Fund manager Gerald Sparrow was able to stay ahead of the curves of the pandemic last year on the stock market, for 2021 he’s moving to different sectors where he still sees the magic. Mr. Sparrow manages Sparrow Growth Fund which has a $97 million fund valance that was in the top 4% in its category last year and has averaged 37% over the past five years.
Some of his biggest gainers for the past year that he was advocating for include Snap, who owns Snapchat messaging, Carvana, the online automobile retailer, and streaming media player company Roku. Sparrow’s methodology includes watching stocks in the United States of any size or category and ranks them based on what happens in their financial statements. In a recent interview Mr. Sparrow says that, “The cash flow, earnings, everything that will measure in the top 10%…is most of the area that we spend our time.”
Their system sends alerts when companies are seeing major growth relative to other stocks and then examines to see where they come from. Mr. Sparrow said of their process that, “So we’re really after organic growth. What are they creating?”
His 2021 list adds the online gambling node DraftKings which in 2020 rose by 335%. The fantasy sports contest and online betting group went public after a merger in April and have gone up 27% this year. It’s legal reach is now at 12 states over the one state it started with and they are expecting all 50 states to jump on board in some form or another over the next couple of years. It’s not just DraftKings however, as MGM is now getting involved in online gambline and it’s more profitable to send an app out to everyone instead of having big facilities.
Another stock on Sparrow’s list for the year is Chegg, which provides textbook rentals for both physical and digital companies as well as online tutoring for students. He is a loyal subscriber as he is able to rent new books and get flashcards, mentoring services, and follow up data on subjects he wants to follow up with.
His next stock pick is Chegg CHGG, +6.71%, which provides rentals of digital and physical textbooks, along with online tutoring and other services for students. Sparrow is also a subscriber, reading books to stay fresh on math and probability for investment analysis.
Mr. Sparrow also likes digital payment systems. His two big picks there are Square, which is owned by Twitter CEO Jack Dorsey, and PayPal with its cash app Venmo. He also believes that pet subscription service Chewy will be a good pick.