Chamath Palihapitiya Stocks: 10 Stocks Picked in the Last 10 Years
In this article, we discuss Chamath Palihapitiya and the 10 stocks he picked in the last 10 years.
Chamath Palihapitiya is the founder of Social Capital, a venture capital firm that he started in 2011. Palihapitiya, a Sri Lankan-origin Canadian-American, envisioned making big bets on transformational ideas, technology, and people through his VC. Since inception, the VC has made bets on several prominent tech startups that later became part of giants like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL). In 2018, Palihapitiya converted Social Capital into a family office.
Latest reports indicate that Palihapitiya, who has helped make stock market debuts of several tech firms through his special purpose acquisition companies (SPACs), is now seeking investment for his VC in the hundreds of millions. SPAC-led mergers, which helped raise the profile of the angel investor across the globe in the past two years, have gone out of fashion as inflation and rising rates combine to slow down macro growth and lead to a large correction in the valuation of growth stocks.
SPACs have been one of the hottest items on Wall Street since the advent of the pandemic. Per SPAC Insider, initial public offerings facilitated by SPACs raised more than $83 billion in 2020 and more than $97 billion in the first three months of 2021. Both numbers were more than double the total amount raised by SPAC-facilitated IPOs in the ten years preceding 2020. However, since 2021, this trend has cooled. In 2022, there were just 85 SPAC-linked IPOs that raised $157 million in gross proceeds.
Palihapitiya, who also had leading roles at Facebook, The Mayfield Fund, AOL, and Winamp, was a proponent of SPACs since this allowed firms to go public without too much scrutiny from the regulatory authorities. Perhaps this is one reason why the opponents of Palihapitiya have accused him of misleading investors into pouring money in low-quality firms. In the past two years, Palihapitiya claims he has held talks with more than 100 IPO targets for his SPAC-backed mergers.
Known as the SPAC King, Palihapitiya is now seeking investors for his VC in the Middle East and Europe, and recently announced that he would be closing down a pair of tech-focused blank check acquisition companies after failing to find adequate merger targets. However, the angel investor has continued to back biotech stocks, noting that they had a more balanced risk/reward profile despite a large drop in valuations. Of the ten SPACs founded by the investor, six focused on tech and four on biotech.
Our Methodology
These were picked from a careful assessment of the investing history of Chamath Palihapitiya. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Chamath Palihapitiya Stocks: 10 Stocks Picked in the Last 10 Years
10. ProKidney Corp. (NASDAQ:PROK)
Number of Hedge Fund Holders: 2
ProKidney Corp. (NASDAQ:PROK) is a clinical-stage biotechnology that engages in developing cellular therapy candidates. On January 18, ProKidney Corp. (NASDAQ:PROK) announced that it would merge with a blank-check firm backed by veteran dealmaker Chamath Palihapitiya to go public in a deal valuing the combined entity at $2.64 billion. The merger with Social Capital Suvretta Holdings Corp III would hand ProKidney up to $825 million in gross proceeds to advance the development of its treatment for chronic kidney diseases.
On December 21, Jefferies analyst Kelly Shi initiated coverage of ProKidney Corp. (NASDAQ:PROK) stock with a Buy rating and a $15 price target.
At the end of the third quarter of 2022, 2 hedge funds in the database of Insider Monkey held stakes worth $29 million in ProKidney Corp. (NASDAQ:PROK), compared to 0 in the preceding quarter worth 0.
Unlike Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL), ProKidney Corp. (NASDAQ:PROK) is one of the newer growth stocks on the market.
9. Akili, Inc. (NASDAQ:AKLI)
Number of Hedge Fund Holders: 5
Akili, Inc. (NASDAQ:AKLI) develops digital therapeutics for cognitive impairments. On August 2, Akili merged with Social Capital Suvretta Holdings Corp. I, one of several special purpose acquisition companies created by Chamath Palihapitiya, to go public in a deal valuing the firm at $1 billion. Eddie Martucci, Akili’s founder and CEO, would continue to lead the company as part of the deal, while Chamath Palihapitiya, the founder of Social Capital Suvretta Holdings Corp, would chair its board.
On November 18, BofA analyst Michael Cherny initiated coverage of Akili, Inc. (NASDAQ:AKLI) stock with a Neutral rating and $2 price target, noting that the main EndeavorRX platform of the company is appropriately positioned to address the incidence of non-therapeutic conditions for neurological illnesses.
