In this article, we discuss the 5 value stocks to buy according to billionaire Paul Tudor Jones. If you want to read our detailed analysis of these stocks, go directly to the 10 Value Stocks to Buy According to Billionaire Paul Tudor Jones.
5. The Timken Company (NYSE:TKR)
Stake Value of Tudor Investment Corp : $4.6 million
Number of Hedge Fund Holders: 20
PE Ratio: 13.74
A cursory glance at the fundamentals of The Timken Company (NYSE:TKR) does not make for a very good reading. However, there is more to the firm that meets the eye in the short-term. It has been forced to raise product prices over the past few months due to supply chain and inflation pressures. The guidance for the rest of 2021 was also withdrawn earlier due to increased volatility. Although these headwinds have put pressure on earnings, the new acquisitions of Timken, including that of Intelligent Machine Solutions, promise long-term growth. Value investors recognize the real value of the company through these tailwinds.
One of these value investors is New York-based investment firm Millennium Management. It is a leading shareholder in The Timken Company (NYSE:TKR) with 577,302 shares worth more than $37 million. Alongside Millennium, 19 other hedge funds in the database of Insider Monkey held stakes worth $153 million in The Timken Company (NYSE:TKR) at the end of third quarter of 2021.
The firm is also financially healthy considering the debt-to-equity and cash flows that are more than enough to cover short-term liabilities. The dividend payout has also been steadily increasing over the past five years and there is lots of room to grow in this regard. The company is expected to grow earnings at a rate of more than 10% in the coming years.
4. Huntington Ingalls Industries, Inc. (NYSE:HII)
Stake Value of Tudor Investment Corp : $4.5 million
Number of Hedge Fund Holders: 15
PE Ratio: 10.78
Analysts expect Huntington Ingalls Industries, Inc. (NYSE:HII) to exceed market expectations on sales, margin, and free cash flows over the coming months. Wolfe Research recently initiated coverage of the stock with an Outperform rating and a price target of $225. Hedge funds seem to agree with analysts in this regard. 15 funds out of 867 tracked by Insider Monkey are bullish on the firm, as of the end of the third quarter of 2021. These funds held stakes in the company that had a combined worth of around $163 million.
Among these funds, AQR Capital Management is a leading shareholder in Huntington Ingalls Industries, Inc. (NYSE:HII) with 460,534 shares worth more than $88 million. The true value of the stock lies in the stable business of the firm as a foremost manufacturer of Navy ships. The company was recently awarded a $113 million contract for Naval Sea Systems. The stock also offers dividend growth at a relatively cheap price. On November 3, the firm raised the quarterly dividend by 4% to $1.18 per share. Huntington has consistently increased dividend payouts for the last eight years.
Huntington Ingalls Industries, Inc. (NYSE:HII) stock also stands to benefit from the rise in US-China tensions, especially in the South China Sea. The US is working with allies in this regard to bolster Navy defenses in the area. Most new product orders are likely to fall to Huntington. In 2022, analysts expect the firm to generate $550 million in free cash flows as well. With room for share buybacks and dividend hikes, the stock looks likely to outperform market expectations in the coming months.
3. Quest Diagnostics Incorporated (NYSE:DGX)
Stake Value of Tudor Investment Corp : $4.3 million
Number of Hedge Fund Holders: 36
PE Ratio: 10.29
Quest Diagnostics Incorporated (NYSE:DGX) provides diagnostic testing services. The stock has benefited from the rise in COVID-19 testing volumes as a new variant of the virus sweeps the globe. Since the new variant is still somewhat “novel” with regards to vaccine protection, this boom for Quest is expected to last well into 2022. The firm recently raised guidance numbers to reflect this. The stock is a favorite of value investors since the company has great pricing power in relation to scale. It beat market estimates on earnings per share and revenue for the third quarter by $1.31 and $250 million respectively.
Quest Diagnostics Incorporated (NYSE:DGX) has also been pursuing acquisitions as it looks to shore up long-term growth on the back of solid COVID-19 revenues. One of these is Mercy Health, a laboratory service business. Investment advisors like Mizuho, Wells Fargo, and Deutsche Bank are all constructive on the company, along with hedge funds like AQR Capital Management that owns 822,434 shares worth more than $119 million in Quest.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Quest Diagnostics Incorporated (NYSE:DGX) was one of them. Here is what the fund said:
“Within healthcare, our largest position is Quest Diagnostics, a leader in independent lab testing and diagnostics. Quest offers its lab services at a fraction of the cost of hospital labs, which constitutes a strong cost-savings value proposition to new and existing customers. It is not surprising that by virtue of the value Quest creates, the company is increasingly serving as an outsource partner to hospitals and healthcare networks across the U.S. We believe Quest’s market is very sticky and only getting larger. The cost savings accruing to Quest’s customers should bode well for the long-term success of the business.”
2. Magellan Health, Inc. (NASDAQ:MGLN)
Stake Value of Tudor Investment Corp : $40 million
Number of Hedge Fund Holders: 23
PE Ratio: 8.48
Magellan Health, Inc. (NASDAQ:MGLN) stock has jumped in recent months after the company received accreditation by the National Association of Boards of Pharmacy for a digital pharmacy practice. Under the Magellan Rx Pharmacy brand, the company will now deliver medicines directly to customers. Starboard Value LP, a New York-based investment firm, is bullish on the stock. At the end of the third quarter, it owned 2.3 million shares in the company worth more than $223 million.
Magellan Health, Inc. (NASDAQ:MGLN) beat market estimates on revenue for the third quarter by $40 million. The hedge fund led by Paul Tudor Jones owned 426,462 shares in the company at the end of the third quarter of 2021 worth $40 million. The firm recently expanded the Navigate Whole Health program to include AIDS Drug Assistance as well. It has a market cap of almost $2.5 billion.
1. B. Riley Financial, Inc. (NASDAQ:RILY)
Stake Value of Tudor Investment Corp : $20 million
Number of Hedge Fund Holders: 24
PE Ratio: 4.02
Riley Financial, Inc. (NASDAQ:RILY) has registered three years of consecutive dividend growth with four years of payouts. It recently declared a quarterly dividend of $1 per share, an increase of more than 100% compared to the previous dividend of $0.50 per share. The forward yield was 6.15%. 24 hedge funds in the Insider Monkey database held stakes worth $109 million in the company at the end of the third quarter of 2021.
Riley Financial, Inc. (NASDAQ:RILY) recently announced that it had purchased a portfolio of performing credit receivables from WS Badcock for about $400 million. The firm expects additional cash flows through the purchase. The company has also set up a receivables business to provide debt monetization solutions and portfolio acquisition services for clients.
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