In this article, we discuss the top 7 stock picks of Vikram Kumar’s Kuvari Partners. If you want to skip our detailed analysis of these stocks, go directly to the Top 2 Stock Picks of Vikram Kumar’s Kuvari Partners.
Vikram Kumar is the founder and chief investment officer at Kuvari Partners, which is a London-based investment advisory firm. Founded in 2017, Vikram Kumar’s Kuvari Partners’ 13F portfolio is worth over $255 million as of the second quarter.
Kumar completed his Bachelor’s from the University of Cambridge, graduating with first class honors in 2003. He started his career with UBS, which is a Zurich-based financial services company, and was appointed as the director of equity sales. Kumar worked at UBS for 8 years, and in 2008, joined TT International, a global asset manager based out of London, as a fund manager. Kumar stayed with TT International until 2017, when he ventured out on his own and established Kuvari Partners.
Kumar’s portfolio is concentrated in the finance, information technology, consumer discretionary, and communications sectors, with the largest stock being Upstart Holdings, Inc. (NASDAQ:UPST), which accounts for 31.79% of Kuvari Partners’ Q2 portfolio.
As of June this year, Kumar purchased five new stocks, including Upstart Holdings, Inc. (NASDAQ:UPST), Nokia Corporation (NYSE:NOK), Tio Tech A (NASDAQ:TIOA), Farfetch Limited (NYSE:FTCH), and Square, Inc. (NYSE:SQ). Whereas, he sold out of MongoDB, Inc. (NASDAQ:MDB) and Roku, Inc. (NASDAQ:ROKU).
The most notable stocks in Kumar’s Q2 portfolio include Square, Inc. (NYSE:SQ), Nokia Corporation (NYSE:NOK), and Zillow Group, Inc. (NASDAQ:Z), among others discussed in detail below.
Why should we pay attention to Vikram Kumar’s 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 S&P 500 ETF (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 context in mind, let’s take a look at the top 7 stock picks of Vikram Kumar’s Kuvari Partners. We used Kumar’s Q2 portfolio to compile this list of stocks, and the hedge fund sentiment around each stock, analyst ratings, and latest earnings are mentioned to give readers a better understanding of the companies.
Top Stock Picks of Vikram Kumar’s Kuvari Partners
7. Porch Group, Inc. (NASDAQ:PRCH)
Kuvari Partners’ Stake Value: $2,142,000
Percentage of Kuvari Partners’ 13F Portfolio: 0.83%
Number of Hedge Fund Holders: 18
Porch Group, Inc. (NASDAQ:PRCH) is a home services marketplace that was established in 2013, offering a platform that connects homeowners to builders, contractors, interior designers, home improvement companies, and other relevant professionals. Initially, Porch Group, Inc. (NASDAQ:PRCH) set out to target the $500 billion home improvement market in the United States, but its operations soon evolved, and Porch Group, Inc. (NASDAQ:PRCH) became a vertical software company focused on making homes simple and smart. It caters to more than 11,000 small and large businesses, to help them grow their customer base, improve operations, and create satisfying customer experiences.
As a top stock in Vikram Kumar’s Q2 portfolio, Porch Group, Inc. (NASDAQ:PRCH) represents 0.83% of the 13F securities held by Kuvari Partners as of June this year. Of the 873 elite hedge funds monitored by Insider Monkey as of the second quarter, 18 funds reported owning stakes in Porch Group, Inc. (NASDAQ:PRCH), worth $359.7 million. This is compared to 27 hedge funds in the preceding quarter, with an approximate stake value of $413.5 million.
According to Loop Capital, Porch Group, Inc. (NASDAQ:PRCH) is positioned to tap the enormous home services market as the industry seems to be on the brink of a technology awakening, which can be catered to by the vertical software offered by Porch Group, Inc. (NASDAQ:PRCH). Analyst Mark Schappel initiated coverage of Porch Group, Inc. (NASDAQ:PRCH) with a Buy rating and a $30 price target.
In addition to Square, Inc. (NYSE:SQ), Nokia Corporation (NYSE:NOK), and Zillow Group, Inc. (NASDAQ:Z), Porch Group, Inc. (NASDAQ:PRCH) is a notable stock in Vikram Kumar’s Q2 portfolio.
6. Nokia Corporation (NYSE:NOK)
Kuvari Partners’ Stake Value: $2,985,000
Percentage of Kuvari Partners’ 13F Portfolio: 1.16%
Number of Hedge Fund Holders: 26
Nokia Corporation (NYSE:NOK) is a Finland-based multinational corporation that specializes in consumer electronics, telecommunications, and information technology. From 1998 till the mid-2000s, Nokia Corporation (NYSE:NOK) was the largest seller of mobile phones and smartphones, however, the mobile division of Nokia Corporation (NYSE:NOK) was sold to Microsoft Corporation (NASDAQ:MSFT). Nokia Corporation (NYSE:NOK), after the divestiture of its mobile division, became invested in artificial intelligence, virtual reality, and digital health via a series of strategic acquisitions.
Kuvari Partners has purchased Nokia Corporation (NYSE:NOK) stock recently, and the $2.98 million stake of the investment firm represents 1.16% of its 13F securities as of June this year. Nokia Corporation (NYSE:NOK) announced on October 28 earnings per share of $0.09 for Q3, beating estimates by $0.01. Revenue for the quarter came in at $6.31 billion, exceeding forecasts by $13.08 million.
On November 1, Barclays analyst Andrew Gardiner kept an Equal Weight rating on the stock, increasing the price target on Nokia Corporation (NYSE:NOK) from EUR5 to EUR5.25.
