In this article, we present the list of the top 10 must-have finance stocks according to Parsa Kiai’s Steamboat Capital Partners. You can skip our detailed analysis of Steamboat Capital Partners’ history, investment philosophy, and hedge fund performance, and go directly to Top 5 Must-Have Finance Stocks According to Parsa Kiai’s Steamboat Capital Partners.
Meta Platforms, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG) are among the most prominent companies found in the portfolio of Steamboat Capital Partners, which otherwise invests heavily in the finance space.
Parsa Kiai’s Steamboat Capital Partners LLC is an Old Greenwich, Connecticut-based hedge fund that takes a value-oriented approach to its investments. The investment advisor, which was founded in 2012 by Mr. Kiai, maintains a concentrated portfolio of assets that it believes to be either undervalued and/or having forthcoming catalysts that could drive meaningful share price appreciation.
The fund’s flagship Steamboat Capital Partners Fund LP has been a solid performer since its inception in July 2012, delivering a compound annual return of 11.06% through April 2020. The fund had a very strong 2019, returning 23.83%, and was one of the few hedge funds to not post losses during the devastating market downturn of Q1 2020, being up by 0.09%. The investment advisor has just under $510 million in assets under management as of March 31, 2021.
The fund’s 13F portfolio contained 44 positions at the end of September 2021 and was valued at just over $431 million, an 11% increase quarter-over-quarter. That rise in value was in spite of the fact that the fund sold off or trimmed about twice as many holdings during the quarter than it was buying. Finance stocks retained the strongest weighting in Steamboat’s 13F portfolio for the tenth straight quarter, accounting for about 39% of its value.
Rather than analyze some of the fund’s more obvious stock picks in hedge fund favorites like Meta Platforms, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), we’ll take a look at the Steamboat Capital Partners’ favorite finance stock picks as of September 30 in this article.
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Now then, let’s check out the Top 10 Must-Have Finance Stocks According to Parsa Kiai’s Steamboat Capital Partners. Note that all hedge fund data is based on the exclusive group of 800+ funds tracked by Insider Monkey as part of our market-beating investment strategy.
Top 10 Must-Have Finance Stocks According to Parsa Kiai’s Steamboat Capital Partners
10. Paypal Holdings, Inc. (NASDAQ:PYPL)
Steamboat Capital Partners has been a Paypal Holdings, Inc. (NASDAQ:PYPL) since the third quarter of 2020, when hedge fund ownership of PYPL also peaked. There’s been a 22% decline in hedge fund ownership since then, though Steamboat Capital is one of the funds that has maintained its position, owning 58,210 shares of the online payment provider at the end of September 2021.
After topping $300 in July, Paypal Holdings, Inc. (NASDAQ:PYPL) shares have since lost nearly 60% of their value amid weakening ecommerce activity. Paypal’s third quarter results disappointed, as did its fourth quarter and 2022 revenue guidance. The latter was pegged by the company at 18%, while analysts had been anticipating growth in the low 20% range.
In its Q4 2021 investor letter, Wedgewood Partners noted some of Paypal Holdings, Inc. (NASDAQ:PYPL)’s positive trends, including the fact that former parent company and largest customer eBay now represents just 3% of Paypal’s business thanks to aggressive expansion that has seen it become adopted by ecommerce businesses of all sizes. Paypal’s total volume of payments also grew by a strong 26% year-over-year in 2021.
Alger, an investment management firm, published its “Alger Spectra Fund” fourth quarter 2021 investor letter and mentioned Paypal Holdings, Inc. (NASDAQ:PYPL). Here‘s what the fund said:
“Among long positions, PayPal Holdings, Inc. was among the top detractors from performance. PayPal is a pure play on ecommerce and electronic payments, which is driving high unit volume growth. As a digital payments company, it is helping to facilitate the shift to a cashless society. Coronavirus has significantly accelerated the adoption of ecommerce and the utilization of digital payments platforms. PayPal detracted from the portfolio’s performance as its third quarter revenues disappointed toward the end of the quarter on weakening travel and ecommerce activity. The company issued weaker-than-expected fourth-quarter revenue guidance and provided initial 2022 revenue growth guidance of 18%, lower than consensus expectations of growth in the low 20% range. In the current fourth quarter, aggregated retail sales data and credit card activity have slowed.”
9. Betterware de Mexico SAB de CV (NASDAQ:BWMX)
Steamboat Capital Partners is one of the few hedge funds tracked by Insider Monkey that is long Betterware de Mexico SAB de CV (NASDAQ:BWMX), owning by far the largest stake in the direct-to-consumer company among those funds. Steamboat owned 378,899 BWMX shares on September 30 valued at $13.74 million.
Betterware de Mexico SAB de CV (NASDAQ:BWMX) grew revenue by 4% year-over-year in Q3 to PS$2.36 billion ($3.21 billion) against tough comps following the company’s stellar growth in 2020. Betterware continued to solidify its network of associates and distributors during the quarter, which it tripled in size during 2020. The company expects to achieve double digit compound annual sales growth between 2021 and 2025.
