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Top 10 Stock Picks of Billionaire Daniel Sundheim

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·11 min read
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  • TMUS
  • PTON
  • BLL
  • CVNA
  • RH
  • DIS
  • MSFT

In this article, we discuss the top 10 stock picks of billionaire Daniel Sundheim. If you want to skip our detailed analysis of Sundheim’s history, investment philosophy, and hedge fund performance, go directly to the Top 5 Stock Picks of Billionaire Daniel Sundheim.

Billionaire investor Daniel Sundheim founded D1 Capital Partners in 2018. His Q3 2021 portfolio is valued at almost $18 billion. He serves as the chief investment officer at D1 Capital Partners, and prior to that, he was associated with Viking Global for 15 years as the chief investment officer. Viking Global CEO, Andreas Halvorsen, has praised Sundheim’s innate knack for selecting top stocks, saying that Sundheim is in a league of his own as a portfolio manager.

During the initial waves caused by the COVID-19 pandemic, Sundheim’s hedge fund gained from the market volatility. However, in January 2021, prominent portfolio managers including Daniel Sundheim, Steve Cohen, Ken Griffin, and Gabriel Plotkin were trumped by Redditors, who invested actively in GameStop Corp. (NYSE:GME), whereas these portfolio managers heavily shorted the stock. As a result, D1 Capital Partners lost $4 billion, and the fund’s performance fell sharply by 20% in a single month.

However, Sundheim has recovered about 90% of what he lost in January when retail investors targeted his short bets on GameStop Corp. (NYSE:GME). The 44-year-old billionaire investor is unfazed by risk, holding a concentrated portfolio of stocks, stating that taking risks has helped him amass a sizable portfolio in a relatively short amount of time. In April 2021, he posted annualized returns of almost 30% on behalf of D1 Capital Partners.

Top 10 Stock Picks of Billionaire Daniel Sundheim
Top 10 Stock Picks of Billionaire Daniel Sundheim

Daniel Sundheim of D1 Capital Partners

Sundheim controls discretionary assets under management of almost $34 billion, and his $18 billion portfolio has a top ten holdings concentration of 48.56%. His investments are concentrated in the healthcare, finance, information technology, consumer discretionary, and communications sectors. D1 Capital Partners caters to global clients, investing on behalf of endowments and foundations, family offices, sovereign wealth funds, outsourced CIOs, hospitals, and pension funds.

The most notable stocks from Daniel Sundheim’s Q3 portfolio include Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB), among others discussed in detail below.

Our Methodology

With this context in mind, let’s discuss the top 10 stock picks of billionaire Daniel Sundheim. We used Daniel Sundheim’s D1 Capital Partners’ Q3 portfolio to select these stocks.

Top Stock Picks of Billionaire Daniel Sundheim

10. Peloton Interactive, Inc. (NASDAQ:PTON)

D1 Capital Partners’ Stake Value: $599,058,000

Percentage of D1 Capital Partners’ 13F Portfolio: 3.34%

Number of Hedge Fund Holders: 62

Peloton Interactive, Inc. (NASDAQ:PTON) is a company selling exercise equipment, and offers subscription to online workout videos that customers can stream while using Peloton Interactive, Inc. (NASDAQ:PTON)’s smart bicycles and treadmills. Daniel Sundheim, as of Q3, owns 6.88 million shares in the company, worth $599 million, representing 3.34% of his stock portfolio.

Chase Coleman and Feroz Dewan’s Tiger Global Management LLC is the leading Peloton Interactive, Inc. (NASDAQ:PTON) stakeholder as of September this year, holding a $626.4 million position in the company. Overall, Insider Monkey’s database reported that 62 hedge funds held stakes in Peloton Interactive, Inc. (NASDAQ:PTON) as of Q3, worth $4.63 billion.

Peloton Interactive, Inc. (NASDAQ:PTON) released its Q3 results on November 4. EPS for the quarter came in at -$1.10, beating estimates by $0.04. Revenue for the period failed to meet analysts’ estimated revenue, missing estimates by -$3.67 million at $805.20 million.

Baird analyst Jonathan Komp revealed in a November 16 report that Peloton Interactive, Inc. (NASDAQ:PTON) is his new "Fresh Pick," stating that the company raising common stock capital by $1.07 billion removes "a significant near-term overhang", and he sees improving catalysts over multiple upcoming quarters. The analyst kept an Outperform rating and a $90 price target on Peloton Interactive, Inc. (NASDAQ:PTON) shares.

