In this article we will list Hosking Partners’ top 15 stocks picks.
Hosking Partners was established in 2013 by Jeremy Hosking as an independent partnership that offers a single global equity strategy. The firm appeals to investors seeking long-term returns and innovative thinking employing a capital cycle approach to investing. It has a diverse set of stocks in its portfolio that belong to a variety of industries consisting of AI, shipping, and financial services, among others. Jeremy Hosking earned an MA from the University of Cambridge, after which he served Marathon Asset Management 26 years as a founding partner and lead portfolio manager. There he contributed to developing the capital cycle approach to investment.
In its recent blog about shipping, Hosking Partners believes that understanding the cycles in different classes of shipping and global trends is essential for successful investment in the industry. Currently, Shipping (covering the container, dry bulk, product tanker and LNG sub-sectors) represents 1.25% of the portfolio. Global trade has declined as a percentage of GDP since 2010 caused by deglobalization, accelerated by the COVID-19 pandemic and geopolitical instability from the Russia-Ukraine war. This trend, coupled with the energy transition, is expected to constrain future supply and increase commodity price volatility, benefiting shipping by enabling cross-border trade.
Furthermore, shipping is a significant emitter of CO2, accounting for about 3% of global emissions. Environmental regulations aim to reduce emissions, but uncertainty over future fuel technology deters investment in new ships, leading to a tighter supply. The industry’s efficiency, measured by emissions per tonne-km, remains high compared to other transport modes. The shipping industry is at a pivotal juncture, with significant transformations driven by AI, the energy transition, and ESG considerations.
Another industry that Hosking Partners talks about is copper mining. Copper is often seen as a barometer for economic health and is crucial for the energy transition, including electric vehicles, power grids, and wind turbines. Wall Street banks are optimistic about copper prices, forecasting significant gains. Citi analysts suggest that prices could surge to over $15,000 per ton in the next 2-3 years if a strong economic recovery occurs, while their base case projects a rise to $12,000 per ton with modest demand growth through 2025 and 2026. Bank of America has also increased its 2024 copper price target to $9,321 from $8,625, citing tight mine supply and high demand driven by the energy transition as key factors.
However, some experts are cautious. Colin Hamilton of BMO Capital Markets argues that commodity markets tend to self-correct, and if supply issues persist, demand may adjust, potentially leading to lower prices. Hamilton suggests that while high price targets might be temporarily achievable, adjustments in demand could follow. The market may see a modest surplus due to increased mined supply, which is projected to grow by 4-4.5%. This is largely driven by new greenfield and brownfield projects. Despite the near-term surplus, long-term scarcity is anticipated as regulatory and political challenges in South America could impede the development of new mines.
A large shipping container vessel with cranes in motion on the open sea.
Our Methodology
Stocks mentioned in this article were picked from the investment portfolio of Hosking Partners at the end of the second quarter of 2024. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2024 was used to quantify the popularity of each stock in the hedge fund universe.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
15. International Seaways, Inc. (NYSE:INSW)
Hosking Partners’ Stake Value: $52,096,664
Percentage of Hosking Partners’ 13F Portfolio: 1.92%
Number of Hedge Fund Holders: 34
International Seaways, Inc. (NYSE:INSW) provides global shipping services through voyage charters, commercial pools, and time charters. The company, established in 2016, provides energy transportation services for crude oil and petroleum products across international markets. International Seaways owns and operates a fleet of 82 vessels, including crude, product, and chemical tankers in addition to Very Large Crude Carriers (VLCCs), Suezmaxes, Aframaxes, and Medium Range (MR) tankers.
It became the first NYSE-listed shipowner to include a sustainability-linked pricing mechanism in a credit facility. Recently, Seaways has benefited by geopolitical events (Russian-Ukraine conflict) that have caused disruptions to both crude and product tanker trade, as these events have not just defined tanker earnings but merely boosted a fundamentally strong market. Due to strong tanker market the order book has grown to about 11% of the total fleet but the current order book only represents about 11% of the total fleet, which is insufficient to replace the aging fleet. With the average tanker now over 13 years old, fleet efficiency and utilization are declining. However, International Seaways has more than $500 million in available credit to fuel our growth. Its net debt is only 14% of the current fleet’s value, and its wholly-owned 34 tankers are entirely debt-free.
