2 Growth Stocks Billionaires Are Piling Into

Recent 13F filings reveal that billionaire fund managers like Bill Ackman and David Tepper have significantly increased their positions in Uber Technologies, citing the company's strong momentum in mobility and delivery, its large user base, and strategic partnerships in the autonomous vehicle space; Ackman's Pershing Square acquired over 30 million shares, while Tepper more than doubled his fund's stake. Additionally, Chase Coleman's Tiger Global Management increased its stake in PDD Holdings, the parent company of Pinduoduo and Temu, attracted by its discounted valuation and unique social e-commerce model despite potential risks from competition and economic headwinds in China.

Analysis

Recent 13F filings indicate significant acquisitions in growth-oriented equities by prominent billionaire fund managers. Uber Technologies (NYSE: UBER) attracted substantial new investment, with David Tepper's Appaloosa Management more than doubling its stake and Bill Ackman's Pershing Square acquiring over 30 million shares valued at $2.2 billion. This interest is underpinned by Uber's robust first-quarter performance, which saw an 18% year-over-year increase in trips and gross bookings on a currency-neutral basis, driven by features like 'Reserve' that are expanding suburban market penetration. Uber's strategy of partnering with autonomous vehicle makers such as Alphabet's Waymo and WeRide, leveraging its 170 million monthly active consumers, positions it to capitalize on autonomous ride-hailing without incurring massive fleet investment costs. Despite recent share price appreciation, Uber's forward price-to-earnings multiple of 25 is considered attractive, supported by analyst projections of 23% annualized long-term earnings growth. PDD Holdings (NASDAQ: PDD) also saw increased investment, with Chase Coleman's Tiger Global Management boosting its stake by 67% in the first quarter. PDD, parent to Pinduoduo and Temu, has demonstrated explosive revenue growth from $15 billion in fiscal 2021 to $54 billion in fiscal 2024, converting 28% of revenue to profit due to its technology-centric model. Its unique social group buying feature fosters customer engagement, though the company faces risks from intense e-commerce competition, notably from Alibaba, and potential macroeconomic headwinds in China stemming from U.S. tariff disputes. Nevertheless, PDD's current valuation, trading at just under 10 times this year's estimated earnings, is perceived by these institutional investors as adequately discounting these risks for a company with its growth trajectory and long-term strategic investments in market expansion.

Key Decisions for Investors

• Investors may consider Uber Technologies for exposure to growth in the mobility and delivery sectors, given its strong Q1 metrics, strategic positioning for autonomous vehicle services through partnerships, and a forward P/E of 25 that is viewed as attractive relative to its projected 23% long-term earnings growth.
• PDD Holdings presents a potential opportunity for investors seeking high-growth e-commerce at a comparatively low valuation (sub-10x forward P/E), but this must be weighed against significant risks including intense market competition and potential adverse impacts from Sino-U.S. economic tensions.
• Monitoring 13F filings can offer insights into the investment theses of successful fund managers; however, any capital allocation decisions should follow thorough independent due diligence of the specific company's fundamentals, ongoing performance, and prevailing market conditions.