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10 Best Tech Stocks to Buy Now According to Joe Dimenna’s Zweig-DiMenna Partners

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·12 min read
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In this article, we discuss 10 best tech stocks to buy now according to Joe Dimenna's Zweig-DiMenna Partners. If you want to skip our detailed analysis of Dimenna's history, investment philosophy, and hedge fund performance, go directly to 5 Best Tech Stocks to Buy Now According to Joe Dimenna's Zweig-DiMenna Partners.

Founded in 1984 by current major owner Joseph DiMenna and his mentor Martin Zweig, Zweig-DiMenna International Managers (Zweig-DiMenna) is a hedge fund located in New York. In terms of investing, the hedge fund favors a long/short equity strategy and selects stocks based on fundamental analysis. In 1999, Business Week rated DiMenna "one of the best stock pickers no one has ever heard of" after his fund returned an average of 25% after fees per year for the preceding 15 years, outperforming the S&P 500 index by more than 6%. Between 2006 and 2010, Zweig-DiMenna returned about 90%. However, the hedge fund did lose 6% in 2008, which was still better than most funds. DiMenna was still down 3.5% when other funds began to recoup their losses in 2009 and remained 3% down in 2010 as well.

Zweig-DiMenna is recognized for having a gross long exposure of 95% and a gross short exposure of 40%. Over the last few years, the fund has been methodically buying failures and selling winners. Zweig-DiMenna Partners oversees more than $750.29 million in its investment portfolio, according to 13F filings from the first quarter of 2022.

Zweig-DiMenna Partners has allocated up to 17.54% of its portfolio to the IT sector. In the IT sector, some of the major companies in Joe Dimenna's portfolio were Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).

The fund manager has a significant stake in Amazon.com, Inc. (NASDAQ:AMZN). Due to its investment pricing discipline, Wedbush analyst Michael Pachter eliminated Amazon.com, Inc. (NASDAQ:AMZN) from the firm's Best Ideas List on May 2. He maintained an Outperform rating and a $3,500 price target on the stock.

10 Best Tech Stocks to Buy Now According to Joe Dimenna's Zweig-DiMenna Partners
10 Best Tech Stocks to Buy Now According to Joe Dimenna's Zweig-DiMenna Partners

Photo by Adam Nowakowski on Unsplash

Microsoft Corporation (NASDAQ:MSFT) is another large-cap tech stock in Zweig-DiMenna Partners’ portfolio. Microsoft Corporation (NASDAQ:MSFT) currently has a $2.01 trillion market capitalization. It delivered a 6.57% return in the past 12 months as of May 12.

Joe Dimenna also owns 97,827 Apple Inc. (NASDAQ:AAPL) shares. On April 28, Apple (NASDAQ:AAPL) declared a quarterly dividend of $0.23 per share, up 4.5% from the previous $0.22 distribution.

Our Methodology

Let's look at 10 best tech stocks to buy now according to Joe Dimenna's Zweig-DiMenna Partners. The top firms in which Dimenna's holds major investments at the conclusion of the first quarter of 2022 were chosen for this list. We stated hedge fund sentiment about the stocks, which was derived from Insider Monkey's database of 900+ elite hedge funds in the fourth quarter of 2021.

Best Tech Stocks to Buy Now According to Joe Dimenna's Zweig-DiMenna Partners

10. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Zweig-DiMenna Partners’ Stake Value: $6,676,000

Zweig-DiMenna Partners’ 13F Portfolio: 0.88%

Number of Hedge Fund Holders: 74

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cybersecurity company that focuses on preventing data breaches. On April 18, Jefferies analyst Joseph Gallo initiated coverage of CrowdStrike Holdings, Inc. (NASDAQ:CRWD), boosting his price target to $275 from $265 and maintaining a Buy rating on the stock.

With 29,400 shares valued at $6.68 million, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is one of the best tech stocks to buy now according to Joe Dimenna's Zweig-DiMenna Partners. However, the hedge fund trimmed its stake in the firm by 45% in the first quarter of 2022.

74 out of 924 hedge funds held stakes in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in the fourth quarter of 2021, worth $5.24 billion, compared to the same number of funds in the preceding quarter, holding stakes in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) valued at $6.74 billion.

Like CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Joe Dimenna's Zweig-DiMenna Partners has significant stakes in Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).

