In this article, we discuss Jeffrey Smith’s top 5 stock picks. For Smith’s investment philosophy and his comments on particular stocks, please see Jeffrey Smith’s Top 10 Stock Picks.
5. ON Semiconductor Corporation (NASDAQ: ON)
Value: $295,803,000
Percent of Jeffrey Smith’s 13F Portfolio: 7.52%
No. of Hedge Fund Holders: 45
Arizona-based ON Semiconductor is a new addition in Jeff Smith’s Starboard Value’s portfolio. In the fourth quarter, the fund bought 9.01 million shares of the company, worth $295.8 million. The semiconductor company sells products related to signal management, logic, discrete and custom solutions. BofA recently upgraded the stock from Underperform to Buy, citing chances of a turnaround after new management and strong demand from the automobiles sector. The bank also increased its price target for the stock to $48 from $32.
Our database shows that 45 hedge funds held stakes in ON Semiconductor Corp. as of the end of the fourth quarter, versus 29 funds in the third quarter.
4. ACI Worldwide, Inc. (NASDAQ: ACIW)
Value: $371,459,000
Percent of Jeffrey Smith’s 13F Portfolio: 9.44%
No. of Hedge Fund Holders: 30
ACI Worldwide ranks 4th on the list of Jeff Smith’s top 10 stock picks. The payments company’s stock is up 60% over the last 12 months. The company in February reached an agreement with Starboard value to add two new independent directors. Starboard named Tom Cusack as board observer as part of the agreement. In December 2020, Jeff Smith in a letter pushed the company to consider putting itself up for a sale.
As of the end of the fourth quarter, there were 30 hedge funds in Insider Monkey’s database that held stakes in ACI Worldwide, compared to 29 funds in the third quarter. Starboard Value, with 9.7 million shares of ACIW, is the biggest stakeholder in the company.
3. AECOM (NYSE: ACM)
Value: $386,890,000
Percent of Jeffrey Smith’s 13F Portfolio: 9.83%
No. of Hedge Fund Holders: 37
Aecom is an infrastructure consulting company providing planning, consulting, architectural and engineering services for commercial clients and governments in transportation, water, government, facilities and energy sectors. Jeff Smith’s Starboard Value has a $386.9 million stake in the company. In the fiscal first quarter, the company posted adjusted EPS of $0.62, beating the estimates by $0.05. Revenue in the quarter jumped 2.2% to $3.31 billion, beating the consensus by $100 million. Operating cash flow in the period was $7 million.
A total of 37 hedge funds tracked by Insider Monkey were bullish ACM at the end of the fourth quarter, down from 39 funds a quarter earlier. Starboard Value, with 7.8 million shares of ACM, is the biggest stakeholder in the company.
2. NortonLifeLock Inc. (NASDAQ: NLOK)
Value: $432,853,000
Percent of Jeffrey Smith’s 13F Portfolio: 11%
No. of Hedge Fund Holders: 29
NortonLifeLock Inc. ranks 2nd on the list of Jeff Smith’s top 10 stock picks. The company is behind famous cyber security and data protection products including Norton antivirus. NortonLifeLock shares recently rallied after reports suggested that McAfee (NASDAQ:MCFE) is considering a combination deal with the company. Jeff Smith boosted his stake in the company by 67% in the fourth quarter, ending the period with shares worth $432.9 million.
1. Corteva, Inc. (NYSE: CTVA)
Value: $558,869,000
Percent of Jeffrey Smith’s 13F Portfolio: 14.21%
No. of Hedge Fund Holders: 38
Agricultural chemical company Corteva, Inc. tops the list of Jeff Smith’s top 10 stock picks, as Starboard Value has a $558.9 million stake in the company as of the end of the fourth quarter. Jeff Smith is trying to initiate a management shakeup at the company. In February, he said in an interview with CNBC that he had “terrific conversations” with the company’s board. However, no agreement was reached.
The company is also getting the attention of the smart money, as 38 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 36 funds a quarter earlier.
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