In this article, we discuss Ravi Chopra’s Azora Capital’s top 5 stock picks. If you want our detailed analysis of these stocks, go directly to Ravi Chopra’s Azora Capital’s Top 10 Stock Picks.
5. International Bancshares Corporation (NASDAQ:IBOC)
Azora Capital’s Stake Value: $25,458,000
Percentage of Azora Capital’s 13F Portfolio: 3.96%
Number of Hedge Fund Holders: 18
International Bancshares Corporation (NASDAQ:IBOC) was founded in Texas, in 1966, as a bank holding and financial services company. International Bancshares Corporation (NASDAQ:IBOC) has around $15.3 billion in assets under management, and 87 commercial banks located in Texas and Oklahoma. In addition to that, International Bancshares Corporation (NASDAQ:IBOC) owns subsidiaries in the insurance, investment banking, and the mortgage lending industries. International Bancshares Corporation (NASDAQ:IBOC) is one of the top stocks in Ravi Chopra’s Azora Capital’s Q2 portfolio.
Azora Capital owns 592,881 shares in International Bancshares Corporation (NASDAQ:IBOC), worth $25.45 million, representing 3.96% of the firm’s 13F portfolio.
At the end of June, 18 hedge funds were bullish on International Bancshares Corporation (NASDAQ:IBOC), up from 13 in Q1.
4. PacWest Bancorp (NASDAQ:PACW)
Azora Capital’s Stake Value: $31,192,000
Percentage of Azora Capital’s 13F Portfolio: 4.85%
Number of Hedge Fund Holders: 29
PacWest Bancorp (NASDAQ:PACW) is a bank holding company in California, with Pacific West Bank as its core, wholly owned subsidiary. With 79 operational bank branches, PacWest Bancorp (NASDAQ:PACW) is engaged in commercial banking services such as financing for real estate and construction, commercial loans, deposit, and treasury management services to small and medium-sized businesses. PacWest Bancorp (NASDAQ:PACW) is one of the top stocks in Ravi Chopra’s Q2 portfolio.
Ravi Chopra owns 757,812 shares in PacWest Bancorp (NASDAQ:PACW), worth $31.19 million, making up 4.85% of Chopra’s 13F portfolio.
Fisher Asset Management is the leading stakeholder in PacWest Bancorp (NASDAQ:PACW) at the end of Q2. Overall, 29 hedge funds were bullish on PacWest Bancorp (NASDAQ:PACW) at the end of June.
PacWest Bancorp (NASDAQ:PACW) announced earnings for Q3 on October 18. The EPS was $1.17, beating estimates by $0.15. The revenue also exceeded expectations by $14.01 million at $331.12 million.
3. PayPal Holdings, Inc. (NASDAQ:PYPL)
Azora Capital’s Stake Value: $51,053,000
Percentage of Azora Capital’s 13F Portfolio: 7.94%
Number of Hedge Fund Holders: 143
PayPal Holdings, Inc. (NASDAQ:PYPL) is an American financial technology company that facilitates online money transfers via its digital payment system. PayPal Holdings, Inc. (NASDAQ:PYPL) operates in most countries, providing a secure digital alternative to paper money and manual transfer of funds. PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the top stocks in Ravi Chopra’s Q2 portfolio.
As of the end of the second quarter, Azora Capital owns 175,152 shares in PayPal Holdings, Inc. (NASDAQ:PYPL), amounting to $51.05 million, representing 7.94% of Chopra’s 13F portfolio.
This stock is quite popular among the smart money, as 143 hedge funds monitored by Insider Monkey were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of June. Fisher Asset Management is the leading stakeholder in PayPal Holdings, Inc. (NASDAQ:PYPL), with stakes worth $3.12 billion.
Here is what Alger has to say about PayPal Holdings Inc. in its Q3 2021 investor letter:
“PayPal Holdings, Inc. was among top detractors from performance. PayPal is a pure play on e-commerce and electronic payments which is driving the company’s high unit volume growth. As a digital payments company, it is helping to facilitate the shift to a cashless society. The coronavirus pandemic has significantly accelerated the adoption of e-commerce and the utilization of digital payments platforms. In our view, PayPal is currently positioned to benefit from the strength in e-commerce trends, including increasing net new active users and increased engagement per user. PayPal also has launched a service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account. PayPal’s vision is to become a Super App that integrates payments, commerce and financial services, as well as crypto capabilities. After outperforming earlier in the year, the performance of PayPal shares weakened in the third quarter with the company facing potentially higher transaction expenses and credit losses. The higher transaction expenses are driven by a shift by consumers to the higher cost travel and entertainment categories which skew toward less profitable credit transactions.”
2. Square, Inc. (NYSE:SQ)
Azora Capital’s Stake Value: $54,390,000
Percentage of Azora Capital’s 13F Portfolio: 8.46%
Number of Hedge Fund Holders: 94
Square, Inc. (NYSE:SQ) is a financial services company focusing on digital payments, and servicing small business and enterprise level organizations alike. Square, Inc. (NYSE:SQ) started out as a digital payments company, but since its inception in 2009, the company has expanded its operations to include a complete suite of business tools and equitable loans that give every eligible business a chance to grow, with Square, Inc. (NYSE:SQ)’s flexible funding. Square, Inc. (NYSE:SQ) is a top stock in Chopra’s Q2 portfolio.
Azora Capital owns 223,092 shares in Square, Inc. (NYSE:SQ), worth $54.39 million, which represents 8.46% of Chopra’s Q2 portfolio.
At the end of June, 94 hedge funds were long Square, Inc. (NYSE:SQ), up from 92 in Q1.
Here is what RiverPark Large Growth Fund has to say about Square, Inc. in their Q1 2021 investor letter:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
1. BrightSphere Investment Group Inc. (NYSE:BSIG)
Azora Capital’s Stake Value: $55,788,000
Percentage of Azora Capital’s 13F Portfolio: 8.67%
Number of Hedge Fund Holders: 29
Ranking first on our list of Ravi Chopra’s Azora Capital’s top stock picks is BrightSphere Investment Group Inc. (NYSE:BSIG), which is an American holding company specializing in financial services. Headquartered in Boston, Massachusetts, BrightSphere Investment Group Inc. (NYSE:BSIG) owns several financial services and money management companies, and serves customers worldwide with investment advisory and wealth management consultancy.
Chopra owns 2.38 million shares in BrightSphere Investment Group Inc. (NYSE:BSIG), worth $55.78 million, making up 8.67% of Chopra’s Q2 portfolio.
At the end of June, 29 hedge funds were bullish on BrightSphere Investment Group Inc. (NYSE:BSIG), up from 26 in Q1.
On October 28, BrightSphere Investment Group Inc. (NYSE:BSIG) announced earnings for Q3. The EPS was $0.28, missing estimates by -$0.01. The actual revenue for BrightSphere Investment Group Inc. (NYSE:BSIG) stood at $117.40 million, beating estimates by $4.40 million.
Here is what Third Avenue Management has to say about Brightsphere Investment Group Inc. in its Q2 2021 investor letter:
“The time-arbitrage/special-situations bucket predominantly comprises other out-of-favor, misunderstood companies such as BrightSphere. This company is cyclical and currently out of favor, but given its strong financial positions, Fund Management believes they have the luxury of time and capital to invest and grow until the clouds dissipate.”
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