High-growth stocks continue to face selling pressure amid geopolitical tensions and Fed uncertainty. Many maintain views that these stocks will continue to slide, but others, like former hedge fund manager Puru Saxena, see incredible opportunity.
What To Know: "I am of the view that after some additional near-term volatility, the beaten down high quality compounders will do well," Saxena said Monday via Twitter.
He expects the indices to extend declines over the coming weeks, but he anticipates seeing relative strength in some of the high-growth stocks that have been beaten down over the last few months.
In case he's wrong, he hedged his position by shorting Nasdaq futures, but he's also taking advantage of outsized declines by buying shares of Shopify Inc (NYSE:SHOP) and Palantir Technologies Inc (NYSE:PLTR).
See Also: Here's How Much You Would Have Made Owning Shopify Stock In The Last 5 Years
"I've tried my best to invest my capital in some of the best growing businesses in e-commerce, fintech and software," Saxena said.
Although he noted that the stocks remain out of favor, he expects the companies to reward shareholders longer term.
"Over the long run, their fantastic business characteristics/metrics will prevail and their market caps will reflect this reality," he said. Cyclical and value stocks will be unable to provide the returns that these stocks offer on a longer-term basis, he added.
E-commerce, fintech/payment and software stocks are "modern-day utilities on steroids," Saxena said.
"These businesses benefit from repeat purchases from customers or recurring revenues, they have high margins, they are capital-light and benefit from scale, network effects and/or switching costs."
SHOP, PLTR Price Action: Shopify closed down 3.04% at $673.18, while Palantir closed up 2.95% at $12.20 on Tuesday.
Photos: courtesy of Shopify and Cory Doctorow from Flickr.
