In this article, we discuss 5 stocks to buy now according to Jeffrey Gates’ Gates Capital. If you want to read our detailed analysis of Gates’ history, investment philosophy, and hedge fund performance, go directly to 10 Stocks to Buy Now According to Jeffrey Gates’ Gates Capital.
5. S&P Global Inc. (NYSE:SPGI)
Gates Capital Stake Value: $186,694,000
Percentage of Gates Capital’s 13F Portfolio: 5.16%
Number of Hedge Fund Holders: 79
S&P Global Inc. (NYSE:SPGI) provides the capital and commodities markets worldwide with transparent and unbiased ratings, benchmarks, analytics, and data. On March 2, JPMorgan analyst Andrew Steinerman initiated coverage on S&P Global Inc. (NYSE:SPGI) with an Overweight rating and a price objective of $480.
S&P Global Inc. (NYSE:SPGI) and IHS Markit Ltd. (NYSE:INFO) announced on February 25 that they intended to finalize their merger on February 28 after the Competition and Markets Authority of the United Kingdom and the European Commission awarded the deal’s final regulatory clearances. After receiving antitrust permission in the United States, the two markets and industrial information businesses agreed to a $44 billion all-stock merger in November 2020.
A total of 79 hedge funds reported owning stakes worth $7.83 billion in S&P Global Inc. (NYSE:SPGI) during Q4 2021, compared to 78 funds in the preceding quarter, holding stakes in the company amounting to $7.04 billion.
Baron Funds, in its first-quarter 2021 investor letter, mentioned S&P Global Inc. (NYSE:SPGI). Here is what the fund said:
“S&P Global Inc. provides credit ratings, indexes, data, and analytics to the financial and commodities markets. Shares increased on strong fourth quarter results and 2021 guidance that exceeded Street expectations. Although bond issuance is expected to moderate after two years of exceptional growth, management still expects revenue to grow mid-single-digits this year. Also, shareholders overwhelmingly voted to approve the merger with IHS Markit. We continue to own the stock as we see a long runway for growth and significant competitive advantages for the company.”
4. Otis Worldwide Corporation (NYSE:OTIS)
Gates Capital Stake Value: $212,931,000
Percentage of Gates Capital’s 13F Portfolio: 5.88%
Number of Hedge Fund Holders: 38
Otis Worldwide Corporation (NYSE:OTIS) is a company that makes, installs, and provides escalators and escalator services. On February 3, Otis Worldwide Corporation (NYSE:OTIS) declared a $0.24 per share quarterly dividend, in line with the previous.
Gates Capital first bought a stake in Otis Worldwide Corporation (NYSE:OTIS) in the first quarter of 2020. In the fourth quarter of 2021, the investment fund strengthened its position in Otis Worldwide Corporation (NYSE:OTIS) by buying 4,067 additional shares. This makes their stake in Otis Worldwide Corporation (NYSE:OTIS) total 2.46 million shares worth $212.93 million.
Vinit Bodas’ Deccan Value Advisors is the most prominent Otis Worldwide Corporation (NYSE:OTIS) stakeholder as of the fourth quarter, with 4.40 million shares worth $383.51 million. Overall, the Q4 database of Insider Monkey suggests that 38 hedge funds were bullish on Otis Worldwide Corporation (NYSE:OTIS).
In its fourth quarter 2021 investor letter, VGI Partners mentioned Otis Worldwide Corporation (NYSE:OTIS). Here is what the fund said:
“We also exited some core holdings during the year. We sold our OTIS position, which has been a strong performer but decided to exit based on valuation coupled with a deteriorating outlook for construction in China. China represents almost 20% of OTIS revenue but an even higher proportion of future growth; in recent months we have started to see some of these concerns play out with multiple signs pointing to a prolonged slowdown in China property construction.”
3. Element Solutions Inc (NYSE:ESI)
Gates Capital Stake Value: $233,862,000
Percentage of Gates Capital’s 13F Portfolio: 6.46%
Number of Hedge Fund Holders: 31
Element Solutions Inc (NYSE:ESI) develops chemical solutions to improve the performance of items that people use daily. Overall, 31 hedge funds in Insider Monkey’s database were bullish on Element Solutions Inc (NYSE:ESI) in Q4, up from 28 in the previous quarter.