In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB), Peloton Interactive, Inc. (NASDAQ:PTON) is a notable stock in Daniel Sundheim’s Q3 portfolio.

Here is what Carillon Tower Advisers has to say about Peloton Interactive, Inc. (NASDAQ:PTON) in its Q2 2021 investor letter:

“Peloton Interactive operates a connected fitness platform offering live and on-demand classes allowing users to exercise at home. The firm’s shares were pressured in the quarter after Peloton announced a voluntary recall for both its legacy treadmill (Peloton Tread+) and its newly-launched base model treadmill (Peloton Tread). The issue surrounding the latter is somewhat troubling, as it appears it may be the result of an engineering flaw. This new treadmill offering was expected to be a key growth driver in the second half of 2021, and this development reduces our confidence in Peloton’s product pipeline. Therefore, we sold the stock.”

9. T-Mobile US, Inc. (NASDAQ:TMUS)

D1 Capital Partners’ Stake Value: $613,527,000

Percentage of D1 Capital Partners’ 13F Portfolio: 3.43%

Number of Hedge Fund Holders: 89

T-Mobile US, Inc. (NASDAQ:TMUS) is the second largest wireless network operator in the US, owned partly by Deutsche Telekom, a German telecommunications corporation. Sundheim, via D1 Capital Partners, holds a $613.5 million stake in T-Mobile US, Inc. (NASDAQ:TMUS) as of September this year, which represents 3.43% of his Q3 portfolio.

T-Mobile US, Inc. (NASDAQ:TMUS) announced earnings for the third quarter on November 2, with the EPS coming in at $1.31, beating estimates by $0.82. The $19.62 billion revenue was up 1.83% from the prior-year quarter, however, it missed analysts’ forecasted revenue by -$593.78 million.

Following the Q3 earnings beat, Morgan Stanley analyst Simon Flannery raised the price target on November 4 to $152 from $148 and kept an Overweight rating on T-Mobile US, Inc. (NASDAQ:TMUS).

The leading T-Mobile US, Inc. (NASDAQ:TMUS) stakeholder as per Insider Monkey’s Q3 records is Andreas Halvorsen’s Viking Global, with 10.22 million shares valued at $1.3 billion. Of the 867 hedge funds tracked by Insider Monkey as of September 2021, 89 funds were bullish on T-Mobile US, Inc. (NASDAQ:TMUS), down from 100 funds in the preceding quarter. The total stakes held by these funds amounted to $6.92 billion.

Here is what ClearBridge Investments has to say about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q1 2021 investor letter:

“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included communication services, where T-Mobile trailed after generating robust returns earlier in the recovery.”

8. RH (NYSE:RH)

D1 Capital Partners’ Stake Value: $675,465,000

Percentage of D1 Capital Partners’ 13F Portfolio: 3.61%

Number of Hedge Fund Holders: 57

RH (NYSE:RH), a home furnishings company, is one of Daniel Sundheim’s top stock picks for the third quarter, with his investment firm owning 968,235 shares in RH (NYSE:RH), valued at $675.4 million, representing 3.61% of the total investments at D1 Capital Partners.

As of Q3 2021, 57 hedge funds monitored by Insider Monkey were long RH (NYSE:RH), with a reported stake value of $4.99 billion. This is an increase as compared to the preceding quarter, when 54 funds reported owning stakes worth $4.3 billion in the company.

The leading stakeholder for RH (NYSE:RH) is billionaire Warren Buffett’s Berkshire Hathaway, holding 1.79 million shares, valued at over $1.1 billion.

Here is what Polen Capital has to say about RH (NYSE:RH) in its Q1 2021 investor letter:

“RH was also a top contributor during the quarter. RH is a leading luxury retailer in home furnishings, including high-end luxury furniture, home décor, lighting, textiles, etc. The company has experienced high demand for its products over the past year, despite many of its galleries and integrated restaurants being closed, at least temporarily, in 2020. We think the management team has continued to make thoughtful investments in the core business as well as other adjacencies to further meet customer needs. We believe RH has a long runway to further expand into other home furnishings categories, expand its footprint both domestically and internationally, and launch other luxury adjacent categories.”

7. Ball Corporation (NYSE:BLL)

D1 Capital Partners’ Stake Value: $675,465,000

Percentage of D1 Capital Partners’ 13F Portfolio: 3.77%

Number of Hedge Fund Holders: 27

Ball Corporation (NYSE:BLL) is a Colorado-based company offering metal containers and packaging solutions to major American retailers. Via its subsidiaries, Ball Corporation (NYSE:BLL) also offers spacecraft manufacturing and engineering services to the aerospace, defense and intelligence, and automotive sectors.

