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Billionaires bought 2 shares of growth in the first quarter


This article was originally published on Fool.com. All figures are in US dollars, unless otherwise stated.

The Nasdaq Composite fell 9% in the first quarter as many investors weighed concerns about the strength of the economy. Despite this, the wave of Form 13-F, recently filed with the U.S. Securities and Exchange Commission, suggests that some asset managers are still set on stock growth.

In the first quarter, billionaire Chase Coleman of Tiger Global Management added more than a million shares CrowdStrike Holdings 09.30 NASDAQ: CRWD in its hedge fund, making it the third largest position in the portfolio. Also, billionaire James Simons of Renaissance Technologies has doubled Tesla 09.30 NASDAQ: TSLAand the shares now occupy the second largest holding company in its hedge fund.

Obviously, these professional money managers see what they like in both companies. But let’s take a closer look before adding them to your own portfolio. Here’s what you need to know.

1. CrowdStrike Holdings

CrowdStrike is the gold standard for endpoint and cloud load security. Its cloud architecture is the foundation of this success as it allows companies to retrieve vast amounts of data from devices on their network. In fact, its Falcon platform captures trillions of security signals each week, and it relies on artificial intelligence (AI) to detect understanding and prevent cyberattacks.

This creates a powerful network effect. Each new data point makes the AI ​​CrowdStrike model a little better at identifying malicious activity, which means that each new customer creates incremental value for all existing customers and vice versa. In addition, CrowdStrike has stood out even more with a wide range of software beyond security endpoints and cloud workloads, including solutions for identity protection, threat intelligence and managed services.

Financially CrowdStrike shoots at all cylinders. Its customer base jumped 65% to 16,325 last year, and the average customer spent 24% more, a testament to the successful implementation of land growth and expansion strategies. In turn, revenue grew 66% to $ 1.4 billion and free cash flow jumped 51% to $ 442 million.

Looking ahead, CrowdStrike is well positioned to maintain that momentum. The company estimates its market potential at $ 67 billion by 2024, and its ability to innovate should keep it at the forefront of cybersecurity. For example, CrowdStrike recently debuted the industry’s first fully managed identity protection service. This means that organizations that lack the time or talent to deal with their own security can outsource this to CrowdStrike. And adding authentication protection to this service is especially important because 80% of cyber attacks start with compromised credentials.

As such, CrowdStrike has a strong presence in a critical industry, and its market opportunities should only increase as the digital transformation creates more surfaces for hacker attacks. With that in mind, Coleman’s decision to add stocks to his hedge fund makes a lot of sense. More importantly, if the stock price has dropped 50% from its maximum, now is a great time to buy multiple stocks for your own portfolio.

2. Tesla

In the first quarter, Tesla again took the lead in the leading electric vehicle (EV) brand, occupying a 15.5% market share. The company also continued to participate in total car sales in three main regions: China, Europe and the United States. But the real story was Tesla’s operating margin.

Revenue rose 81% to $ 18.8 billion in the first quarter, but GAAP earnings rose 633% to $ 2.68 per diluted share. What led to this accelerated profit growth? Tesla posted industry-leading operating profitability of 19.2%, which helped increase production, pricing capacity and initiatives such as single-casting. This figure is likely to decline soon as production increases at new plants in Berlin and Texas, but this increase in capacity should make Tesla even more efficient in the long run.

More interestingly, CEO Elon Musk has announced plans to create an EV robot taxi. The company aims to achieve mass production by 2024, which puts Tesla one step closer to achieving its goal – to launch an autonomous driving platform. In this regard, Musk believes that by the end of the year, complete software for self-driving will be safer than human drivers, which will pave the way for software to become a critical source of profitability for Tesla’s automotive business.

Ark Invest has a similar forecast. In a recent report, the firm said stand-alone transportation platforms could bring in $ 2 trillion in revenue by 2030, while boosting global economic production by $ 26 trillion. On that note, Tesla has more real driving data than any competitor, which perhaps makes it a leader in the race to build a fully autonomous car.

If you think cars sound like science fiction, how about smart cars? Musk believes that Tesla’s stand-alone humanoid robot (known as Optimus) will ultimately cost more than the automotive business. The prototype in the company may be already this year, and full-scale production may begin next year.

The biggest argument against Tesla is evaluation. It currently costs more than the next seven automakers combined, and the stock is trading 12.8 times more. But if Tesla realizes its vision of robot taxis and stand-alone robots, it may somewhat look cheap. Renaissance Technologies clearly believes in the company, but should you add stocks to your own portfolio? It depends on yours risk tolerance. If you can handle it volatility and you believe in Tesla’s vision, I think it’s worth buying a few shares. As far as it’s worth, I own the stock and have no plans to sell.

This article was originally published on Fool.com. All figures are in US dollars, unless otherwise stated.


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