In this article, we discuss 5 stocks to buy according to James Morrow’s Callodine Capital Management. If you want to read our detailed analysis of Morrow’s history, investment philosophy, and hedge fund performance, go directly to 10 Stocks to Buy According to James Morrow’s Callodine Capital Management.
5. Equitable Holdings, Inc. (NYSE:EQH)
Callodine Capital Management’s Stake Value: $12,746,000
Percentage of Callodine Capital Management’s 13F Portfolio: 3.77%
Number of Hedge Fund Holders: 38
Equitable Holdings, Inc. (NYSE:EQH) is a holding company providing financial services. Its two significant franchises are Equitable and AllianceBernstein. Callodine Capital Management first initiated a position in Equitable Holdings, Inc. (NYSE:EQH) in Q1 2021 by purchasing 215,000 shares. In the second quarter of 2022, the hedge fund increased its stake in the firm by 7% and held 488,930 shares.
On August 18, Barclays analyst Tracy Benguigui maintained an ‘Overweight’ rating on Equitable Holdings, Inc. (NYSE:EQH) while increasing her price target from $32 to $36. In addition, 38 hedge funds were bullish on Equitable Holdings, Inc. (NYSE:EQH) at the conclusion of the June quarter, down from 44 funds in the prior quarter.
4. Ares Management Corporation (NYSE:ARES)
Callodine Capital Management’s Stake Value: $13,362,000
Percentage of Callodine Capital Management’s 13F Portfolio: 3.95%
Number of Hedge Fund Holders: 30
Ares Management Corporation (NYSE:ARES), a global alternative investment manager, provides customers with complementary primary and secondary investment alternatives in the asset classes of infrastructure, private equity, real estate, and credit. Mick Hellman’s HMI Capital is the leading shareholder of Ares Management Corporation (NYSE:ARES), with 3.80 million shares worth over $216.01 million.
Benjamin Budish, an analyst at Barclays, initiated coverage of Ares Management Corporation (NYSE:ARES) on August 31, rating the stock as ‘Overweight’ with a $92 price target. The analyst began with a positive outlook on the brokers, asset managers, and exchange area.
Callodine Capital Management has owned a stake in Ares Management Corporation (NYSE:ARES) since Q2 2019. The hedge fund increased its stake in Ares Management Corporation (NYSE:ARES) by 91% in the second quarter of 2022. As a result, the fund held a total of 235,000 shares worth $13.36 million as of June 30, making Ares Management Corporation (NYSE:ARES) the fourth-largest stock in its 13F portfolio.
Hedge funds had a bullish outlook on Ares Management Corporation (NYSE:ARES) in Q2, as the stock was in 30 hedge fund portfolios at the end of the second quarter, up by eight positions from the prior quarter.
3. Merck & Co., Inc. (NYSE:MRK)
Callodine Capital Management’s Stake Value: $14,131,000
Percentage of Callodine Capital Management’s 13F Portfolio: 4.18%
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) provides health solutions through its prescription medications, vaccines, biologic therapies, animal health, and consumer care products. The company has joint ventures with AstraZeneca PLC (NASDAQ:AZN), Bayer AG, Eisai Co., Ltd., Ridgeback Biotherapeutics, and Gilead Sciences, Inc. (NASDAQ:GILD) to develop and sell long-acting HIV treatments. On October 1, China’s National Medical Products Administration (NMPA) approved Merck & Co., Inc. (NYSE:MRK)’s Lynparza oncology drug to treat patients with an advanced form of ovarian cancer.
On September 14, analyst Luisa Hector of Berenberg raised Merck & Co., Inc. (NYSE:MRK) from ‘Hold’ to ‘Buy’ with a $100 price objective, up from $95. In addition, fund managers reduced their Merck & Co., Inc. (NYSE:MRK) holdings in the second quarter. According to Insider Monkey’s Q2 data, 79 hedge funds had long bets on Merck & Co., Inc. (NYSE:MRK) as of June 30, compared to 84 funds in the preceding quarter.
