PIF’s Hidden Gems: 3 Stocks to Buy From the Saudi Wealth Fund (Not Named Lucid)


  • Here are three PIF stock picks other than Lucid Group (LCID).
  • Pinterest (PINS): It’s monthly active users are rising.
  • Ermenegildo Zegna (ZGN): It’s an under-the-radar pick. 
  • Costco (COST): It’s simply the best. 
PIF Stock Picks - PIF’s Hidden Gems: 3 Stocks to Buy From the Saudi Wealth Fund (Not Named Lucid)

Source: Golden Dayz / Shutterstock.com

Fortune published an article in early April about Saudi Aramco, the most profitable company in the world over the past decade. Majority-owned by the Saudi Arabia government, the oil company’s revenue in 2023 accounted for 40% of the country’s GDP (gross domestic product). The Public Investment Fund (PIF) has invested a big chunk of the profits outside Saudi Arabia. Lucid Group (NASDAQ:LCID), one of the PIF stock picks, hasn’t gone too well.

But don’t worry. The professionals operating the sovereign wealth fund have mostly done a reasonable job of delivering returns for Saudi Arabia. 

According to WhaleWisdom.com, as of Dec. 31, 2023, it had $35.2 billion invested in U.S.-listed stocks, with Lucid accounting for 16.42% of these assets. WhaleWisdom says the average price paid by PIF for LCID stock is $19.65, significantly higher than the $2.68 it’s currently trading at. 

PIF is patient capital but Lucid is trying to have an easy-going, carefree attitude about its investments. 

It has 52 stocks invested across the $35 billion, with its top 10 holdings accounting for nearly 64$ of the assets.

Here are my three PIF stock picks to buy now.

Pinterest (PINS)

Pinterest logo. PINS stock.
Source: Ink Drop / shutterstock

Representing the communications sector is Pinterest (NYSE:PINS), the visually focused social media platform that helps users come up with product ideas for projects they’re working on. It makes money from ads sold on its site. 

PINS stock accounts for 0.51% of PIF’s portfolio. It first acquired Pinterest stock in Q3 2021. Its share price has gained more than 17% in 2024 and is up nearly 97% over the past year. 

In its first quarter of 2024, which it announced on April 30, the report included a 23% increase in revenue to $740 million, a 12% increase in its global monthly active users (MAUs) to 518 million, and an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $113 million, up from $27 million a year earlier. 

“Q1 was a milestone quarter for Pinterest as we reached new highs: surpassing half a billion monthly active users and reporting 23% revenue growth – our fastest user and revenue growth since 2021,” said Bill Ready, CEO of Pinterest. 

As social media stocks go, Pinterest might not be the most profitable, but it does have the most potential upside.

Ermenegildo Zegna (ZGN)

Hand pointing up and to the right with blue arrow, symbolizes growth stocks. hypergrowth stocks
Source: shutterstock.com/Lemonsoup14

I had forgotten entirely that Ermenegildo Zegna (NYSE:ZGN) went public in December 2021 by merging with Investindustrial Acquisition Corp., a SPAC (special purpose acquisition company). 

The 113-year-old Italian suit-maker went public to raise capital that it could use to reenergize the company by moving more casual. 

Zegna is a tiny piece of the PIF pie. It accounts for just 0.07% of its 13F assets. PIF first bought shares in Q3 2023. The Zegna family controls 59.8% of the common shares and 96.6% of the special voting Class A shares. Together, they give the family nearly 74% of the total votes and complete control.

In Q1 2024, Zegna reported 11% revenue growth year-over-year, excluding currency, with a significant contribution from Tom Ford Fashion, which it acquired in April 2023 for $150 million for the 85% it didn’t already own. 

In 2023, it had an operating profit of 208.1 million euros ($223.6 million) on revenue of 1.90 billion euros ($2.04 billion).   

It trades at 24.4x its 2023 earnings and 1.6x sales, which is a very reasonable price to pay to own a piece of the iconic company.  

Costco (COST)

A Costco Wholesale (COST) warehouse in Auburn Hills, Michigan.
Source: ilzesgimene / Shutterstock.com

I bet the Costco (NASDAQ:COST) board meetings will be less fun or interesting now that Charlie Munger, who passed away last November, won’t be there.

Ben Gilbert and David Rosenthal, the duo behind the successful Acquired podcast, interviewed Munger at his home last October, just weeks before he passed. The podcast had lots of interesting nuggets about Costco from the 99-year-old.

“They really did sell cheaper than anybody else in America and they did it in big, efficient stores. The parking spaces were 10 feet wide instead of eight or nine feet or whatever they normally are,” Munger told Acquired’s listeners.  

He discussed the company’s philosophy about buying real estate using Walmart (NYSE:WMT) as an example. While Walmart spent little on its real estate, Costco went for better locations that cost more to attract its wealthier clientele. 

“Costco just specializes in the good locations, where the rich people lived. And Walmart just let them do it year after year. It was just a terrible mistake,” Munger said. 

Costco isn’t one of PIF’s top 10 holdings, but it accounts for 1.94% of the portfolio, putting it in the 14th spot. 

Of the three stocks, Costco would have to be my favorite. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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