Summary List Placement
Investment advice isn't in short supply. Ideas saturate the market.
But they can often contradict one another — that's what drives buying and selling, after all.
So which ones are the best to follow? Some crucial elements for buying into an investment thesis can include: the credibility of the expert with the idea; the fundamentals behind an idea; and consensus around an idea.
We tried to combine these three elements for this story. At Insider, we regularly interview some of the market's top-performing investors and ask them about their best investing ideas. Much of the time, they offer different perspectives and stock picks. But sometimes their thinking overlaps.
Below we've compiled the four stocks that multiple growth fund managers who rank in at least the top 5% of their peers over the past 1-, 3-, 5-, and/or 10-year periods like for the long-term.
Each stock is accompanied by quotes on why the managers are bullish. Some comments are months old, but managers who weren't interviewed within the last few weeks confirmed in recent days that their comments still accurately reflect their views, and provided updates if necessary.
Brooke de Boutray, a co-portfolio manager of the Zevenbergen Genea Fund (ZVGNX) among others, has beaten 99% of her peers over the last 1-, 3-, and 5-year periods
"It has two powerful tailwinds.
"What I would call the great reshuffling of America: people changing where they want to live because home has become such a center part of your life now. You spend so much time there now not only working and living but also educating your children, where you watch your Netflix. So the home is really the center of everything now. I think that will be a multi-year trend, maybe a multi-decade trend.
"And in addition to that is the technology that we're bringing into that whole process of real-estate transactions. So now we've been forced to go to virtual open houses, virtual closings — so digitizing the whole process, and Zillow is really at the center of that."
Ryan Jacob — portfolio manager of the Jacob Internet Fund (JAMFX) — beaten 99% of his peers over the last 10 years.
On Zillow's iBuying feature, which allows users to make a cash offer for a property online: "They've done incredibly well with it. Their margins have outpaced what they initially guided for in this business."
Jacob also said low interest rates are a tailwind, but that rising rates and a cooling-off of the real estate market could also benefit them with their iBuying feature.
Garvin Jabusch, co-portfolio manager of the Shelton Green Alpha Fund (NEXTX), has beaten 97% of his peers over the last year, and 96% over the last 4.
"We definitely are going to keep a meaningful weight on it because again, solving big problems [like climate change]. And then also, its tech lead is just visible. Nobody else is even close in terms of the efficiency of the drivetrain and how much mileage it can squeeze out of the battery pack. Like not even in the ballpark. Sandy Munro, who does the tear downs, thinks they've got something like a 6-year lead on the EV (electric vehicle) tech.
"Finally, we like it because as the CEO keeps saying, they think the energy side of the business is going to be as big or bigger than the car side of the business."
Update: Jabusch pointed out on Wednesday that Volkswagen has made significant strides in developing EVs, and that he wouldn't be surprised if the tech gap to Tesla is now smaller than six years. Still, even if Tesla loses market share, their revenue will continue to grow as the EV and energy storage markets grow, he said, and it is still a long-term investment he likes.
Nancy Zevenbergen, co-portfolio manager of the Zevenbergen Genea Fund (ZVGNX) among others, has beaten 99% of her peers over the last 1-, 3-, and 5-year periods.
On Elon Musk: "Founder-led, visionary, delivers on his promises, maybe not in a timely fashion, but definitely delivers — and he's doing the right thing by dropping prices of the cars on a regular basis and trying to get the cost down whether it's through batteries, or manufacturing, or painting, or distribution.
"But Tesla's more than just a car company, it truly is an alternate energy company. Their solar panels, their charging network, which no one else has…I think that's an asset that no one even talks about that Tesla has. Will Tesla be a much larger company five years from now? Absolutely."
Brooke de Boutray
"I think that Tesla will continue to be a significant holding for us in 2021. And I say because it meets all of our criteria. It is a company that has multiple areas of growth and very large total addressable markets: transportation, energy, insurance, just to name a few.
"The electrification of the transportation market, right now it's only 2% of global auto sales. But we think that will grow dramatically over time."
Tom Plumb, portfolio manager of the Plumb Balanced Fund (PLBBX), has beaten 98% of his peers over the last 5 years.
On how the economy is undergoing a technological revolution: "We're seeing a structural change in productivity driven by data ... Ten years from now, I believe Amazon, Apple, Microsoft, and Alphabet are all going to be worth much more than they are today."
On Google and Facebook compared to the rest of the FAANMG stocks: "These are companies that are large, they're generating lots of cash flow. In some cases — Google, they are buying back a little bit of stock. The multiples, in my opinion, they're not that demanding. Do I think there will be some multiple compression? Maybe. But here's the difference. Google and Facebook are going to grow 20-30% a year for a while. They are growing at significantly above-market rates.
Brooke de Boutray
On how the move to e-commerce during the pandemic won't revert: "We think that the shopping patterns of consumer behavior are not going back because it's so much easier to buy online ... friction has been removed."
"It has been growing its revenue almost 15%. You have many of the attributes of Amazon, and many of the attributes of PayPal, and they combine that sort of like Alibaba does in China.
"It has an incredible valuation here, and you're really buying it because you believe it's got the potential to be the Amazon that you were afraid to buy for the first 10 years of their success.
"They, like Amazon, are bypassing social systems so that they can provide the delivery times that can be truly competitive.
"It's a lot like Alibaba 10 years ago."