The third-quarter 13F filings are now made available and hedge fund whiz Christopher “Chris” Hawkins Lord has made some interesting adjustments to the fund portfolio. Lord, the Co-Founder and Managing Partner of the $2.35 billion Criterion Capital Management showed a bullish sentiment towards controversial auto stock Tesla Inc. (NASDAQ:TSLA) and ServiceNow Inc. (NYSE:NOW). In contrast he indicated a more bearish outlook on social media giant Facebook Inc. (NASDAQ:FB).
Christopher Lord, an MBA holder from the prestigious Harvard Business School, co-founded the Criterion Capital fund in 2002.. The fund has a bias towards the technology, media, and telecommunications (TMT) sector. Criterion has a fundamental investing approach based on primary research and proprietary modeling and uses both long-term positions to invest in growth and turnaround stocks, as well as tactical and secular short positions.
According to TipRanks, Lord is a four-star hedge fund manager ranked #23 out of 203 hedge funds with a 3.17 sharpe ratio. He has achieved an impressive 145.6% portfolio gain since June of 2013, outperforming both the Average Hedge Fund Portfolio and S&P 500. Lord’s average returns are also stellar, with 35.56% returns in the past 12 months and 25.83% annualized returns in the past 3 years.
Let’s now take a look at how the San Francisco-based investment adviser head is hedging his bets.
Buys Tesla Inc. (NASDAQ:TSLA)
The prominent electric car maker was already on Lord’s radar of compelling prospects. In a savvy third-quarter play, the hedge fund guru boosted the fund’s TSLA holding by another 4.45% to a total of $17.43 million.
The production woes of the Model 3 had really eaten into the overall positive stance of Tesla. But the recent Tesla truck and roadster reveal seems to be slowly luring the skeptics back in. According to Guggenheim analyst Rob Cihra, two of the most exciting features that give Tesla the edge are the standout battery/pack engineering (coupled with “manufacturing SCALE of the Gigafactory”) and the strength of in-house self-driving software capabilities.
How does Tesla stack up against the rest of the Street’s opinion? Given the uncertainties going forward,the majority of analysts are sidelined on the stock. TipRanks shows TSLA has a Hold analyst consensus with 5 buy, 8 hold and 8 sell ratings published in the last three months. Analysts are predicting an upside of 3.73% for the stock, which is currently trading at $308.74.
Buys ServiceNow Inc. (NYSE:NOW)
In Q3, Christopher Lord lifted his hedge fund’s holding in NOW by 16.67% to a total value just shy of $159 million. With this move, NOW accounts for 6.75% of the overall portfolio, cinching the top spot.
UBS analyst Jennifer Swanson was one of the latest one to initiate coverage on NOW. Swanson believes that “ServiceNow currently offers the best mix of growth and margins in the software group”. Piper Jaffray analyst Alex Zukin also shares this bullish stance. Zukin feels that based on the company’s new annual contract value bookings, ServiceNow’s near-term, medium-term and long-term setup is favorable. Indeed many prominent names like Canada Pension Plan Investment Board, Tocqueville Asset Management L.P., and Victory Capital Management Inc. have also increased their holdings in shares of ServiceNow, Inc. in Q3.
Most of the Street seems to side with Lord’s bullish stance, as TipRanks analytics indicate NOW as a Strong Buy. Out of 20 analysts polled by TipRanks in the last 3 months, 18 are bullish on ServiceNow stock while the other 2 remain sidelined. According to these analysts, the average 12-month price target for the cloud computing company is $140.28, marking a 9.88% upside from where shares last closed.
Sells Facebook Inc. (NASDAQ:FB)
For the third quarter, the fund pulled back on Facebook, reducing the stake by close to 11.63% down to $138.4 million. However, since the last SEC filing, these shares have gained a little over 4.76% in value.
Despite CEO Zuckerberg increasing the operating expenses by nearly 60% in FY18 to improve security against “bad actor manipulation”, many analysts have a bullish bias for Facebook. This is mainly due to FB’s very strong Q3 results, Instagram monetization ramp, and improved ad targeting. Wedbush analyst Michael Pachter explains: “We expect Facebook to continue its rapid growth overseas and to increase monetization of under-penetrated Instagram, WhatsApp, and Messenger over the coming years. We view Facebook as well-positioned to defend itself from competition for user mindshare and attention from other apps, as its initiatives around the camera and augmented reality can leverage its massive user base and suite of applications to streamline adoption and drive higher engagement.”
Out of the 31 analysts who have rated the social media giant in the past 3 months, 29 are bullish, 1 remains on the sidelines, and 1 has a bearish stance. With a return potential of nearly 16.5%, the stock’s consensus target price stands at $208.24.
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