As of the second quarter of 2021, 26 hedge funds in the database of Insider Monkey’s elite funds were long Nokia Corporation (NYSE:NOK), with stakes valued at $494.3 million.
5. Tio Tech A (NASDAQ:TIOA)
Kuvari Partners’ Stake Value: $15,256,000
Percentage of Kuvari Partners’ 13F Portfolio: 5.97%
Number of Hedge Fund Holders: N/A
Tio Tech A (NASDAQ:TIOA) is a Germany-based company that allows EU tech firms to smoothly transition into their initial public offering process, by helping them strategically carry out mergers and acquisitions, share trading, business combinations, and corporate restructuring, as needed.
Kumar holds 1.52 million shares in Tio Tech A (NASDAQ:TIOA) via Kuvari Advisors, worth $15.25 million, representing 5.97% of the firm’s Q2 investment portfolio.
In addition to Square, Inc. (NYSE:SQ), Nokia Corporation (NYSE:NOK), and Zillow Group, Inc. (NASDAQ:Z), Tio Tech A (NASDAQ:TIOA) is a notable stock in Vikram Kumar’s portfolio for the second quarter.
4. Farfetch Limited (NYSE:FTCH)
Kuvari Partners’ Stake Value: $27,069,000
Percentage of Kuvari Partners’ 13F Portfolio: 10.60%
Number of Hedge Fund Holders: 63
Farfetch Limited (NYSE:FTCH) is an ecommerce platform offering luxury fashion brands from over 700 designer labels worldwide. Farfetch Limited (NYSE:FTCH) offers customers apparel, footwear, and accessories, via websites and mobile applications in 14 different languages. Farfetch Limited (NYSE:FTCH) has corporate offices and distribution centers in Lisbon, New York, Dubai, Tokyo, Shanghai, and Hong Kong, among other cities.
Farfetch Limited (NYSE:FTCH) is a significant holding in the 13F portfolio of Vikram Kumar, as of June this year. Kuvari Partners holds a $27 million stake in the ecommerce fashion retailer, which accounts for 10.60% of the investment firm’s Q2 portfolio.
Wedbush analyst Tom Nikic, as of October 4, initiated coverage of Farfetch Limited (NYSE:FTCH) with a Neutral rating. A $38 price target was set.
Farfetch Limited (NYSE:FTCH) is a popular stock among hedge funds, with 63 funds being long Farfetch Limited (NYSE:FTCH) as of June this year, with stakes worth $4.25 billion. This is compared to 57 funds in the preceding quarter, with an approximate stake value of $3.09 billion.
“We do still see some higher growth companies with reasonable expectations. Farfetch is a good example. Most high growth darlings trade at much higher valuations than they have historically. This isn’t true of Farfetch, which trades inline with Amazon’s historical valuation, which is a good comparable due to business model similarities. Both companies have commerce marketplaces (though Farfetch’s is high margin and Amazon’s is high asset turns) and technology services businesses. Amazon’s web services (AWS) is now well recognized. Similarly, Farfetch’s strategy is to build the operating system for luxury goods companies who have been notoriously bad at technology. The market doesn’t yet reflect any value for this business, in our opinion.
Farfetch sold-off dramatically, recently trading at less than half its peak earlier this year. Fundamentals have performed strongly. The company has been able to maintain high growth on the top of difficult comps from last year, and recently reached adjusted EBITDA breakeven.
We think the company will continue to drive both growth and incremental profits over the coming years. The company’s nascent platform services and advertising businesses represent sizable opportunities. Cost rationalization in shipping and logistics should create efficiencies. People who focus on Farfetch’s historical losses don’t properly distinguish between investments and operating losses (a common problem in a world of intangible assets). We believe Farfetch has the potential to be a multi-bagger over a multi-year period.
Long duration assets like Farfetch are more sensitive to movements in interest rates. We evaluate all our investments for adequate upside even with higher interest rates. Yet rising rates does represent a legitimate risk. Warren Buffett equated interest rates to gravity for financial assets.
3. Square, Inc. (NYSE:SQ)
Kuvari Partners’ Stake Value: $59,099,000
Percentage of Kuvari Partners’ 13F Portfolio: 23.15%
Number of Hedge Fund Holders: 94
Square, Inc. (NYSE:SQ) is primarily a financial services company that helps small, mid-cap, and enterprise level customers procure necessary funding for operations, in addition to offering financial products and services including point of sale systems, credit cards, payment processing, and payroll assistance, among other related services. Square, Inc. (NYSE:SQ) is a popular stock among the smart money, with 94 hedge funds owning stakes in the company, according to the database of 873 elite hedge funds maintained by Insider Monkey as of June this year.
Representing 23.15% of Kuvari Partners’ Q2 portfolio, Square, Inc. (NYSE:SQ) is indeed a top stock pick of Vikram Kumar, who recently purchased shares in the financial technology company. Q3 results on November 5 reveal an EPS for the period totaling $0.37, missing estimates by -$0.02.
Mayank Tandon, a Needham analyst, as of November 5, kept a Buy rating on Square, Inc. (NYSE:SQ), but lowered the price target from $350 to $315, owing to the Q3 performance. He believes that Square, Inc. (NYSE:SQ) is positioned for robust growth in the future, once the businesses it serves gain their momentum post COVID-19.
Here is what RiverPark Large Growth Fund has to say about Square, Inc. (NYSE:SQ) in their Q1 2021 investor letter:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
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Disclosure: None. Top 7 Stock Picks of Vikram Kumar’s Kuvari Partners is originally published on Insider Monkey.