In this article, we discuss the top 10 stock picks of Christopher Lyle’s SCGE Management. If you want to skip our detailed analysis of Lyle’s history, investment philosophy, and hedge fund performance, go directly to Top 5 Stock Picks of Christopher Lyle’s SCGE Management.
Christopher Lyle is a Stanford University graduate. In 2002, he started his career as an analyst at JPMorgan Chase. Later, he worked as a senior analyst at Disney, an equity analyst at Bain Capital Public Equity LP, and a VP advisor and chief of business for Google Cloud. Christopher Lyle established SCGE Management in November 2008. Currently, he is the portfolio manager at SCGE Management.
SCGE Management, situated in Menlo Park, California, is a well-known financial advising hedge fund. The hedge fund invests in various firms, from public to late-stage private. Christopher Lyle’s SCGE Management had a $10.78 billion 13F portfolio in the third quarter of 2021, up from $10.67 billion a quarter earlier. The hedge fund has investments in various sectors, including communications, information technology, consumer discretionary, utilities, and telecommunications. In addition, the hedge fund’s 13F portfolio includes notable stocks like Amazon.com, Inc. (NASDAQ:AMZN), Airbnb, Inc. (NASDAQ:ABNB), and Snowflake Inc. (NYSE:SNOW).
In Amazon.com, Inc. (NASDAQ:AMZN), Christopher Lyle owns 120,800 shares. The investment covers an impressive 3.68% of the fund’s 13F portfolio. Cowen analyst John Blackledge boosted his price target on Amazon.com, Inc. (NASDAQ:AMZN) to $4,500 from $4,300 in December and maintained an “Outperform” rating on the stock, naming it his Best Choice for 2022.
Another notable stock in Christopher Lyle’s portfolio is Airbnb, Inc. (NASDAQ:ABNB). The investor owns a $282.03 million stake in the company. Airbnb, Inc. (NASDAQ:ABNB)’s third quarter EPS came in at $1.22, beating consensus estimates by $0.52.
Snowflake Inc. (NYSE:SNOW) is also part of Christopher Lyle’s portfolio. In December, Credit Suisse analyst Phil Winslow increased his price target on Snowflake Inc. (NYSE:SNOW) to $465 from $455 and kept an “Outperform” rating on the shares.
Our Methodology
With this economic outlook in mind, let’s start our list of the top 10 stock picks of Christopher Lyle’s SCGE Management. We used Lyle’s 13F portfolio for Q3 2021 for this analysis.
Top Stock Picks of Christopher Lyle’s SCGE Management
10. Robinhood Markets, Inc. (NASDAQ:HOOD)
SCGE Management: $404,100,000
Percentage of SCGE Management’s 13F Portfolio: 3.74%
Number of Hedge Fund Holders: 20
Robinhood Markets, Inc. (NASDAQ:HOOD) is a financial services company. The business focuses on retail brokerage and provides trading in U.S. listed equities, exchange traded funds, associated options, and cryptocurrency trading, in addition to cash management services, such as debit cards. Christopher Lyle added Robinhood Markets, Inc. (NASDAQ:HOOD) to his portfolio in the third quarter of 2021 by buying 9.60 million shares.
In December, Deutsche Bank analyst Brian Bedell decreased his price target on Robinhood Markets, Inc. (NASDAQ:HOOD) to $17 from $32 and kept a “Hold” rating on the shares. According to the analyst, Robinhood Markets (NASDAQ:HOOD) stock now has a greater risk of upward rise.
Overall, 20 hedge funds monitored by Insider Monkey in the third quarter were bullish on Robinhood Markets (NASDAQ:HOOD). The stakes held by these funds are valued at $4.69 billion.
Along with Amazon.com, Inc. (NASDAQ:AMZN), Airbnb, Inc. (NASDAQ:ABNB), and Snowflake Inc. (NYSE:SNOW), Robinhood Markets, Inc. (NASDAQ:HOOD) is one of the notable stocks according to Christopher Lyle’s Q3 portfolio.
9. Okta, Inc. (NASDAQ:OKTA)
SCGE Management: $424,127,000
Percentage of SCGE Management’s 13F Portfolio: 3.93%
Number of Hedge Fund Holders: 62
Okta, Inc. (NASDAQ:OKTA) is a technology company located in the United States, specializing in identity and access management. Christopher Lyle’s SCGE Management is the most significant stakeholder of Okta, Inc. (NASDAQ:OKTA), with 1.79 million shares worth $424.13 million.
In December, Deutsche Bank analyst Patrick Colville reduced his price target on Okta, Inc. (NASDAQ:OKTA) to $250 from $270 and maintained a “Buy” rating on the shares. Okta, Inc. (NASDAQ:OKTA) continues to split investors, says Colville in a research note, and the Q3 figures give ammo to both sides for debate.
The number of hedge funds tracked by Insider Monkey holding stakes in Okta, Inc. (NASDAQ:OKTA) grew to 62 in the third quarter, up from 57 in the preceding quarter. These stakes hold a consolidated value of $2.26 billion as of Q3, up from $2.09 billion in Q2.
In its second-quarter 2021 investor letter, Lakehouse Capital mentioned Okta, Inc. (NASDAQ:OKTA). Here is what the fund said:
“The Fund held 20 positions as of the end of June and exited four during the year (including) Okta. The companies we exited were sold almost entirely on the basis of their valuations getting stretched well past their norms and to levels where the return profile no longer offered the asymmetric upside that led us to invest in the first place. We dislike selling on valuation as great growth companies are hard to find and letting winners run is an important facet of a winning growth strategy, however, we’re not gluttons for punishment either and in each of those cases we redeployed capital towards other high-quality growth companies with less demanding valuations.”
