This article discusses the top 5 stock picks of Ronald Mass’ Almitas Capital at the end of June 2022. If you want to read about the fund’s history, the assets it invests in, its investment style and recent changes it has made to its portfolio, please go to 10 Best Stocks to Buy According to Ron Mass’ Almitas Capital.
5. PhenixFIN Corporation (NASDAQ:PFX)
Almitas Capital’s Stake Value: $3,637,000
Percentage of Almitas Capital’s 13F Portfolio: 1.88%
Number of Hedge Fund Holders: 1
Almitas Capital was the only hedge fund among funds tracked by Insider Monkey that held a stake in PhenixFIN Corporation (NASDAQ:PFX) at the end of the second quarter. Founded in 2010, PhenixFIN Corporation (NASDAQ:PFX) is a New York-based business development company. It invests primarily in privately negotiated debt and equity securities of small and middle market companies. However, over the past few years, it has not been making many new investments, and its stock price reflects that.
The company, formerly known as Medley Capital Corp., went for a 1 for 20 reverse stock split in 2020 after its stock went below the minimum price required to continue being listed on the NYSE. Shortly after that, it announced that it would change its name to PhenixFIN Corporation (NASDAQ:PFX) and transfer the listing of its common shares to the Nasdaq Global Market from the New York Stock Exchange. At the end of June 2022, the net asset value of PhenixFIN Corporation (NASDAQ:PFX) stood at $129.1 million, implying a close to 40% discount from its market capitalization of around $80 million.
4. MFA Financial, Inc. (NYSE:MFA)
Almitas Capital’s Stake Value: $9,673,000
Percentage of Almitas Capital’s 13F Portfolio: 5%
Number of Hedge Fund Holders: 15
MFA Financial, Inc. (NYSE:MFA) was the only stock among Almitas Capital’s top 10 stocks in which the fund had initiated a stake during the second quarter. Like several other top stock picks of Almitas Capital, MFA Financial, Inc. (NYSE:MFA) is also a mortgage REIT and boasts an unusually high dividend yield. The company made it to Insider Monkey’s list of 5 Penny Stocks that Pay Dividends in January. However, it went for a 1 for 4 reverse stock split in April this year which took it out from the penny stock zone. Nonetheless, it still made it to our 5 Best Dividend Stocks on Robinhood list published in June.
A large part of MFA Financial, Inc.’s (NYSE:MFA) unusually high dividend yield of 15.75%, which it currently sports, can be attributed to its stock price movement over the past many quarters. MFA Financial, Inc.’s (NYSE:MFA) stock has lost 42% and around 70% of its value over the past one and five years, respectively. This stock price decline, nonetheless, has made the stock considerably cheap from a valuation perspective. It currently trades at a trailing non-GAAP price to earning multiple of 4.9 and a price to book multiple of only 0.52.
3. PennantPark Investment Corporation (NYSE:PNNT)
Almitas Capital’s Stake Value: $15,129,000
Percentage of Almitas Capital’s 13F Portfolio: 7.82%
Number of Hedge Fund Holders: 11
Apart from Almitas Capital, other hedge funds tracked by Insider Monkey that increased their holdings in PennantPark Investment Corporation (NYSE:PNNT) during the second quarter included James Morrow’s Callodine Capital Management and billionaire Israel Englander’s Millennium Management. While Callodine Capital Management upped its stake slightly by 2% to 1.81 million shares, Millennium Management boosted its holdings by 19% to 381,804 shares.
PennantPark Investment Corporation (NYSE:PNNT) is a business development company that functions like a private equity fund investing in direct and mezzanine investments in middle market companies. Earlier in the year, analysts at Raymond James reiterated their ‘Outperform’ rating on PennantPark Investment Corporation’s (NYSE:PNNT) stock while upping their price target to $9 from $8, which represents a potential upside of close to 40% from the stock’s last closing price.
2. Great Ajax Corp. (NYSE:AJX)
Great Ajax Corp. 7.25 CV SR NT 24 (NYSE:AJXA)
Almitas Capital’s Stake Value in AJX: $6,246,000
Percentage of Almitas Capital’s 13F Portfolio: 3.22%
Almitas Capital’s Stake Value in AJXA: $16,907,000
Percentage of Almitas Capital’s 13F Portfolio: 8.73%
Number of Hedge Fund Holders: 9
Almitas Capital held an equity stake in Great Ajax Corp. (NYSE:AJX), consisting of 651,328 shares and the company’s 7.25% convertible senior notes due on 4/30/2024 worth $16.9 million at the end of Q2. Considering the fund’s total exposure to the company, Great Ajax Corp. (NYSE:AJX) ended up becoming Almitas Capital’s second top stock at the end of June. Because of its high dividend yield of around 12% and low stock price, Great Ajax Corp. (NYSE:AJX) was another stock from Almitas Capital’s portfolio that featured in Insider Monkey’s recently published lists of 10 Dividend Stocks with Over 10% Yield and 5 Best Dividend Stocks Under $10.
On August 26, the company announced that its unit Great Ajax Operating Partnership had closed a private offering in which the latter raised $110 million by issuing 8.875% senior unsecured notes due in September 2027. These notes would be guaranteed by Great Ajax Corp. (NYSE:AJX) and two of its subsidiaries. All three analysts from Wall Street who cover the stock currently have a ‘Buy’ rating on it with a consensus price target of $14.67, representing a potential upside of 63% from the stock’s last closing price.
1. AGNC Investment Corp. (NASDAQ:AGNC)
Almitas Capital’s Stake Value: $22,555,000
Percentage of Almitas Capital’s 13F Portfolio: 11.65%
Number of Hedge Fund Holders: 18
Almitas Capital more than doubled its stake in AGNC Investment Corp. (NASDAQ:AGNC) by 116% to 2 million shares, propelling the company to the top spot in the fund’s 13F portfolio at the end of June. Having gone through Almitas Capital’s other top picks, it wouldn’t surprise the readers that even AGNC Investment Corp. (NASDAQ:AGNC) is a REIT that flaunts a very high dividend yield. However, the stock’s high dividend yield hasn’t helped it claim the same popularity among smart money investors as it did two years ago. Amongst the hedge funds covered by Insider Monkey, the number of funds that disclosed a stake in AGNC Investment Corp. (NASDAQ:AGNC) fell by half to 19 at the end of June this year from 38 at the end of June 2020.
On August 7, through a press release, the company announced that for gross proceeds of $150 million, it had priced a public offering of 6,000,000 depositary shares with a liquidation preference of $25.00 per share. Each of the depositary shares issued by AGNC Investment Corp. (NASDAQ:AGNC) represents a 1/1,000th interest in a share of the company’s 7.75% Series G Fixed-Rate Reset Cumulative Redeemable Preferred Stock. In June, analysts at Keefe, Bruyette & Woods upgraded the stock to ‘Outperform’ from ‘Market Perform’ and also upped their price target to $13.25 from $12.25.
You can also look at 5 Best Stocks to Buy According to ‘Warren Buffett of Brazil’ and BlueDrive Global Investors’ Latest Portfolio: Top 7 Stock Picks
