating cash flow could shift into a new gear. Further, the company is aggressively investing in the metaverse, which could eventually become a multitrillion opportunity.