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Top 9 Stocks to Buy According to Patrick Degorce’s Theleme Partners

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·8 min read
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  • FB
  • TMUS
  • ANTM
  • INFY
  • CNC

In this article, we discuss the top 9 stocks to buy according to Patrick Degorce's Theleme Partners based on Q2 holdings of the fund. If you want to skip our detailed analysis of Degorce's history, investment philosophy, and hedge fund performance, go directly to the Top 5 Stocks to Buy According to Patrick Degorce's Theleme Partners.

Theleme Partners is a hedge fund based in London. The hedge fund focuses on large-cap firms and invests in global equities. It often places a few large, concentrated bets on beaten-down equities that it believes will pay off over time.

As of the second quarter of 2021, some notable stock picks of Patrick Degorce's Theleme Partners portfolio include Facebook, Inc. (NASDAQ:FB), Wells Fargo & Company (NYSE:WFC), and T-Mobile US, Inc. (NASDAQ:TMUS).

In the second quarter of 2021, Theleme Partners bought 390,000 shares in Facebook, Inc. (NASDAQ:FB), worth $135.61 million. The company represents 3.95% of the fund’s 13F portfolio. On October 6, BofA initiated coverage of Facebook, Inc. (NASDAQ:FB), rating the stock as "Buy" and gave a price objective of $425.

Patrick Degorce is also bullish on Wells Fargo & Company (NYSE:WFC). The hedge fund increased its holding in Wells Fargo & Company (NYSE:WFC) by 3% in the second quarter of 2021, ending the period with over 20.13 million shares of the company.

Patrick Degorce's Theleme Partners also owns 2.18 million shares in T-Mobile US, Inc. (NASDAQ:TMUS). On September 20, Loop Capital analyst Stephan Bisson initiated coverage of T-Mobile US, Inc. (NASDAQ:TMUS) rating the stock as "Buy" and gave a price target of $160.

Source:Pixabay

Why should we pay attention to hedge funds' stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

With this background in mind, let’s start our list of top 9 stocks to buy according to Patrick Degorce's Theleme Partners. We used Degorce's 13F portfolio for Q2 2021 for this analysis.

9. Infosys Limited (NYSE:INFY)

Degorce's Stake Value: $3,679,000

Percentage of Patrick Degorce's 13F Portfolio: 0.1%

Number of Hedge Fund Holders: 22

Infosys Limited (NYSE:INFY) is ranked ninth on the list of top 9 stocks to buy according to Patrick Degorce's Theleme Partners. It is an Indian multinational IT firm. Patrick Degorce's Theleme Partners increased its hold in Infosys Limited (NYSE:INFY) by 109% in the second quarter, ending the period with 173,600 shares.

On September 21, Infosys Limited (NYSE:INFY) and ServiceNow (NYSE:NOW) teamed together to utilize Infosys’ industry cloud blueprints and ServiceNow Operations Technology Management to aid manufacturers to digitalize their factories. In July, Susquehanna analyst David Grossman raised his price target on Infosys Limited (NYSE:INFY) to $22 from $21 and kept a "Neutral" rating.

Out of the hedge funds being tracked by Insider Monkey, Oldfield Partners is a leading shareholder in Infosys Limited (NYSE:INFY), with 2.42 million shares worth more than $53.95 million.

8. Anthem, Inc. (NYSE:ANTM)

Degorce's Stake Value: $126,067,000

Percentage of Patrick Degorce's 13F Portfolio: 3.68%

Number of Hedge Fund Holders: 67

Anthem, Inc. (NYSE:ANTM) is placed eighth on the list of top 9 stocks to buy according to Patrick Degorce's Theleme Partners.

On September 27, SVB Leerink analyst Whit Mayo initiated coverage of Anthem, Inc. (NYSE:ANTM) with a “Market Perform” rating and gave a price target of $403.

With shares worth $33.92 billion, Mubadala Investment’s MIC Capital Partners is Anthem, Inc.’s (NYSE:ANTM) leading shareholder. The company is also getting the attention of the smart money, as 67 hedge funds tracked by Insider Monkey reported owning stakes in Anthem, Inc. (NYSE:ANTM) at the end of the second quarter, up from 58 funds a quarter earlier.

Just like Facebook, Inc. (NASDAQ:FB), Wells Fargo & Company (NYSE:WFC), and T-Mobile US, Inc. (NASDAQ:TMUS), Anthem, Inc. (NYSE:ANTM) is one of the stocks to buy according to Patrick Degorce's Theleme Partners.