Daniel Sundheim holds over 7.5 million shares in Ball Corporation (NYSE:BLL), valued at $675.4 million, which accounts for 3.77% of his Q3 portfolio.

As of the third quarter of 2021, Richard Chilton’s Chilton Investment Company is one of the leading Ball Corporation (NYSE:BLL) stakeholders, with a $315.8 million stake in the company. Overall, 27 hedge funds in the database of Insider Monkey were long Ball Corporation (NYSE:BLL), with a total stake value of $1.45 billion.

On November 4, the Q3 EPS for Ball Corporation (NYSE:BLL) amounted to $0.94, missing estimated EPS by -$0.04. The $3.55 billion revenue was up 14.87% year-over-year, beating estimates by $35.16 million.

BofA analyst George Staphos on October 14 downgraded Ball Corporation (NYSE:BLL) to Neutral from Buy with a price target of $95, down from $101. He believes that the shares are fairly valued, and still remains bullish on the stock.

Here is what ClearBridge Investments has to say about Ball Corporation (NYSE:BALL) in its Q1 2021 investor letter:

“Aluminum beverage and food container manufacturer Ball Corp, meanwhile, delivered fourth-quarter operating income slightly lower than consensus, though this was mainly attributable to higher startup costs for large new facilities coming online in North America. These investments and additional capacity projects will contribute to strong volume growth globally, however. Aluminum cans are infinitely recyclable and offer the best replacement product for single-use plastic beverage containers, in our view. They are more likely to be recycled than single-use plastic and are more energy efficient in production as well.”

6. Carvana Co. (NYSE:CVNA)

D1 Capital Partners’ Stake Value: $714,632,000

Percentage of D1 Capital Partners’ 13F Portfolio: 3.99%

Number of Hedge Fund Holders: 58

Carvana Co. (NYSE:CVNA) is an Arizona-based used cars retailer which operates online via a website. Daniel Sundheim’s D1 Capital Partners holds 2.36 million shares in Carvana Co. (NYSE:CVNA), worth $714.6 million as of Q3 2021, representing 3.99% of the firm’s total investments.

Carvana Co. (NYSE:CVNA) posted its Q3 results on November 4. The EPS equaled -$0.38, missing estimates by -$0.11. Revenue for the quarter came in at $3.48 billion, up 125.45% from the prior-year quarter, outperforming estimates by $219.76 million.

After the Q3 earnings miss, Needham analyst Chris Pierce on November 5 lowered the price target on Carvana Co. (NYSE:CVNA) to $378 from $421 but kept a Buy rating on the shares. The analyst states that Carvana Co. (NYSE:CVNA) will face higher expenses to meet the demand, but he still remains bullish on the stock due to attractive share gains.

Spruce House Investment Management, as of September this year, is one of the largest Carvana Co. (NYSE:CVNA) stakeholders, with 3.75 million shares valued at $1.13 billion. The Q3 database maintained by Insider Monkey reported a total of 58 funds being bullish on Carvana Co. (NYSE:CVNA), with a total stake value of $8.3 billion.

In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB), Carvana Co. (NYSE:CVNA) is a notable stock in Daniel Sundheim’s Q3 portfolio.

Here is what Steel City Capital has to say about Carvana Co. (NYSE:CVNA) in their Q1 2021 investor letter:

“Carvana’s (CVNA) 4Q’20 results weren’t particularly great. EBITDA was negative ($70) million, a stark turnaround on a sequential basis from a first-ever EBITDA profit of $21 million in 3Q’20. The culprit was a steep drop off in retail unit GPU ($1,265 vs. $1,857) and wholesale unit GPU ($358 vs. $1,113) as some of the COVID-driven aberrations in the used car market began to abate.

The company’s presentation of EBITDA (calculated “bottom up”) is dubious, as it commingles non-operating items including mark-to-market changes in its retained securitization portfolio. With the exception of 1Q’20, when ABS markets were going haywire, this line item provided a tailwind throughout 2020, including a gain of $5 million in 4Q’20. Also on the non-operating self-help front, management released a reserve for vehicle service contract cancellations in 4Q’20, adding another $7 million to EBITDA, and boosting “Other” GPU by $96…” (Click here to see the full text)

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Disclosure: None. Top 10 Stock Picks of Billionaire Daniel Sundheim is originally published on Insider Monkey.