During Q2 2024, the company acquired six modern MR vessels for $232 million, funding 85% of the purchase with cash and the rest with common shares. It also sold three older vessels, generating $73 million in net proceeds, and entered into three new time charter agreements, increasing future contracted revenues by $86 million. Additionally, the company ordered six dual-fuel LR1 vessels for $359 million, with deliveries expected between late 2025 and mid-2026. These vessels will be added to the Panamax International Pool, which has consistently outperformed the market.
14. JPMorgan Chase & Co (NYSE:JPM)
Hosking Partners’ Stake Value: $52,396,262
Percentage of Hosking Partners’ 13F Portfolio: 1.93%
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co (NYSE:JPM) is an American multinational financial services corporation serving millions of consumers, small businesses and corporate, institutional, and government clients in the US and around the world. It is one of the largest banks in the US by customers. On August 9, CNBC reported that JPMorgan Chase & Co. (NYSE:JPM) has launched a generative AI assistant, named LLM Suite, that is already supporting over 60,000 employees in various tasks such as drafting emails and compiling reports. This initiative marks the first step in a larger plan to incorporate AI technology throughout the bank’s operations to enhance productivity while ensuring data security. The LLM Suite has been designed to be a portal to utilize external large language models. It has been launched with ChatGPT maker OpenAI’s LLM. JPMorgan Chase & Co. (NYSE:JPM) is leveraging AI for diverse applications, from marketing content creation to fraud prevention in its global payments sector.
Currently, it operates globally in sectors including Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. Recently, Piper Sandler maintained its Overweight rating and $220 price target for the bank following an optimistic revenue update for Q2 2024. Co-CEO Troy Rohrbaugh shared revised revenue guidance for investment banking and markets segments at an industry conference, leading Piper Sandler to raise its EPS estimates for 2024 from $16.76 to $16.95 and for Q2 2024 from $4.54 to $4.63. Analysts have a positive outlook on JPMorgan’s financial performance, expecting a stable ROTCE target of 17% and projected Net Interest Income of around $91 billion for 2024.
Jim Cramer is optimistic about JPMorgan Chase & Co (NYSE:JPM) stating in a recent program that he believes the stock could reach a $1 trillion market cap. He praised JPMorgan as one of the “best banks in the world” and noted that it sells at only 12 times earnings. Cramer emphasized that this multiple is significantly lower than the average stock in the S&P 500, indicating that the stock is undervalued.
13. CBRE Group, Inc. (NYSE:CBRE)
Hosking Partners’ Stake Value: $54,262,465
Percentage of Hosking Partners’ 13F Portfolio: 2%
Number of Hedge Fund Holders: 54
CBRE Group, Inc. (NYSE:CBRE), headquartered in Dallas, is the world’s largest commercial real estate services and investment firm by revenue in 2023. As a Fortune 500 and S&P 500 company, CBRE employs over 130,000 people and operates in more than 100 countries, offering a comprehensive range of services, including property management, investment management, leasing, and development.
In the recent quarter, CBRE’s free cash flow improved significantly to $220 million, with a conversion rate of nearly 90%. The company has raised its annual free cash flow outlook to just over $1 billion and expects to end the year with around 1 turn of net leverage, despite spending $1.3 billion on M&A and co-investments in 2024.
Advisory net revenue increased by 9%, with growth across all business lines except property sales. Leasing revenue exceeded expectations, especially in the U.S., where office leasing saw a nearly 30% increase, driven by strong performance in New York. Retail also showed strength, while industrial activity declined. Global property sales revenue stabilized, with only a slight decline. Sales conversion was strong, with the pipeline growing over 6%, driven by technology and energy sectors. Additionally, Product Management and Facilities Management saw significant revenue growth, supported by strategic acquisitions, including a major move to expand data center management. The company expects continued growth, with substantial profits anticipated from development asset sales and ongoing M&A activities.