This has been a challenging year for Americans across the country. The coronavirus disease 2019 (COVID-19) has uprooted traditions and completely transformed the long-established work environment. For many, saying goodbye to 2020 can't come soon enough.
But that's not entirely true for growth stock investors. The transition online and into the cloud showed the world just how important technological innovation will be moving forward. It's also why the growth-oriented Nasdaq Composite has gained 43% in 2020, through this past weekend.
Billionaire money managers persistently bought into fast-growing stocks throughout the year. Here are the four they couldn't stop buying.
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NIO
One of the most popular buys throughout the year has been China-based electric-vehicle (EV) manufacturer NIO (NYSE:NIO). In the most recently ended quarter, Larry Fink's BlackRock upped its existing stake by 10.6 million shares. Meanwhile, Jim Simons' Renaissance Technologies and Two Sigma Investments, which was founded by David Siegel and John Overdeck, picked up more than 4.6 million and nearly 5.8 million respective shares.
The writing is on the wall that EVs are the future of the auto industry. NIO's popularity springs from its location — China should be the largest consumer market for EVs in the world — and the company's rapidly rising deliveries. Between April and September, NIO delivered more of its premium EV SUVs than were delivered in the entirety of 2019. As a result, its sales are soaring, and the company's vehicle margin has flipped from negative in the year-ago period to a double-digit positive percentage in the third quarter.
NIO also made waves with the introduction of its battery-as-a-service (BaaS) program. The company is reducing the upfront cost of its EVs for buyers who enroll in its BaaS program, which carries a monthly fee. The BaaS program will allow buyers to replace or upgrade batteries in the future, while tying those buyers to the NIO brand for a long time to come. In other words, NIO is giving up some short-term margin in order to generate predictable, high-margin cash flow in the future.
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Novavax
Another fast-growing company that's been purchased hand-over-fist by billionaires and esteemed money managers in 2020 is drug developer Novavax (NASDAQ:NVAX). Although share ownership in the third quarter was relatively flat compared to the sequential second quarter, there was a 44% increase in the number of funds holding Novavax that filed a 13F (required of firms with over $100 million in assets under management). Specific to billionaires, we saw Steven Cohen's Point72 Asset Management open a nearly 600,000-share position.
The buzz surrounding Novavax concerns the development of a COVID-19 vaccine. The company's candidate, NVX-CoV2373, led to the development of neutralizing antibodies in 100% of early stage trial participants. Though late-stage trials were delayed in the U.S., the company anticipates reporting phase 3 results in the U.K. early in the first quarter.
Estimates vary wildly with regard to how much revenue COVID-19 vaccines could bring in each year. But with Novavax expect to be one of the first five or six drug developers to release efficacy data on its vaccine candidate, it could be in line to generate many billions of dollars in sales, assuming its treatment is effective. As a mid-cap stock, Novavax presents with substantial additional upside if NVX-CoV2373 become one of a handful of mainstay COVID-19 treatment options.
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Zoom Video Communications
As a true sign of the times, communications platform Zoom Video Communications (NASDAQ:ZM) was at or near the top of the buy list for billionaire money managers throughout 2020. More than 840 funds required to file a 13F owned Zoom stock at the end of September. BlackRock added nearly 4 million more shares to its stake in the third quarter, while Jeff Yass' Susquehanna Asset Management bolstered its existing position by more than 600,000 shares.
There may not be a tech stock that's benefited more directly from the coronavirus pandemic than Zoom. Back in March, when Zoom reported its fiscal 2020 fourth-quarter operating results, it guided for $905 million to $915 million in full-year fiscal 2021 sales. Now, it's expecting fiscal 2021 full-year sales will reach as high as $2.58 billion. The number of customers spending at least $100,000 annually jumped 136% in Q3 from a year ago, while the total number of customers with at least 10 employees almost quintupled in Q3 2021 from the prior-year period.
Zoom has also pretty clearly shown that it's developed quite the moat in video conferencing. What isn't known is what'll happen in a post-COVID-19 world. One would assume we'd see some workers return to the traditional office environment, which could slow down growth for this red-hot company. Then again, Zoom and a host of other tech companies have demonstrated that work can go on remotely. For what it's worth, Wall Street anticipates that Zoom can triple its sales to north of $8 billion by fiscal 2024.
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Teladoc Health
Rounding out the list, billionaires haven't been able to stop buying telemedicine giant Teladoc Health (NYSE:TDOC) in 2020. More than 700 funds required to file a 13F are now holding shares of Teladoc. Both Simons' Renaissance Technologies and Ken Griffin's Citadel Advisors have been active acquirers of shares of Teladoc Health this year.
Like Zoom, Teladoc really put itself on the map during the coronavirus pandemic. With doctors wanting to keep COVID-19-infected patients and high-risk people out of the offices, virtual visit demand surged. Teladoc's virtual visit count has more than tripled in each of the past two quarters, with aggregate visits set to handily top 10 million in 2020. Since virtual visits are more convenient for patients and doctors, and often cheaper for health insurers, the demand for telehealth is only going to grow.
Teladoc Health also made waves with its acquisition of leading applied health signals company Livongo Health. When the deal closed, Livongo had signed up more than 400,000 diabetes patients as members and was profitable on a recurring basis, despite only penetrating a little over 1% of the U.S. diabetes market. Looking to expand its solutions to include hypertension and weight management, and now able to cross-sell to existing clients, the sky is seemingly the limit.
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