Hedge fund managers met this week at the Sohn San Francisco Investment Conference, which has been known for market-moving presentations as well as introducing the rising stars in the hedge fund universe.
At this year’s conference, several up-and-coming hedge fund managers dropped their top stock picks now.
Among them was Toronado Capital Management’s Stephen Perkins.
Perkins currently has his eye on Blackline (NASDAQ: BL), a cloud-based software-as-a-service (SaaS) company that automates accounting processes for mid-sized companies.
Blackline boasts more than 237,000 customers in 130 counties with a 97% retention rate since 2013. In its last reported quarter, Blackline reported a 26% jump in revenue to $69.7 million, a 1,120% year-over-year increase in non-GAAP net income at $6.1 million, and an 82.7% increase in adjusted gross margin for the quarter.
Not only is its retention rate incredibly high—which means once Blackline adds a new customer, they almost never lose it—its scored a net revenue retention rate of 108%, which means existing customers spent an additional 8% with Blackline this year.
According to Perkins, Blackline’s products replace Microsoft Excel with “digitally automated workflows,” and is the “leading product” in the fintech space. Perkins also pointed out that more than half of Fortune 50 companies use Blackline’s software.
Perkins also noted that Blackline has a large “underpenetrated” market and it is expanding its sales efforts, which should boost growth over the long run.
Perkins isn’t the only analyst bullish on Blackline. Earlier this month, First Analysis initiated coverage on the stock with an Outperform rating and a 12-month price target of $55 – 17% higher than the current price. The average analyst price target indicates nearly 14% upside over the next year.
AltraVue Capital’s Touk Sinantha likes commercial-stage biopharma stock SIGA Technologies (NASDAQ: SIGA).
Early this month, SIGA announced that it had reached concurrence with the FDA that no further clinical studies would be required for the IV formulation of TPOXX (tecovirimat) for the treatment of smallpox, and the company plans to file a New Drug Application for the formulation in 2020.
“We are pleased to reach this milestone with the FDA in the development of the IF formulation of TPOXX,” Phil Gomez, CEO of SIGA Technologies, said in a press release. “We will now focus on finalizing the commercial production capability for IV TPOXX and submitting the NDA in 2020.”
According to Sinantha, SIGA is a “super conventional biotech” considering its focus on smallpox, and noted that the company has over $100 million in net cash and its research and development expenses are funded by the government.
Sinantha sees more than 30% upside for the stock over the next 12 months, and says the stock could see a push from international sales as G-8 companies stockpile vaccines.
And finally, Stamina Capital’s Christopher Weldon is bullish on Adyen (OTC: ADYYF).
Weldon says Adyen is the lowest-cost payments processor around, and said it is used by several other fast-growing tech companies including Facebook (NASDAQ: FB), Netflix (NASDAQ: NFLX), Spotify (NYSE: SPOT), and Uber (NYSE: UBER).
The Stamina portfolio manager says Adyen has the potential to double over the next three years.
Goldman Sachs (NYSE: GS) is also bullish on the stock and just last week, analyst Mohammed Moawalla upgraded Adyen to Goldman’s Conviction Buy list with a price target of 960 euros ($1,067.85) – 55.5% higher than the current price.
Moawalla said Adyen’s “attractive” competitive positioning and secular growth dynamics in payments should help it to outgrow the market.