At the end of the third quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $9 million in Akili, Inc. (NASDAQ:AKLI), compared to 0 in the previous quarter worth 0.
8. Sunlight Financial Holdings Inc. (NYSE:SUNL)
Number of Hedge Fund Holders: 11
Sunlight Financial Holdings Inc. (NYSE:SUNL) operates a business-to-business-to-consumer technology-enabled point-of-sale financing platform in the United States. In January 2021, Chamath Palihapitiya tweeted that he would be investing in residential solar company Sunlight Financial. Sunlight provides loans to homeowners for the installation of solar panels. Palihapitiya said he would be part of a $250 million funding round for the firm.
At the end of the third quarter of 2022, 11 hedge funds in the database of Insider Monkey held stakes worth $5 million in Sunlight Financial Holdings Inc. (NYSE:SUNL), compared to 14 in the preceding quarter worth $22.2 million.
Among the hedge funds being tracked by Insider Monkey, London-based firm LMR Partners is a leading shareholder in Sunlight Financial Holdings Inc. (NYSE:SUNL) with 2.5 million shares worth more than $3 million.
7. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 12
Virgin Galactic Holdings, Inc. (NYSE:SPCE) focuses on the development, manufacture, and operation of spaceships and related technologies for conducting commercial human spaceflight and flying commercial research and development payloads into space. In October 2019, Social Capital Hedosophia, the SPAC led by Chamath Palihapitiya, took Virgin public in a deal valuing the firm at around $2.3 billion. The stock has nosedived since then and Palihapitiya has stepped down from his role at the board of directors of the firm.
On November 7, Jefferies analyst Greg Konrad maintained a Buy rating on Virgin Galactic Holdings, Inc. (NYSE:SPCE) stock and lowered the price target to $11 from $14, noting that the first commercial spaceflight is expected to launch in the second quarter of 2023 since the schedule has stabilized.
At the end of the third quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $18.4 million in Virgin Galactic Holdings, Inc. (NYSE:SPCE), compared to 15 in the preceding quarter worth $42.95 million.
6. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 17
GameStop Corp. (NYSE:GME) is a specialty retailer that provides games and entertainment products through its e-commerce properties and various stores in the United States, Canada, Australia, and Europe. At the height of the meme stock saga in January 2021, Chamath Palihapitiya tweeted that he had bought $125,000 worth of CALL options on GameStop stock after asking his followers on Twitter what to buy. He also clarified that he would donate all the profits and proceeds from the deal.
On October 13, investment advisory Jefferies took over coverage of GameStop Corp. (NYSE:GME) stock with a Hold rating and $26 price target. Analyst Andrew Uerkwitz issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in GameStop Corp. (NYSE:GME) with 2 million shares worth more than $252 million.
In contrast to Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL), GameStop Corp. (NYSE:GME) is one of the growth stocks popular among meme traders.
In its Q2 2022 investor letter, Bireme Capital, an asset management firm, highlighted a few stocks and GameStop Corp. (NYSE:GME) was one of them. Here is what the fund said:
“Amazingly, GameStop Corp. (NYSE:GME) is one of our only short positions to not fall in 2022. The stock trades at an $11.5b market cap, exceeding its pre-pandemic peak by billions of dollars. This is even though revenue is down 30% from the peak, gross margins are down 1500 bps, and the company has generated a negative free cash outflow of $700m in the last four quarters (we had to double-check that number because it is so high).
Wall Street has consistently revised downward their estimates of Gamestop’s profitability, making its stock price stability in 2022 even more perplexing. Analysts currently estimate an EBITDA loss of around $400m, markedly worse than their estimates as of 2/3/22 of a loss of $60m. Their recently launched NFT marketplace will do nothing to fix their core business and comes about a year too late to be relevant in the NFT space. Instead, we see this as another example of a meme stock company hoping it can ape its way into a new business model, utilizing the popularity of the stock to drive new lines of business. We are not optimistic and think the $11.5b market cap drastically overestimates the capability of Gamestop to pivot into something more profitable. We find it unlikely that Gamestop books a GAAP profit ever again.”
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Disclosure. None. Chamath Palihapitiya Stocks: 10 Stocks Picked in the Last 10 Years is originally published on Insider Monkey.
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