15 Stock Picks of Michael O Keefe’s 12th Street Asset Management

Published on November 24, 2021 at 9:17 am by Ramish Cheema in Hedge Funds, News

In this piece, we will take a look at the top 15 stock picks of Michael O’ Keefe’s 12th Street Asset Management. If you want to skip Mr. O’ Keefe and his firm’s background and take a look at the top 5 stocks in this list, then head on over to 5 Stock Picks of Michael O Keefe’s 12th Street Asset Management.

12th Street Asset Management is an investment firm registered in Delaware and established in 2007. The firm was founded by Michael O’Keefe who is its principal manager and majority owner. It provides services to its clients through two kinds of accounts, which are separately managed accounts and sub-advisory accounts. Additionally, it also offers services through a model portfolio which it provides to advisors or platforms.

Mr. O’Keefe has 30 years of industry experience and 12th Street is not the only financial firm that he has founded during this journey. Prior to beginning his journey at his current firm, the executive helped find Two Rivers Capital, which is another investment firm. Mr. O’Keefe has a bachelor’s in fine arts from the illustrious Rhodes College and a Master’s in Business Administration from the University of Memphis. The executive has also served on the investment committee of Rhodes College.

12th Street Asset Management’s top three investments are in Graphic Packaging Holding Company (NYSE:GPK), LKQ Corporation (NASDAQ:LKQ) and Berry Global Group, Inc. (NYSE:BERY). Cumulatively, the top three firms represent roughly 23% of the hedge fund’s $452 million portfolio.

Photo by Scott Graham on Unsplash

Our Methodology

In order to decipher the inner workings of Mr. O’Keefe’s mind and see how they translate into 12th Street’s investments, we sifted through the latter’s 13F filings to pick out its top 15 investments. These companies were then analyzed by taking a look at their latest quarterly earnings, investor letters, analyst ratings, and other hedge fund holdings generated through Insider Monkey’s survey of 867 funds in Q3 2021. This enabled us to gain a holistic view of the companies’ situation.

Stock Picks of Michael O Keefe’s 12th Street Asset Management

15. Skechers U.S.A., Inc. (NYSE:SKX)

12th Street Asset Management’s Stake Value: $12 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 2.75%

Number of hedge fund holdings: 35

Skechers U.S.A., Inc. (NYSE:SKX) is an American shoe company that develops and sells products for men, women, and children. It is headquartered in Manhattan Beach, California, and was founded in 1992.

Mr. O’Keefe’s 12th Street holds 295,872 Skechers U.S.A., Inc. (NYSE:SKX) shares as of third quarter 2021. These are worth $12 million and represent 2.75% of the firm’s portfolio. Out of the 867 hedge funds surveyed by Insider Monkey at Q3 end, 35 held a stake in the company.

Skechers U.S.A., Inc. (NYSE:SKX) reported $1.5 billion in revenue and $0.66 in GAAP EPS for its third quarter, missing analyst estimates on both counts. In an October 2021 analyst note, B. Riley lowered the company’s price target to $56, outlining that the shoemaker has growth potential and the earnings miss was due to logistical problems.

Skechers U.S.A., Inc. (NYSE:SKX)’s largest shareholder is Richard S. Pzena’s Pzena Investment Management who holds 4.6 million shares worth $196 million.

14. Pinnacle Financial Partners, Inc. (NASDAQ:PNFP)

12th Street Asset Management’s Stake Value: $13 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 2.87%

Number of hedge fund holdings: 20

Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is a holding company for Pinnacle Bank. The bank provides several services such as loans, deposits, savings, and investment products.

At the end of its third quarter, Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) reported $341 million in revenue and $1.75 in GAAP EPS, beating analyst estimates for both. Wells Fargo increased the company’s price target to $145 in an October 2021 analyst note, sharing that the bank stands to grow from the strong performance of its healthcare division.

Mr. O’Keefe’s 12th Street held 138,524 Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) shares by the end of the third quarter of 2021. These are worth $13 million and represent 2.87% of the firm’s portfolio. By Q3 2021 end, 20 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company.

Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is a part of Mr. O’ Keefe’s top stock picks, just like Graphic Packaging Holding Company (NYSE:GPK), LKQ Corporation (NASDAQ:LKQ) and Berry Global Group, Inc. (NYSE:BERY)

13. Pioneer Natural Resources Company (NYSE:PXD)

12th Street Asset Management’s Stake Value: $13.2 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 2.93%

Number of hedge fund holdings: 48

Pioneer Natural Resources Company (NYSE:PXD) is an independent oil and gas exploration and production company in the United States. It was founded in 1997 and is headquartered in Irving, Texas.

Mr. O’Keefe’s investment firm held 79,849 Pioneer Natural Resources Company (NYSE:PXD) shares by the end of the third quarter of 2021 which were worth $13.2 million and represent 2.93% of its portfolio. 48 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company by Q3 2021 end.

Pioneer Natural Resources Company (NYSE:PXD) reported $4.4 billion in revenue and $4.07 in GAAP EPS for its Q3, beating analyst estimates for EPS only. The company’s price target was increased to $263 by Mizuho in an October 2021 analyst note, which highlighted that energy and exploration are expected to grow next year.

12. Hub Group, Inc. (NASDAQ:HUBG)

12th Street Asset Management’s Stake Value: $13.3 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 2.93%

Number of hedge fund holdings: 19

Hub Group, Inc. (NASDAQ:HUBG) is a freight transportation management company that was founded in 1971 and is headquartered in Oak Brook, Illinois.

Hub Group, Inc. (NASDAQ:HUBG) reported $1 billion in revenue and $1.28 in GAAP EPS, beating analyst estimates for EPS only for its Q3.

Mr. O’Keefe’s 12th Street held 193,616 Hub Group, Inc. (NASDAQ:HUBG) shares by the end of the third quarter of 2021. These are worth $13.3 million and represent 2.93% of the firm’s portfolio. 19 of the 867 hedge funds surveyed by Insider Monkey held a stake in the transportation company by the end of the third quarter of this year.

Hub Group, Inc. (NASDAQ:HUBG) largest shareholder is Ken Fisher’s Fisher Asset Management who holds 922,374 shares worth $63 million.

11. Masco Corporation (NYSE:MAS)

12th Street Asset Management’s Stake Value: $15 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 3.31%

Number of hedge fund holdings: 29

Masco Corporation (NYSE:MAS) is a global home improvement and equipment manufacturer and distributor that is headquartered in Livonia, Michigan, United States. It was founded in 1929.

Mr. O’Keefe’s 12th Street held 270,593 Masco Corporation (NYSE:MAS) shares by the end of Q3 2021. These were worth $15 million and represented 3.31% of its portfolio. 29 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company by Q3 2021 end.

Graphic Packaging Holding Company (NYSE:GPK), Berry Global Group, Inc. (NYSE:BERY), and LKQ Corporation (NASDAQ:LKQ) are met by Masco Corporation (NYSE:MAS) in Mr. O’Keefe’s list of hot stocks.

Masco Corporation (NYSE:MAS)’s largest shareholder is David S. Winter and David J. Millstone’s 40 North Management which holds 1.8 million shares worth $102 million.

Masco Corporation (NYSE:MAS) reported $2.2 billion in revenue and $0.89 in GAAP EPS for its Q3, beating analyst estimates for both. Loop Capital raised the company’s price target to $67 in an October 2021 analyst note, which noted that the company remained relatively insulated to supply chain pressures when compared to its peers.

In its first quarter 2021 investor letter, Madison Funds had the following to say about Masco Corporation (NYSE:MAS):

“The Industrial and Material sectors reaction to the vaccine news was sudden. Many investors pivoted quickly to deep cyclicals and reopening plays. We were disappointed in our performance in this sector. Through the year, we had liquidated several of our more pandemic exposed names at depressed prices with the expectations that we would revisit them. Unfortunately, the strong market recovery took us by surprise, and we did not execute well. The fourth quarter continued this streak of underperformance, and while we made some incremental investments recently, we do not want to compound our mistake by chasing stocks that have already high embedded reopening expectations. Our largest underperformer in the space was Masco, which has been a successful investment overall. The stock, as well as other of our holdings, simply could not keep up with the market’s strong fourth quarter.”