8. Microsoft Corporation (NASDAQ:MSFT)
SCGE Management: $452,482,000
Percentage of SCGE Management’s 13F Portfolio: 4.19%
Number of Hedge Fund Holders: 250
Microsoft Corporation (NASDAQ:MSFT) is a global technology company based in the United States. The most significant stakeholder of Microsoft Corporation (NASDAQ:MSFT) is Ken Fisher’s Fisher Asset Management, with 25.52 million shares worth $7.20 billion.
In December, SMBC Nikko analyst Steve Koenig initiated coverage of Microsoft Corporation (NASDAQ:MSFT), keeping an “Outperform” rating on the stock, with a price target of $410. Microsoft (NASDAQ:MSFT) also issued a quarterly dividend of $0.62 per share in December, in line with the previous.
Microsoft Corporation (NASDAQ:MSFT) is getting the attention of the smart money, as 250 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the third quarter, up from 238 funds a quarter earlier.
In its third-quarter 2021 investor letter, Baron Funds mentioned Microsoft Corporation (NASDAQ:MSFT). Here is what the fund said:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue beating Street estimates by 4.5%, an acceleration in Commercial Cloud revenue to 31% constant-currency growth, a four-point improvement in Commercial Cloud gross margins (to 70% from 66%), and GAAP earnings up 42%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by TAM expansion across its disruptive cloud product portfolio, as more companies look to transform and digitize their businesses, as well as strong operating leverage as its cloud products gain scale.”
7. PayPal Holdings, Inc. (NASDAQ:PYPL)
SCGE Management: $467,337,000
Percentage of SCGE Management’s 13F Portfolio: 4.33%
Number of Hedge Fund Holders: 123
PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform and digital payments corporation that enables customers and merchants worldwide to make digital and mobile payments. Among the hedge funds tracked by Insider Monkey, Fundsmith LLP is a leading shareholder of PayPal Holdings, Inc. (NASDAQ:PYPL), with 12.29 million shares worth more than $3.20 billion.
In December, Wedbush analyst Moshe Katri lowered his price target on PayPal Holdings, Inc. (NASDAQ:PYPL) to $220 from $240 and kept an “Outperform” rating on the shares, citing decreasing consumer spending owing to inflationary pressures for the slashed price target.
At the end of the third quarter of 2021, 123 hedge funds in the database of Insider Monkey held stakes worth $12.88 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), down from 143 funds in the preceding quarter, holding stakes totaling $16.35 billion.
In its third-quarter 2021 investor letter, Baron Funds mentioned PayPal Holdings, Inc. (NASDAQ: PYPL) and detailed its position on the company. Here is what the fund said:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
6. ServiceNow, Inc. (NYSE:NOW)
SCGE Management: $518,413,000
Percentage of SCGE Management’s 13F Portfolio: 4.8%
Number of Hedge Fund Holders: 87
ServiceNow, Inc. (NYSE:NOW) is a cloud computing company that specializes in enterprise solutions. In November, Credit Suisse analyst Phil Winslow initiated coverage of ServiceNow, Inc. (NYSE:NOW), awarding an “Outperform” rating to the stock, with a price target of $850.
ServiceNow, Inc. (NYSE:NOW)’s third quarter revenue came in at $1.51 billion, up 32.5% year-over-year, exceeding market predictions by $30 million. The hedge fund chaired by Christopher Lyle holds 833,100 shares in ServiceNow, Inc. (NYSE:NOW) as of Q3 2021, worth over $518.41 million. It is the sixth-largest holding of SCGE Management.
In Q3 2021, 87 hedge funds were bullish on ServiceNow, Inc. (NYSE:NOW), down from 91 funds in the preceding quarter.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Airbnb, Inc. (NASDAQ:ABNB), and Snowflake Inc. (NYSE:SNOW), ServiceNow, Inc. (NYSE:NOW) is one of the stocks gaining the attention of Christopher Lyle.
RiverPark Funds, an investment management firm, in its third-quarter 2021 investor letter, mentioned ServiceNow, Inc. (NYSE:NOW). Here is what the fund said:
“NOW shares were our final top contributor for 3Q on a strong beat and raise quarter. The company reported 31% subscription revenue growth, 30% subscription billings growth, and a 19% non-GAAP FCF margin for the quarter, while raising full year subscription revenue and billings guidance to 29% and 31%, respectively, as well as raising non-GAAP FCF margin by 100 basis points to 31%.
ServiceNow is a best-of-breed provider of both IT Service Management (ITSM) and IT Operations Management (ITOM) solutions to enterprise customers. The company’s products serve mainly its clients’ internal employee base with a current focus on automating the process of IT deployment, configuration and service and management of IT assets across an organization. Both its ITSM and ITOM solutions are delivered as a software-as-a-service (SaaS), and are each leading solutions in growing markets, driven by the secular trend of enterprises transitioning all aspects of their business and operations to the cloud. As the company maintains and adds customers, upsells them, and expands into adjacent markets, we believe NOW should sustain a strong long-term revenue and FCF growth trajectory.”
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Disclosure: None. Top 10 Stock Picks of Christopher Lyle’s SCGE Management is originally published on Insider Monkey.