On January 24, CL King analyst David Silver initiated coverage of Element Solutions Inc (NYSE:ESI), giving the stock a Buy rating and setting a price target of $28. On February 15, Element Solutions Inc (NYSE:ESI) declared a quarterly dividend of $0.08 per share, in line with the previous.
As of the fourth quarter of 2021, Gates Capital Management is the leading shareholder of Element Solutions Inc (NYSE:ESI), holding over 9.63 million shares, valued at $233.86 million. The hedge fund has reduced its stake in the firm by 5% in the fourth quarter.
2. Terminix Global Holdings, Inc. (NYSE:TMX)
Gates Capital Stake Value: $234,384,000
Percentage of Gates Capital’s 13F Portfolio: 6.48%
Number of Hedge Fund Holders: 32
Terminix Global Holdings, Inc. (NYSE:TMX) is a residential and commercial services provider. It provides termite and pest control services for both residential and commercial properties, as well as national pest control services, restoration, commercial and residential cleaning, furniture repair, and house inspections. On December 14, William Blair analyst Tim Mulrooney initiated coverage of Terminix Global Holdings, Inc. (NYSE:TMX), rating the stock as Outperform and giving a price objective of $55.
Terminix Global Holdings, Inc. (NYSE:TMX), on March 1, posted its Q4 results. The company announced earnings per share of $0.20, below estimates by $0.02. Revenue over the period totaled $484 million, up 5.2% year-over-year. Higher pricing realization and improved trailing 12-month client retention rates drove revenue growth.
By the end of the fourth quarter, Insider Monkey found Terminix Global Holdings, Inc. (NYSE:TMX) to be a part of 32 hedge fund portfolios. The total stakes that these funds had in the company are worth $696.02 million, up from $380.52 million the prior quarter with 20 positions.
In its fourth quarter 2021 investor letter, Cooper Investors discussed its stance on Terminix Global Holdings, Inc. (NYSE:TMX). Here is what the fund said:
“In mid-December portfolio holding Rentokil Initial announced its intention to acquire US-listed Terminix Global Holdings for around US$6bn. As a reminder Rentokil is the world’s largest Pest Control business, providing annual contract-based prevention and extermination services to residential, commercial and government customers in over 80 countries across the globe.
Terminix is the largest provider of home termite services in the US and a top three player in residential and commercial pest. This deal will roughly double the size of Rentokil’s Pest Control business in North America and take them to number one in terms of market share. While we are typically wary of large acquisitions that attract the label of ‘transformational’ we feel positive about this transaction for several reasons.…” (Click here to see the full text)
1. Vista Outdoor Inc. (NYSE:VSTO)
Gates Capital Stake Value: $246,218,000
Percentage of Gates Capital’s 13F Portfolio: 6.8%
Number of Hedge Fund Holders: 25
Vista Outdoor Inc. (NYSE:VSTO) is a consumer goods company that designs, manufactures, and markets outdoor sports and entertainment equipment. According to the 13F filings for the fourth quarter of 2021, Gates Capital holds over 5.34 million Vista Outdoor Inc. (NYSE:VSTO) shares, amounting to more than $246.22 million and representing 6.8% of the fund’s portfolio value. Gates Capital is the leading stakeholder of Vista Outdoor Inc. (NYSE:VSTO).
On February 4, Roth Capital analyst Matt Koranda trimmed his price target on Vista Outdoor Inc. (NYSE:VSTO) from $61 to $57 and maintained a Buy rating. According to the analyst, a continuing ammunition up-cycle would benefit Vista Outdoor Inc. (NYSE:VSTO) over the following three quarters, albeit he saw evidence that a peak is nearing.
A total of 25 hedge funds reported owning stakes worth $460.48 million in Vista Outdoor Inc. (NYSE:VSTO) during Q4 2021, compared to 23 funds in the preceding quarter, holding stakes in the company amounting to $407.07 million.
ClearBridge Investments, in its second quarter 2021 investor letter, mentioned Vista Outdoor Inc. (NYSE:VSTO). Here is what the fund said:
“Our Strategy outperformed with strong results from consumer discretionary stocks like Vista Outdoor. Vista Outdoor, a manufacturer of a wide range of products serving the outdoor sports and recreation markets, also performed well in the period on continued demand and growing margins.”
You can also take a peek at 10 Stocks to Invest in Now According to Anthony Bozza’s Lakewood Capital and 10 Stocks to Buy Now According to Wayne Yu’s BCK Capital.