10. Crown Holdings, Inc. (NYSE:CCK)

12th Street Asset Management’s Stake Value: $22 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 4.89%

Number of hedge fund holdings: 52

Crown Holdings, Inc. (NYSE:CCK) is a manufacturer of packaging products and equipment for consumer and industrial products in the United States. It is headquartered in Yardley, Pennsylvania, and was founded in 1892, making it one of the oldest companies in the world.

Crown Holdings, Inc. (NYSE:CCK) reported $2.9 billion in revenue and $2.03 in non-GAAP EPS for its Q3, beating analyst estimates on both counts. Mizuho set a $129 price target for the firm in October 2021 in an analyst note that expressed optimism for the company’s contracts and new partnerships.

Mr. O’Keefe’s 12th Street held 219,930 Crown Holdings, Inc. (NYSE:CCK) shares by the end of Q3 2021. These are worth $22 million and represent 4.89% of the firm’s portfolio. 52 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company by the end of the third quarter of this year.

9. Knight-Swift Transportation Holdings Inc. (NYSE:KNX)

12th Street Asset Management’s Stake Value: $22.8 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 5.03%

Number of hedge fund holdings: 21

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is a North and South American truckload transportation services provider that serves customers in the United States, Mexico, and Canada. It was founded in 1989 and is headquartered in Phoenix, Arizona.

Mr. O’Keefe’s 12th Street held 446,274 Knight-Swift Transportation Holdings Inc. (NYSE:KNX) shares by the end of Q3 2021 which were worth $22.8 million and represented 5.03% of its portfolio. 21 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company by Q3 2021 end.

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) reported $1.6 billion in revenue and $1.23 in GAAP EPS for its Q3, as it beat analyst estimates for both. The logistics company’s price target was raised to $65 by KeyBanc in an October 2021 analyst note, which highlighted that Knight-Swift Transportation Holdings Inc. (NYSE:KNX)’s diversified offerings can offset truckload cyclicality.

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) joins Mr. O’Keefe’s top stock picks, alongside LKQ Corporation (NASDAQ:LKQ), Graphic Packaging Holding Company (NYSE:GPK), and Berry Global Group, Inc. (NYSE:BERY)

8. AutoZone, Inc. (NYSE:AZO)

12th Street Asset Management’s Stake Value: $23 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 5.11%

Number of hedge fund holdings: 35

AutoZone, Inc. (NYSE:AZO) is an American retailer and distributor of automotive accessories and replacement parts. It was founded in 1979 and is headquartered in Memphis, Tennessee.

Mr. O’Keefe’s investment firm held 13,650 AutoZone, Inc. (NYSE:AZO) shares by the end of Q3 2021. These were worth $23 million and represent 5.11% of its portfolio. 35 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company by Q3 2021 end.

AutoZone, Inc. (NYSE:AZO)’s largest shareholder is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital which holds 149,673 shares worth $254 million.

AutoZone, Inc. (NYSE:AZO) reported $4.9 billion in revenue and $35.72 in GAAP EPS for its Q3, beating analyst estimates for both. AutoZone, Inc. (NYSE:AZO)’s price target was increased to $1,850 by Oppenheimer in a September 2021 analyst note, which stated that positive earnings had pushed the company’s share price to meet the research firm’s price target.

In a first-quarter 2021 investor letter, Weitz Investment Management mentioned AutoZone, Inc. (NYSE:AZO) and outlined that:

“We initiated a new position in AutoZone, a specialty retailer of auto parts and accessories. AutoZone continues to have success with its traditional do-it-yourself customers, and it is still in the early stages of rolling out its commercial account business that reaches do-it-for-me customers. We believe both efforts have significant growth potential for years to come and are led by a management team that has demonstrated a consistent ability to grow the per-share value of their business. Investors can learn more about our investment thesis in Jon Baker’s upcoming Analyst Corner feature.”

