Below we present the list of Anchor Capital Management’s Top 5 Stock Picks in 2024. For our methodology and some background on Clarence Dunnagan’s Anchor Capital Management, please see Anchor Capital Management’s Top 9 Stock Picks and Former Holdings in 2024.
5. Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND)
Value of Anchor Capital Management’s 13F Position (3/31/2024): $8.17 million
Number of Hedge Fund Shareholders (12/31/2023): 14
First up among Anchor Capital Management’s top five stock picks for 2024 is Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND), which operates a small fleet of cruise line and expedition ships and offers experiential travel adventures to clients in remote regions of the world, in partnership with National Geographic.
Clarence Dunnagan’s fund raised its stake in Lindblad Expeditions by 128% during the first quarter to 876,070 shares, elevating the position from its smallest holding a quarter earlier to its fifth-largest.
Chuck Royce’s Royce and Associates, which has been a Lindblad shareholder since the fourth quarter of 2015, also raised its stake in the company by 12% during Q4 2023 to 1.39 million shares.
In addition to hedge fund ownership, another important metric for investors to pay attention to is insider trading, particularly insider buying activity. Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) Director Alex Schultz purchased 33,016 shares of the company on April 19 at an average price of $7.47, which suggests the insider has great confidence in the future outlook of the company. Lindblad’s overall insider ownership is high, at about 31%.
Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) beat revenue estimates in Q1, growing revenue by 7.1% year-over-year to $153.6 million. The company reported that its strong bookings momentum from 2023 has carried over into the first three months of 2024, which it aims to capitalize on through a growing portfolio of assets.
The company recently announced the acquisition of Wineland-Thompson Adventures, a family-oriented adventure travel operator, expanding Lindblad’s travel offerings into Tanzania and East Africa.
4. Standex International Corporation (NYSE:SXI)
Value of Anchor Capital Management’s 13F Position (3/31/2023): $10.4 million
Number of Hedge Fund Shareholders (12/31/2024): 11
Anchor Capital Management cut its stake in Standex International Corporation (NYSE:SXI) by 37% during Q1 to 56,937 shares. Other hedge funds have been cautious with SXI shares in recent quarters, as smart money ownership of the company dropped by 27% during the second half of 2023.
Shares of the diversified manufacturer of hydraulics, electronics, and food service equipment, among other things, hit a 52-week high in late March, which prompted some insider selling. Standex International Corporation (NYSE:SXI) earned $1.33 per share in its fiscal Q3 of 2024, beating estimates, but revenue was down 3.8% year-over-year to $177.3 million. Adjusted gross margin was again strong at nearly 40%.
Standex International Corporation (NYSE:SXI) declared a $0.30 per share quarterly dividend on April 25, in line with its previous payout. The dividend will be paid out on May 24 to shareholders of record as of May 10 and will represent the 239th consecutive quarter that the company has made a dividend payment. Its quarterly dividend yields about 0.7%.
3. Air Transport Services Group, Inc. (NASDAQ:ATSG)
Value of Anchor Capital Management’s 13F Position (3/31/2024): $12.2 million
Number of Hedge Fund Shareholders (12/31/2023): 19
Anchor Capital Management bought more shares of Air Transport Services Group, Inc. (NASDAQ:ATSG) during the first quarter, raising the size of its position by 23% to 886,153 shares. Hegde fund ownership of ATSG has been remarkably steady of late, with 19 funds holding long positions in the company in five of the previous six quarters between mid-2022 and the end of 2023.
It’s not hard to see why some hedge funds are doggedly hanging on to their positions in Air Transport Services Group, Inc. (NASDAQ:ATSG), as shares of the provider of air cargo transportation and services trade well below their historical valuation. The company’s revenue growth was modest in 2023, inching up by just 1% to $2.1 billion and the company has scaled back on some of its ambitious capital spending plans in the wake of weakening demand in both its passenger airline operations and leasing segment.