Betterware de Mexico SAB de CV (NASDAQ:BWMX) also announced a $50 million share repurchase program last September, which it plans to put into place by the end of this year.
8. Donnelley Financial Solutions, Inc. (NYSE:DFIN)
Donnelley Financial Solutions, Inc. (NYSE:DFIN) shares have been a five-bagger since the middle of 2020, rising from just $7.20 to over $35 during that time. Steamboat Capital Partners has been along for much of that wealth-generating ride, being a DFIN shareholder since early 2021. As of the end of September, the fund owned 404,302 shares, growing the size of its position by 113% during Q3.
Donnelley Financial Solutions, Inc. (NYSE:DFIN) is coming off a record-breaking Q3, posting revenue and earnings that decimated estimates. Its non-GAAP EPS of $1.36 beat estimates by 72%, while its revenue of $247.7 million also represented a double-digit beat. Donnelley Financial Solutions, Inc. (NYSE:DFIN) achieved record quarterly adjusted EBITDA and free cash flow as its software solutions net sales exceeded those of its print and distribution offerings for the first time, resulting in much higher margins and profitability, a trend the company expects to continue to grow in the quarters to come.
7. Blackstone Inc. (NYSE:BX)
Blackstone Inc. (NYSE:BX) is first up, with Steamboat Capital Partners owning 65,723 BX shares on September 30 valued at $7.65 million. The fund has held a long position in the $161 billion global investment company since the third quarter of 2019.
Hedge fund ownership of Blackstone Inc. (NYSE:BX) has been sitting around all-time highs for several quarters and those funds have cashed in big time in 2021, as BX shares more than doubled in value. The asset manager is coming off a tremendous third quarter in which it trounced analysts’ estimates on both the revenue and EPS fronts by 33% and 43% respectively.
Blackstone Inc. (NYSE:BX), which has nearly $650 billion in assets under management as of Q1 2021, invests in various asset classes on behalf of pension funds, family offices, institutions, and other wealthy investors, utilizing its size and assets to help generate strong returns for its clients. Blackstone’s revenue grew by an immense 105% year-over-year to $6.2 billion during Q3 as it experienced record demand for its alternative-asset investments that aren’t readily available or viable to the average investor.
Artisan Partners, a high value-added investment management firm, published its “Artisan Value Fund” third quarter 2021 investor letter and mentioned Blackstone Inc. (NYSE:BX). Here‘s what the fund said:
“Among our top Q3 contributors were Blackstone. Investment stalwart Blackstone’s virtuous cycle is in full swing. Throughout Blackstone’s history, excellent investment performance and capital protection have allowed the firm to increase fundraising in existing verticals as well as launch new endeavors. Historically, less than 10% of assets under management mature in any given year, and that number should move lower with continued growth in perpetual capital vehicles. Blackstone’s A+ rated balance sheet and capital-light model are the backbone of its 85% of cash flow distribution policy via a variable quarterly dividend. In short, this is a long-duration fee stream and robust capital-raising engine.”
6. Apollo Global Management Inc. (NYSE:APO)
Apollo Global Management Inc (NYSE:APO) is another rapidly growing alternative asset manager that Steamboat Capital Partners thinks highly of, owning 172,197 APO shares on September 30 valued at $10.2 million.
Like Blackstone, Apollo Global Management Inc (NYSE:APO) has also reached record levels of ownership among the hedge funds tracked by Insider Monkey in recent quarters, with 47 of them being long APO at the end of Q3 compared to less than 20 in early 2019.
Apollo Global Management Inc (NYSE:APO) is aiming to raise $25 billion for its next flagship buyout fund, similar to what the company was able to raise in 2017. During its investor Day presentation last November, Apollo laid out plans to more than double its assets under management by 2026, which would hit $1 trillion. The asset manager also anticipates reaching fee-related revenue and earnings of $4.6 billion and $2.8 billion respectively by that same year.
Miller Value Partners, an investment management firm, published its “Miller Income Fund” second quarter 2021 investor letter and mentioned Apollo Global Management Inc (NYSE:APO). Here‘s what the fund said:
“Apollo Global Management (APO) rose 33.5% during the period after reporting Q1 distributable earnings of $0.66, topping consensus of $0.57 and the quarterly dividend of $0.50/share (3.3% annualized yield). Fee-related earnings came in at $287M ($0.65/share and a 55.9% margin) while Transaction & Advisory fees of $55.5M beat by $10M. Net accrued performance fees rose 66% quarter-overquarter (Q/Q) to $1.346Bn, or $3.04/share on strong performance with Private Equity +22%, Credit +3% to +6%, and Real Assets +4%. Total fundraising of $13.4Bn was in-line, driving total assets under management (AUM) to $461Bn and fee-paying AUM to $345Bn.”
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Disclosure: None. Top 10 Must-Have Finance Stocks According to Parsa Kiai’s Steamboat Capital Partners is originally published at Insider Monkey.