Baron Funds, in its Q1 2022 investor letter, mentioned CrowdStrike Holdings, Inc. (NASDAQ:CRWD). Here is what the fund said:

“CrowdStrike, Inc. provides cloud-delivered, next generation security solutions via its Falcon platform consisting of end-point protection, advanced persistent threat, security information, event management, and cloud workload protection. Shares rose 11% in the first quarter, on the back of impressive quarterly results with net new annual recurring revenue (ARR) accelerating for the second straight quarter to 52% year-over-year and the company’s favorable unit economics driving 30% free cash flow margins. Moreover, key new disclosures highlight how non-end-point products are seeing momentum with cloud product-generated ARR surpassing $100 million, representing 8% of net new ARR in the quarter. With more workloads migrating to or starting in the cloud, we believe CrowdStrike is well positioned to compound at high growth rates for years given its unique product platform and attractive go-to-market business model.”

9. Meta Platforms, Inc. (NASDAQ:FB)

Zweig-DiMenna Partners’ Stake Value: $7,783,000

Zweig-DiMenna Partners’ 13F Portfolio: 1.03%

Number of Hedge Fund Holders: 224

Meta Platforms, Inc. (NASDAQ:FB), formerly Facebook Inc., is a social media platform. Zweig-DiMenna Partners disclosed a decreased stake in Meta Platforms, Inc. (NASDAQ:FB) by 56% in the first quarter of 2022. This leaves the investment value at $7.78 million and 35,000 shares.

Evercore ISI analyst Mark Mahaney maintained an Outperform rating on Meta Platforms, Inc. (NASDAQ:FB) and decreased his price objective to $325 from $350 on April 28. Mahaney told investors that he had identified three major concerns - ad platform deterioration owing to Apple's privacy constraints, income issues related to Reels, and TikTok rivalry, but he is sure that Meta Platforms, Inc. (NASDAQ:FB) will be able to address them successfully.

By the end of Q4 2021, 224 hedge funds tracked by Insider Monkey reported owning stakes in Meta Platforms, Inc. (NASDAQ:FB), down from 248 in the previous quarter. These funds hold a combined stake value of over $31.85 billion.

In its Q4 2021 investor letter, Boyar Value Group mentioned Meta Platforms, Inc. (NASDAQ:FB). Here is what the fund said:

“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (NASDAQ:FB) (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”

8. Confluent, Inc. (NASDAQ:CFLT)

Zweig-DiMenna Partners’ Stake Value: $8,682,000

Zweig-DiMenna Partners’ 13F Portfolio: 1.15%

Number of Hedge Fund Holders: 46

Confluent, Inc. (NASDAQ:CFLT) creates and maintains a real-time business data platform. Its products include Confluent Platform, KSQL, and Confluent Hub. On May 6, Deutsche Bank analyst Patrick Colville lowered his price target on Confluent, Inc. (NASDAQ:CFLT) to $28 from $63 and maintained a Hold rating on the shares following the Q1 results. Confluent, Inc. (NASDAQ:CFLT), on May 5, posted earnings for the first quarter. The company declared a loss per share was $0.19, above expectations by $0.02. Revenue over the period was $126 million, outperforming estimates by $7.51 million.

In Q4 2021, Confluent, Inc. (NASDAQ:CFLT) received positive hedge fund sentiment, with 46 hedge funds monitored by Insider Monkey owning shares, up from 27 the previous quarter. These holdings are collectively worth $3.29 billion.

Securities filings reveal that Zweig-DiMenna Partners trimmed its stake in Confluent, Inc. (NASDAQ:CFLT) by 23% during the first quarter of 2022. The fund presently owns 211,756 shares of Confluent, Inc. (NASDAQ:CFLT), worth over $8.68 million, representing 1.15% of the portfolio.

ClearBridge Investments, in its Q2 2021 investor letter, highlighted a few stocks, and Confluent, Inc. (NASDAQ:CFLT) was one of them. Here is what the fund said:

“The new issue market remains an attractive source of new ideas and we participated in four IPOs in the latest period. Confluent sells and distributes a commercialized version of open source software called Kafka created by former executives at LinkedIn. The solution allows enterprise users the ability to capture data in real time as it is streaming. A prime use case is capturing real-time inventory across retail stores and distribution centers to enable omni-channel commerce. We believe it is early days in the company’s commercialization of this technology which can capture data in both on-premise and hybrid cloud environments. Global-e Online, meanwhile, removes many of the frictions around cross-border ecommerce by handling the different tax structures, languages, currencies, local logistics and fulfillment/returns for any size retailer. The company’s initial customers have been mostly mid to higher end retailers but an investment by Shopify should enable Global-e to significantly increase merchant reach.”