Bernzott Capital Advisors isn’t as bullish on Air Transport Services Group, Inc. (NASDAQ:ATSG) as Anchor Capital Management, having sold off its stake in the company according to the fund’s Q2 2023 investor letter, citing its heavy capex cycle (though as noted above, the company has since scaled back those initiatives):
“Air Transport Services Group, Inc. (NASDAQ:ATSG): The company’s elevated capital spending plans through next year extend its heavy capex cycle and will impede a free cash flow recovery. As a result, we exited the position.”
2. Patrick Industries, Inc. (NASDAQ:PATK)
Value of Anchor Capital Management’s 13F Position (3/31/2024): $14.8 million
Number of Hedge Fund Shareholders (12/31/2023): 17
Ranking second among Anchor Capital Management’s top stock picks for 2024 is Patrick Industries, Inc. (NASDAQ:PATK), a manufacturer and supplier of laminated and other products and components for the RV, homebuilding and industrial markets. The fund raised its stake in PATK by 20% during the first quarter to 123,809 shares.
Patrick Industries, Inc. (NASDAQ:PATK) posted solid Q1 results, earning $1.59 per share for the quarter, up from $1.35 a year earlier and well ahead of the $1.32 average expected by analysts. That represents an important turnaround step for the company after its earnings sank to $6.78 in 2023 from nearly $15 in 2022. Revenue rose by 3.7% year-over-year to $933.5 million.
The company is bullish on its future growth potential in the RV and manufactured homebuilding spaces, and expects its marine segment, which suffered a 35% year-over-year revenue decline to $155 million in Q1, to rebound in the second half of 2024.
Truist Financial analyst Michael Swartz has a ‘Buy’ rating and $130 price target on Patrick Industries, Inc. (NASDAQ:PATK), representing 14.5% upside potential based on the current share price.
1. Iridium Communications Inc. (NASDAQ:IRDM)
Value of Anchor Capital Management’s 13F Position (3/31/2023): $16.3 million
Number of Hedge Fund Shareholders (12/31/2024): 33
Topping the list of Anchor Capital Management’s top stocks for 2024 is Iridium Communications Inc. (NASDAQ:IRDM). The provider of satellite services and products was already the fund’s top stock pick heading into this year and it further doubled down on it in Q1, raising its stake in IRDM by 48% to 623,941 shares. Among Anchor Capital Management’s top stock picks, Iridium is also the most popular among other hedge funds, with smart money ownership of the company rising by 22% during the fourth quarter of 2023.
Iridium Communications Inc. (NASDAQ:IRDM) shares are down near 52-week lows with the company in the midst of a strategic realignment that included cutting ties with QUALCOMM Incorporated (NASDAQ:QCOM). The company is now aiming to adapt its satellite protocols for integration with existing smartphones rather than rely on Qualcomm to develop compatible chips, a move which will ultimately expand the company’s total addressable market.
While its revenue is taking a hit in the near-term (down 1% to $204 million in Q1), long-focused investors like hedge funds are taking advantage of the opportunity to load up on Iridium shares with an eye towards the future, with Iridium poised to become a bigger player in the satellite services market on both smartphones and other mobile devices.
While noting the company’s near-term revenue uncertainty, Baron Partners Fund nonetheless believes in Iridium Communications Inc. (NASDAQ:IRDM)’s long-term trajectory, as the fund relayed in its Q4 2023 investor letter:
“The negative news for Iridium Communications Inc. (NASDAQ:IRDM) impacted its share price in the quarter. The timeline for Iridium’s direct-to-device offering has been prolonged. The company ended its exclusive relationship with Qualcomm and is now seeking other partners with whom to integrate its satellite direct to cellular chip. While this expands addressable customers, it has delayed the realization of revenue. While other aspects of Iridium’s business including the internet of things, voice & data, and government services have stable growth, they do not offer the upside potential of direct to device. We continue to believe Iridium’s long-term business objectives can be achieved, yet the near term is uncertain.”
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