Callodine Capital Management held 155,000 shares in Merck & Co., Inc. (NYSE:MRK) worth over $14.13 million at the end of Q2, representing 4.18% of its investment portfolio. The hedge fund boosted its stake in the firm by an impressive 934%.
Chartwell Investment Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q2 2022 investor letter. Here’s what the fund said:
“In the Dividend Equity accounts, the three best performers in Q2 includes Merck (NYSE:MRK, 3.6%), up 12.0%. Merck, like other pharma companies, is in a defensive business, but the stock also did well as peak-sales estimates for their flagship drug, Keytruda, have gone up (JPMorgan estimates $32 billion in sales by 2026).”
2. Radian Group Inc. (NYSE:RDN)
Callodine Capital Management’s Stake Value: $17,685,000
Percentage of Callodine Capital Management’s 13F Portfolio: 5.24%
Number of Hedge Fund Holders: 31
Radian Group Inc. (NYSE:RDN) supplies mortgage insurance and other services to the realtor and mortgage finance industries. On August 18, BofA analyst Mihir Bhatia upgraded Radian Group to ‘Neutral’ from ‘Underperform’ with a price objective of $24, up from $22.50, following a notable Q2 capital return.
Philadelphia-based Radian Group Inc. (NYSE:RDN) is one of the companies in which Callodine Capital Management increased its stake during the second quarter. The weightage of James Morrow’s hedge fund in Radian Group Inc. (NYSE:RDN) increased from 4.49% at the end of the first quarter of 2022 to 5.24% at the end of June. The hedge fund increased its stake in the firm by 43%, closing the second quarter with 900,000 shares of Radian Group Inc. (NYSE:RDN).
Radian Group Inc. (NYSE:RDN) was in 31 hedge fund portfolios at the end of the second quarter of 2022. There were 37 hedge funds in our database with Radian Group Inc. (NYSE:RDN) holdings at the end of the prior quarter. Radian Group Inc. (NYSE:RDN)’s largest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital, with 2.98 million shares worth $58.54 million.
1. Barings BDC, Inc. (NYSE:BBDC)
Callodine Capital Management’s Stake Value: $18,505,000
Percentage of Callodine Capital Management’s 13F Portfolio: 5.48%
Number of Hedge Fund Holders: 11
Barings BDC, Inc. (NYSE:BBDC) is a specialist financing firm in the United States. Its main business is providing specialized finance to lower middle-market companies. It makes investments in businesses with an EBITDA between $10 million and $75 million that private equity sponsors often support.
Robert Dodd, a Raymond James analyst, downgraded Barings BDC, Inc. (NYSE:BBDC) on August 11 from ‘Strong Buy’ to ‘Outperform’ with an $11.50 price objective, down from $12.50. Dodd stated in a research note that the low NII rate sensitivity no longer justified the previous rating, despite his belief that the company’s unusual income streams offered it a long-term advantage over more typical BDCs.
11 out of the 895 hedge funds held stakes in Barings BDC, Inc. (NYSE:BBDC) in the second quarter of 2022, worth $43.89 million, compared to the same number of funds in the preceding quarter, holding stakes in Barings BDC, Inc. (NYSE:BBDC) totaling $47.55 million.
The most significant stake in Barings BDC, Inc. (NYSE:BBDC) is held by James Morrow’s Callodine Capital Management. Callodine Capital Management boosted its Barings BDC, Inc. (NYSE:BBDC) position by 83% or 900,189 shares during Q2. The hedge fund held 1.99 million shares worth $18.51 million as of June 30. Representing 5.48% of the fund’s 13F portfolio, Barings BDC, Inc. (NYSE:BBDC) was Callodine Capital Management’s top stock pick.
You can also take a peek at 10 Stocks to Buy According to Richard Scott Greeder’s Broad Bay Capital and 10 Stocks to Buy According to Bulldog Investors.
