In this article, we discuss the 5 best picks of Seth Klarman and the performance of his value stock portfolio in 2021. If you want to read our detailed analysis of these stocks, go directly to Seth Klarman’s Value Stock Portfolio Performance in 2021: 10 Best Picks.
5. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 38
Gain in Share Price in 2021: 40%
Nexstar Media Group, Inc. (NASDAQ:NXST) is a broadcasting and digital media company. Several elite hedge funds hold bullish positions on the stock. Among the hedge funds being tracked by Insider Monkey, Canada-based investment firm Cardinal Capital is a leading shareholder in Nexstar Media Group, Inc. (NASDAQ:NXST) with 1 million shares worth more than $166 million.
Nexstar Media Group, Inc. (NASDAQ:NXST) is also one of the top holdings in the Klarman portfolio. At the end of the third quarter of 2021, Baupost Group owned 2 million shares of Nexstar Media Group, Inc. (NASDAQ:NXST) worth $310 million, representing 2.85% of the portfolio. Since the fourth quarter of 2018, Nexstar Media Group, Inc. (NASDAQ:NXST) has consistently featured in the fund’s portfolio.
4. International Flavors & Fragrances Inc. (NYSE:IFF)
Number of Hedge Fund Holders: 46
Gain in Share Price in 2021: 42%
Baupost Group was one of several hedge funds that bet on International Flavors & Fragrances Inc. (NYSE:IFF) to deliver solid returns as the economy reopened. Klarman bought a stake in the company in the first quarter of 2021 consisting of over 2 million shares. Although the hedge fund reduced this position by almost half in the third quarter, it still owns over 1 million shares in International Flavors & Fragrances Inc. (NYSE:IFF) worth $166 million.
International Flavors & Fragrances Inc. (NYSE:IFF) is among the top performing value stocks of 2021 and several hedge funds are bullish on the company for 2022 as well. At the end of the third quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in International Flavors & Fragrances Inc. (NYSE:IFF).
In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and International Flavors & Fragrances Inc. (NYSE:IFF) was one of them. Here is what the fund said:
“We are still getting used to the higher multiples that investors will pay for larger market cap and pure play companies such as IFF. We do understand the market’s rationale. IFF’s products account for a small percentage of the customers’ cost while playing critical roles in the products’ performance. With some operating leverage, the company can probably grow FCF at 4-6% a year. This brings the total return close to the long-term return of the S&P 500 index of 10%. Through trial and error, we have come to appreciate how scale, higher market share, route densities, switching costs, and collaborative relationships amongst major industry players can contribute to sustained high returns on invested capital.”
3. Verint Systems Inc. (NASDAQ:VRNT)
Number of Hedge Fund Holders: 25
Gain in Share Price in 2021: 57%
Verint Systems Inc. (NASDAQ:VRNT) provides customer engagement solutions. Klarman has been bullish on the company since 2020 when he bought over 1.2 million shares at an average price of $22.15 per share. He then nearly tripled this stake in the third quarter of 2020. At the end of September, Baupost Group owned more than 3.5 million shares of Verint Systems Inc. (NASDAQ:VRNT) worth $158 million.
Verint Systems Inc. (NASDAQ:VRNT) has been attracting significant hedge fund interest in recent months. At the end of the third quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $708 million in Verint Systems Inc. (NASDAQ:VRNT).
In its Q2 2021 investor letter, Bernzott Capital Advisors, an asset management firm, highlighted a few stocks and Verint Systems Inc. (NASDAQ:VRNT) was one of them. Here is what the fund said:
“Verint Systems (VRNT): Initiated in January 2014, we exited with an absolute and relative gain. The company is progressing in its business model transition to subscription-based sales, and took a step toward shareholder value enhancement with its spin-off of Cognyte Software earlier this year. We sold those shares in 1Q. As the share price approached fair value, we sold VRNT which also reduced the portfolio’s exposure to the Software sector, where we remain overweight.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Gain in Share Price in 2021: 67%
Alphabet Inc. (NASDAQ:GOOG) provides online advertising services. It is among a band of tech stocks that hundreds of elite hedge funds prefer. Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $7.8 billion.
According to 13F data, Baupost Group owned 290,930 shares in Alphabet Inc. (NASDAQ:GOOG) at the end of September 2021 worth over $775 million, representing 7.12% of the portfolio. Alphabet Inc. (NASDAQ:GOOG) has featured in the Baupost portfolio since the first quarter of 2020.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
1. Veritiv Corporation (NYSE:VRTV)
Number of Hedge Fund Holders: 11
Gain in Share Price in 2021: 510%
Veritiv Corporation (NYSE:VRTV) provides packaging products and services. It is one of the surprising success stories of the economic recovery of 2021. Klarman, however, is a long-term admirer of the stock. He first bought a stake in Veritiv Corporation (NYSE:VRTV) during the third quarter of 2014 and the company has featured in the Baupost portfolio consistently since then. Baupost Group presently owns 3.5 million shares in Veritiv Corporation (NYSE:VRTV) worth $319 million, representing 2.93% of the portfolio.
Veritiv Corporation (NYSE:VRTV) is not the most popular stock among hedge funds despite stellar performance in 2021. At the end of the third quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $354 million in Veritiv Corporation (NYSE:VRTV), down from 14 in the preceding quarter worth $254 million.
You can also take a peek at Why These 10 Stocks Fell on Monday and 10 Penny Stocks With Long-Term Growth Catalysts.
