In this article, we will discuss the top 5 stock picks of James Morrow’s Callodine Capital based on Q2 holdings of the fund. If you want to read our detailed analysis of Morrow’s history, investment philosophy, and hedge fund performance, go directly to James Morrow’s Callodine Capital Portfolio: Top 10 Picks.
5. Vistra Corp. (NYSE:VST)
Callodine Capital’s Stake Value: $11,571,000
Percentage of Morrow’s 13F Portfolio: 4.36%
Number of Hedge Fund Holders: 32
Vistra Corp. (NYSE: VST) is an Irving, Texas-based integrated electricity generation and supply company that provides power across 20 states in the United States and caters to 4.3 million customers with a generation capacity of nearly 39,000 megawatts.
As of Q2 2021, Callodine Capital’s stake in Vistra Corp. (NYSE: VST) stood at 623,750 shares with a market value of nearly $11.57 million. James Morrow has increased his stake in the stock by around 126% as of the second quarter of 2021. Overall, 32 hedge funds in Insider Monkey’s database were bullish on Vistra Corp. (NYSE: VST), compared to 46 in the preceding quarter.
Vistra Corp. (NYSE: VST) has caught investors’ eye after the company announced a $2 billion share repurchase program on October 12 to boost shareholders’ return. At the moment, the stock of Vistra Corp. (NYSE: VST) is up more than 7% in pre-market trading. The company intends to start the share repurchase program next month and intends to wrap it up by December 2022.
This program has been noted as a positive indication of the company’s strategic direction by analysts. Owing to these developments, BMO Capital maintained an Outperform rating on Vistra Corp. (NYSE: VST) stock and raised the price target from $25 to $27 on October 13.
4. Fidelity National Information Services, Inc. (NYSE:FIS)
Callodine Capital’s Stake Value: $12,396,000
Percentage of Morrow’s 13F Portfolio: 4.67%
Number of Hedge Fund Holders: 72
Fidelity National Information Services, Inc. (NYSE: FIS) is a Jacksonville, Florida-based payment services provider. The company has a presence in over 50+ countries and has a workforce of 55,000 employees. Over the past five decades, the company has made numerous acquisitions to remain a notable name in the industry.
As of the second quarter of 2021, Callodine Capital’s stake in Fidelity National Information Services, Inc. (NYSE: FIS) was valued at nearly $12.4 million. ROAM Global Management is the leading stakeholder in the company as of the second quarter of 2021, with shares worth over $4.37 billion.
Since the start of the year, the stock price of Fidelity National Information Services, Inc. (NYSE: FIS) has been down nearly 18%, and currently, the stock is trading around an 18-month low. This prompted TRC Capital Investment to make an unsolicited mini-tender offer for 1 million shares of Fidelity National Information Services, Inc. (NYSE: FIS). This is equivalent to 0.16% of total shares outstanding. Fidelity has recommended its shareholders not to entertain this offer, which will expire on October 19.
David Koning, an analyst at the investment advisory Baird, kept an Outperform rating on Fidelity National Information Services, Inc. (NYSE: FIS) stock and lowered the price target to $174 from $182, noting the banking industry’s pace of growth in the past 10 years.
3. Radian Group Inc. (NYSE:RDN)
Callodine Capital’s Stake Value: $17,947,000
Percentage of Morrow’s 13F Portfolio: 6.77%
Number of Hedge Fund Holders: 30
Radian Group Inc. (NYSE: RDN) is a Philadelphia, Pennsylvania-based diversified mortgage and real estate services business. The company is involved in credit-related insurance coverage through its mortgage division. Meanwhile, through the real estate division, the company comes into play at various stages of the real estate supply chain.
As of the second quarter of 2021, Callodine Capital’s holding in Radian Group Inc. (NYSE: RDN) stood at 806,601 shares, worth $17.95 million. Callodine Capital reduced its exposure in Radian Group from 8.63% during Q1 2021 to 6.77% of its holdings in Q2 2021. Callodine Capital has owned stakes in Radian Group since Q4 2018, making it the oldest holding amongst the top 10 holdings in James Morrow’s portfolio.
Recently, after the debut of titlegenius in Florida, Radian Group Inc. (NYSE: RDN) launched its blockchain-backed title insurance and closing services in five states, namely Arizona, California, Nevada, Ohio, and Pennsylvania. Blockchain technology is considered as the way forward in recording real estate ownership details.
Keeping in view the company’s future outlook, investment firm B Riley maintained a Buy rating on the stock and increased the price target from $30 to $31.
2. Bristol-Myers Squibb Company (NYSE:BMY)
Callodine Capital’s Stake Value: $18,543,000
Percentage of Morrow’s 13F Portfolio: 6.99%
Number of Hedge Fund Holders: 73
During the second quarter of 2021, Callodine Capital increased its stake in the pharmaceutical multinational Bristol-Myers Squibb Company (NYSE: BMY) by 15,000 shares (5%) to 277,500 shares, worth $18.54 million. The stock has been part of Callodine Capital’s portfolio since Q2 2019, which makes it the second oldest stock in the top ten holdings.
73 hedge funds out of the 873 tracked by Insider Monkey were long on Bristol-Myers Squibb Company (NYSE: BMY) at the end of the second quarter of 2021, compared to 81 in the previous quarter. The total stake, however, increased by $165 million.
Bristol-Myers Squibb Company (NYSE: BMY) released initial results from the Phase 3 open-label extension trial for Zeposia for the treatment of multiple sclerosis (MS). The study revealed the long-term safety and effectiveness of the drug in patients facing relapsing forms of MS. Zeposia was approved by the FDA in March 2020 for various types of MS.
Bristol-Myers Squibb Company (NYSE: BMY) stock received an Equal Weight rating at Morgan Stanley. The price target was also lowered from $71 to $66 as analyst Matthew Harrison saw a “mixed long-term outlook” for the company’s recent drug trials.
1. Ares Management Corporation (NYSE:ARES)
Callodine Capital’s Stake Value: $19,274,000
Percentage of Morrow’s 13F Portfolio: 7.27%
Number of Hedge Fund Holders: 20
Ares Management Corporation (NYSE: ARES) is an investment firm involved in credit, private equity, and real estate markets. Callodine Capital owns 303,096 shares in Ares Management Corporation (NYSE: ARES) as of the second quarter of 2021, worth over $19.27 million.
HMI Capital is the leading investor in Ares Management Corporation (NYSE: ARES), with a stake worth $365 million. Overall, 20 hedge funds were bullish on Ares by the end of the second quarter, compared to 16 in the previous quarter, alluding to the positive hedge fund sentiment.
Since the start of 2021, the stock price of this Los Angeles-based company has experienced an increase of over 64% as opposed to the broader market’s rise of nearly 18%. Recently, through its private equity division, Ares Management made a strategic investment in Lockwood Group. Lockwood Group is known for aiding biotech and pharmaceutical companies in coming up with creative treatments to serve patients. Such investments have generated healthy returns for Ares Management Corporation (NYSE: ARES).
In line with this sentiment, investment advisory Jefferies maintained a Buy rating on Ares Management Corporation (NYSE: ARES) on September 30 and raised the price target from $82 to $86. While issuing the rating, analyst Gerald O’Hara described the business trends as “strong if not robust.”
You can also take a peek at the 11 Best Space Stocks To Buy According To Hedge Funds and 10 High Yield Dividend Champions.