Nomadic Value Partners released its fourth-quarter 2020 investor letter and mentioned Anthem, Inc. (NYSE:ANTM) in it. Here is what the firm has to say:

“In mid-December we sold our position in Anthem (NYSE: ANTM). At the end of Q3 the Blue Cross Blue Shield Association (BCBSA), the umbrella organization for “blues” across the country, made a preliminary proposal to settle a multi-year anti-trust case for $2.67 billion. This payment is to be made proportionate by each BCBSA health plan. The BCBSA covers about 100 million members nationwide and ANTM represents about 40% of total BCBSA membership. ANTM’s proportionate payment could be a $1 billion charge, nearly 25% of its expected 2020 earnings. Interestingly, the share price rallied on the news because included in the settlement proposal was BCBSA agreeing to lift restrictions on local BCBS plan geographic boundaries. BCBS plans can begin to horizontally integrate and compete in markets historically excluded from reach.”

The more I’ve thought about ANTM’s position in this hypothetical marketplace the more I’ve become less optimistic on them. While consolidation certainly brings better economics to the surviving health plan, I think it is only realistically available to much smaller companies. Looking back at anti-trust cases within healthcare over the last decade, the large health insurance companies are generally blocked from major horizontal acquisitions. Why would this change? This leaves ANTM competing in an increasingly crowded marketplace and the only strategy left to grow is to super charge their vertical integration. ANTM is behind in integration, and I don’t like situations where a company is being forced to play catch up.”

7. Facebook, Inc. (NASDAQ:FB)

Degorce's Stake Value: $135,607,000

Percentage of Patrick Degorce's 13F Portfolio: 3.95%

Number of Hedge Fund Holders: 266

Facebook, Inc. (NASDAQ:FB) ranks seventh on the list of top 9 stocks to buy according to Patrick Degorce's Theleme Partners.

On September 21, Facebook, Inc. (NASDAQ:FB) CEO Mark Zuckerberg revealed two new variants of the company's Portal video communication devices. According to him, the new Portal Go device will cost $199 and include a 10-inch screen, while the Portal+ model would cost $349 and feature a 14-inch high-definition tilting screen.

Hedge funds are loading up on Facebook, Inc. (NASDAQ:FB), as Insider Monkey’s data shows that 266 elite hedge funds held a stake in the company as of the end of the second quarter of 2021, compared to 257 funds in the previous quarter.

Like Wells Fargo & Company (NYSE:WFC), and T-Mobile US, Inc. (NASDAQ:TMUS), Facebook, Inc. (NASDAQ:FB) is one of the stocks to buy according to Patrick Degorce's Theleme Partners.

Polen Capital released its second-quarter 2021 investor letter and mentioned Facebook, Inc. (NASDAQ:FB) in it. Here is what the firm has to say:

“Facebook was the top contributor to our return for the second consecutive quarter. The company has over $1 trillion market capitalizations. Yet, based on first quarter 2021 results, FB is currently still growing revenue at over 30% organically! In fact, last quarter Facebook grew revenue 48% year over year. Facebook has generated earnings and intrinsic value growth for many years, driven largely by the mostly free services the company provide to people who can easily choose to stop using them and spend their time elsewhere.

That said, we are regularly asked about the perceived high regulatory risk around Facebook. We examine risks to businesses and, in particular, regulatory risks through a lens of risk exposure versus actual risk. For instance, the antitrust complaints globally against Facebook based on their size, influence, and strong competitive positioning, definitionally exposes these companies to more regulatory risk than much smaller businesses. However, we do not believe risk exposure is the same as actual risk…” (Click here to see the full text)

6. Centene Corporation (NYSE:CNC)

Degorce's Stake Value: $136,582,000

Percentage of Patrick Degorce's 13F Portfolio: 3.98%

Number of Hedge Fund Holders: 49

Centene Corporation (NYSE:CNC) stands sixth on the list of top 9 stocks to buy according to Patrick Degorce's Theleme Partners. It is a healthcare company that offers programs and services to the underinsured or uninsured in the United States.

On September 9, Cowen analyst Gary Taylor kept an "Outperform" rating on Centene Corporation (NYSE:CNC) and gave a price target of $87.

Of the 873 hedge funds tracked by Insider Monkey, 49 hedge funds have positions in Centene Corporation (NYSE:CNC) in the second quarter of 2021, worth $3.24 billion, compared to 53 hedge funds worth $2.70 billion in the previous quarter.

Click to continue reading and see Top 5 Stocks to Buy According to Patrick Degorce's Theleme Partners.

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Disclosure: None. Top 9 Stocks to Buy According to Patrick Degorce's Theleme Partners is originally published on Insider Monkey.