7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Zweig-DiMenna Partners’ Stake Value: $9,414,000

Zweig-DiMenna Partners’ 13F Portfolio: 1.25%

Number of Hedge Fund Holders: 72

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a semiconductor contract manufacturer and design corporation. By the end of Q4 2021, 72 hedge funds tracked by Insider Monkey held stakes in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), valued at roughly $11 billion. In comparison, 67 hedge funds held stakes in the company in the preceding quarter, worth $9.51 billion.

On April 14, Erste Group's Hans Engel downgraded Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) from Buy to Hold. While the firm profited from its strong market position, Engel warned investors that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s sales and profit expectations for 2022 had been cut lower owing to a projected decline in world economic progress.

Joe Dimenna owns 90,295 shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) valued at over $9.41million, representing 1.25% of the hedge fund's Q1 portfolio. Zweig-DiMenna Partners has trimmed its stake in the firm by 36% in the first quarter of 2022. Fisher Asset Management is the most significant stakeholder of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in Q1, with a position worth $2.73 billion.

Wedgewood Partners, in its Q1 2022 investor letter, mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and discussed its stance on the firm. Here is what the fund said:

"Taiwan Semiconductor pulled back on geopolitical concerns and periodic market fears about the end of the "cycle" in semiconductors. First, we think the company might be one of the most – if not the most – important Companies in the world. Taiwan Semiconductor has a near-monopoly on semiconductor processing at advanced nodes, which makes it irreplaceable to customers such as Apple, AMD, NVIDIA, Mediatek, Amazon, and even Intel. Second, much less important manufacturers have more direct geopolitical risk than Taiwan Semiconductor, yet they trade at substantial premiums – both multiple and market cap. For example, Tesla is a heavy manufacturer of only about 1 million automobiles with significant production capacity located in the heart of China, yet it trades at double the market cap of Taiwan Semiconductor. Third, while it is hard to know when the current semiconductor “cycle” will slow or end, we see very few signs of it, as Taiwan Semiconductor continues to generate bookings well in excess of its current capacity – unlike any previous cycle. Taiwan Semiconductor traded to levels that are much too pessimistic given its competitive positioning and opportunity for growth driven by a more robust semiconductor cycle, driven by high-performance computing. As such, we added to our position during the quarter.”

6. Palo Alto Networks, Inc. (NASDAQ:PANW)

Zweig-DiMenna Partners’ Stake Value: $13,197,000

Zweig-DiMenna Partners’ 13F Portfolio: 1.75%

Number of Hedge Fund Holders: 73

Palo Alto Networks, Inc. (NASDAQ:PANW) is a cybersecurity company that operates globally. Morgan Stanley analyst Hamza Fodderwala maintained an Overweight rating on Palo Alto Networks, Inc. (NASDAQ:PANW) and boosted his price target to $823 from $670 on April 25.

At the end of the first quarter of 2022, Zweig-DiMenna Partners held 21,200 shares of Palo Alto Networks, Inc. (NASDAQ:PANW), valued at $13.20 million, representing 1.75% of the 13F portfolio. Zweig-DiMenna Partners started building its position in Palo Alto Networks, Inc. (NASDAQ:PANW) in the third quarter of 2015.

By the end of the fourth quarter of 2021, Insider Monkey identified 73 hedge funds that had stakes in Palo Alto Networks, Inc. (NASDAQ:PANW). The total value of these stakes was over $6.48 billion. Jay Genzer of Thames Capital Management was a significant stakeholder of Palo Alto Networks, Inc. (NASDAQ:PANW). The fund owned 27,139 shares of stock worth $16.89 million.

In addition to Palo Alto Networks, Inc. (NASDAQ:PANW), Joe Dimenna's Zweig-DiMenna Partners has significant stakes in other tech companies like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).

ClearBridge Investments, an investment management firm, talked about Palo Alto Networks, Inc. (NYSE:PANW) in its Q1 2022 investor letter. The fund said:

“The portfolio also saw solid performance from cybersecurity names Palo Alto Networks (NYSE:PANW) which is gaining prominence as the risk of global cyberattacks increases as part of the Russian offensive. On an individual stock basis, leading contributors to absolute returns in the first quarter included positions in Palo Alto Networks.”

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Disclosure: None. 10 Best Tech Stocks to Buy Now According to Joe Dimenna's Zweig-DiMenna Partners is originally published on Insider Monkey.