Top 10 Stock Picks of Don Morgan’s Brigade Capital

In this piece, we will take a look at the top 10 stock picks of Don Morgan’s Brigade Capital. If you want to skip our detailed analysis of Don Morgan’s history, investment philosophy, and hedge fund peformance, then head on right over to the Top 5 Stock Picks of Don Morgan’s Brigade Capital.

Brigade Capital is an investment management firm based out of New York City, New York. The firm is headed by its chief investment officer and managing partner Mr. Don Morgan. Mr. Morgan is an individual who has years of experience in the financial sector, and this has led him to the helm of affairs at Brigade Capital, which manages a portfolio that has $1.7 billion in assets by the end of June 2021.

Brigade Capital’s investment strategy is focused primarily on targeting entities with distressed balance sheets or hefty amounts in debt. It has offices in major global cities such as Tokyo, Japan and London, United Kingdom alongside a presence in the American state of Colorado. The firm also won the Firm of the Year award from Absolute Return Awards in 2017, to mark another feather in its cap. Brigade often buys the debt of distressed firms and then seeks a return on it.

Mr. Morgan’s investment firm targets companies from different sectors such as telecommunications, energy, finance, healthcare and media. A cursory look at its portfolio reveals that as of June 2021, some of its biggest investments are in Extraction Oil & Gas, Inc. (NASDAQ:XOG), Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) and Magnachip Semiconductor Corporation (NYSE:MX). These companies reflect the portfolio’s diverse nature, as they range from fossil fuel exploration to the technology sector.

Photo by Jason Briscoe on Unsplash

Our Methodology:

In order to gain a deeper insight into Mr. Morgan and Brigade Capital, we sifted through the investment management firm’s 13-F portfolio, which lists down all of its investments. This list also includes the debt bought by Brigade Capita and the positions that it has taken against the shares of several companies. For today’s piece, we focus exclusively on the shares owned by the investment fund.

Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Top 10 Stock Picks Of Don Morgan’s Brigade Capital

10. Turning Point Brands, Inc. (NYSE:TPB)

Mr. Morgan’s Stake Value: $8.9 million

Percentage of Mr. Morgan’s 13F Portfolio: 0.53%

Number of Hedge Fund Holders: 30

Turning Point Brands, Inc. (NYSE:TPB) is an American company that provides tobacco paraphernalia. It operates through three brands which are ZigZag, Stoker and NewGen. They target several different aspects of tobacco consumption, such as rolling papers, chewable tobacco and non-tobacco products with the compound Nicotine such as liquid vapor products.

By the end of June 2021, Mr. Morgan’s Brigade Capital held 195,498 shares of Turning Point Brands Inc. (NYSE:TPB), in a stake that was worth $8.9 million and represented 0.53% of its portfolio.

In an October 2021 analyst note, B. Riley lowered Turning Point Brands, Inc. (NYSE:TPB)’s price target to $55 and kept a Buy rating for the shares, explaining that a recent price drop presents a good buying opportunity. A poll of 873 hedge funds conducted at the end of this year’s first half by Insider Monkey revealed that 30 hedge funds had a stake in the company.

In a July 2021 investor letter, Maran Capital Management had the following to say about Turning Point Brands, Inc. (NYSE:TPB):

“We continue to hold core positions in previously disclosed companies (including) Turning Point Brands (TPB). Turning Point Brands remains cheap given its organic growth profile, low capital intensity, and large collection of small, asymmetric bets in vaping and active ingredients. TPB’s Zig Zag brand is among the most well-positioned brands in the US as cannabis legalization marches forward, jurisdiction by jurisdiction.”

9. FirstEnergy Corp. (NASDAQ:FE)

Mr. Morgan’s Stake Value: $10.8 million

Percentage of Mr. Morgan’s 13F Portfolio: 0.64%

Number of Hedge Fund Holders: 36

FirstEnergy Corp. (NASDAQ:FE) is an American electricity company that is responsible for generating, transmitting and distributing electricity throughout several states. These states include Pennsylvania, Ohio, New York, New Jersey, Maryland and West Virginia. FirstEnergy Corp. (NASDAQ:FE) has thousands of miles of electricity cables laid out throughout the U.S.

Mr. Morgan held 290.500 shares of FirstEnergy Corp. (NASDAQ:FE) by the end of this year’s second quarter, which amount to $10.8 million and represent 0.64% of his portfolio. Out of the 873 hedge funds polled by Insider Monkey during the same time period, 36 had held a stake in the company.