7. Maximus, Inc. (NYSE:MMS)

12th Street Asset Management’s Stake Value: $26.8 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 5.92%

Number of hedge fund holdings: 14

Maximus, Inc. (NYSE:MMS) provides health and human services to governments. It was founded in 1975 and is headquartered in Reston, Virginia.

Maximus, Inc. (NYSE:MMS) reported $1 billion in revenue and $1.08 in non-GAAP EPS, beating analyst estimates only for revenue for its fourth fiscal quarter. Canaccord kept its $89 price target for the company in a September 2021 analyst note, outlining that census and COVID revenues will reduce.

Mr. O’Keefe’s 12th Street held 322,566 Maximus, Inc. (NYSE:MMS) shares by the end of the third quarter of 2021. These are worth $26.8 million and represent 5.92% of the firm’s portfolio. 14 of the 867 hedge funds surveyed by Insider Monkey held a stake in the services company by the end of the third quarter of this year.

6. FedEx Corporation (NYSE:FDX)

12th Street Asset Management’s Stake Value: $27.6 million

Percentage of 12th Street Asset Management’s 13F Portfolio: 6.09%

Number of hedge fund holdings: 49

FedEx Corporation (NYSE:FDX) is a transportation and electronic commerce provider in the United States that is headquartered in Memphis, Tennessee, and was founded in 1971.

Mr. O’Keefe’s 12th Street held 125,885 FedEx Corporation (NYSE:FDX) shares by the end of Q3 2021 worth $27.6 million and constituted 6.09% of its portfolio. 49 of the 867 hedge funds surveyed by Insider Monkey held a stake in the company by Q3 2021 end.

FedEx Corporation (NYSE:FDX)’s largest shareholder is Michael Larson through the Bill & Melinda Gates Foundation Trust which holds 1.4 million shares worth $327 million.

FedEx Corporation (NYSE:FDX) reported $22 billion in revenue and $4.09 in GAAP EPS for its first fiscal quarter, beating analyst estimates for revenue. Cowen lowered the company’s price target to $283 in an October 2021 analyst note, which highlighted that despite revenue growth and a greater consumer shift to e-commerce, rising costs spell uncertainty for the company.

In its third quarter 2021 investor letter, Longleaf Partners Fund had the following to say about FedEx Corporation (NYSE:FDX):

“FedEx reported a slightly disappointing quarter, as margins decreased due to cost inflation. We wonder if this could be a preview of what happens with other S&P 500 companies in the months to come (FedEx reports late in the quarter). What those companies don’t have is the incredible pricing power of FedEx to eventually pass through those costs, and we also still see a path to improved FCF conversion both in absolute terms and vs. core competitor UPS, leading to various ways that the multiple gap between these two companies can close.

FedEx (-25%, -1.32%), the B2B and e-commerce global logistics company, was our largest detractor for the quarter. Revenues continued to grow very well across all three segments, with Freight standing out at +23% year-over-year. Yet Ground margins declined by 1.6 percentage points due to the labor shortage and associated wage cost inflation, as FedEx is hiring over 80,000 employees this year. The company therefore cut its full-year earnings guidance by 5% and now trades around 11x earnings per share (EPS). UPS with less growth and much more dangerous Amazon dependence trades at 17x, implying a FedEx value similar to our appraisal. Despite the stock’s significant appreciation over the last year, we believe it remains very cheap. We also expect to see capital allocation contribute going forward as the gap between EPS and FCF closes while the company has an outstanding repurchase authorization.”

Like Graphic Packaging Holding Company (NYSE:GPK), LKQ Corporation (NASDAQ:LKQ) and Berry Global Group, Inc. (NYSE:BERY), FedEx Corporation (NYSE:FDX) makes it on the list of Mr. O’Keefe’s list of hot stocks.

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