In this piece, we will take a look at the top ten stock picks of Himanshu Shah’s Shah Capital. If you want to skip our introduction to the hedge fund and jump ahead to the top five stocks in this list, then head on over to Top 5 Stock Picks of Himanshu Shah’s Shah Capital.
Shah Capital is a hedge fund based out of Raleigh, North Carolina, the United States. The fund is run by Himanshu Shah, a pharmaceutical executive who is also the fund’s president and chief investment officer.
Mr. Shah set up Shah Capital in 2005, and like some other hedge fund executives out there not only does he have significant experience in the financial world, but also corporate experience as the executive has served on the board of directors of several healthcare companies.
His hedge fund markets itself as focusing primarily on long-term and medium-term investments by taking a look at hardcore data and research to sift out which firms to invest in. This is in contrast to a short-only strategy, which sees a hedge fund identify firms (or even currencies as evidenced by the recent rout in the British Pound) that will see their prices drop, and then proceed to sell the stocks only to buy them back at a lower price to close out the position and make a profit.
Shah currently sits on the board of directors of Renesola Limited and Vitamin Shoppe Limited. The executive is also a graduate of the University of Akron in Akron, Ohio, and Gujrat University, India. He attended Akron for his Masters in Business Administration and Gujrat University for his bachelor’s degree.
As of the second quarter of this year, Shah Capital had a portfolio that was worth $385 million, making it one of the smaller hedge funds in the industry. The bulk of these funds are tied in the top ten firms in the portfolio, and out of these, some well known names are New Oriental Education & Technology Group Inc. (NYSE:EDU), ReneSola Ltd (NYSE:SOL), and Antero Resources Corporation (NYSE:AR).
Photo by Zbynek Burival on Unsplash
Our Methodology
We took a look at Shah Capital’s filings with U.S. regulators to pick out which firms were on its radar as of this year’s June quarter. The firms were then analyzed briefly through factors such as analyst ratings, financial performance, and hedge fund sentiment courtesy of Insider Monkey’s Q2 2022 survey of 895 funds.
Top 10 Stock Picks of Himanshu Shah’s Shah Capital
10. Antero Midstream Corporation (NYSE:AM)
Shah Capital’s Stake Value: $19 million
Percentage of Shah Capital’s 13F Portfolio: 4.94%
Number of Hedge Fund Holders: 19
Antero Midstream Corporation (NYSE:AM) is a water and midstream energy management firm that is headquartered in Denver, Colorado, the United States. The company has network pipelines, compressor stations, water storage, and water pumping facilities in the U.S.
Mr. Shah’s hedge fund held a $19 million stake in Antero Midstream Corporation (NYSE:AM) as part of its second quarter of 2022 investment portfolio. This came in the form of 2 million shares and it represented 4.94% of the firm’s investment portfolio. For the same time period, 19 out of the 895 hedge funds polled by Insider Monkey for their investments had also held a stake in the company.
The bulk, or 85%, of Antero Midstream Corporation (NYSE:AM)’s midstream assets in the U.S. focus on natural gas, and its only customer has significant cash reserves as well, leaving little room for doubt about the company’s ability to sell its product. Barclays reduced the company’s share price target to $9 from $10 in July 2022, sharing that it is relatively well insulated when compared to other energy firms.
Antero Midstream Corporation (NYSE:AM)’s largest investor in our database is Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management which owns 4.8 million shares that are worth $43 million.
New Oriental Education & Technology Group Inc. (NYSE:EDU), ReneSola Ltd (NYSE:SOL), and Antero Resources Corporation (NYSE:AR) are met by Antero Midstream Corporation (NYSE:AM) in the list of Shah Capital’s top stock picks.
9. Valaris Limited (NYSE:VAL)
Shah Capital’s Stake Value: $22 million
Percentage of Shah Capital’s 13F Portfolio: 5.73%
Number of Hedge Fund Holders: 40
Valaris Limited (NYSE:VAL) is an oil and gas contract drilling services provider. The firm provides services to several entities such as governments and independent oil and gas companies. It has its own drilling rig fleet and is headquartered in Hamilton, Bermuda.
Valaris Limited (NYSE:VAL) has more than $500 million in backlogged contracts, and it reactivated a new drillship earlier this month which is already in an 18 month contract with a Brazilian company. It also has a four year contract worth $159 million with Shell which is expected to come online in April next year.
Shah Capital owned a $22 million stake in Valaris Limited (NYSE:VAL) during this year’s June quarter, which came through 523,353 shares and represented 5.73% of its investment portfolio. Insider Monkey’s Q2 2022 survey of 895 hedge funds indicated that40 had held a stake in the company.
Out of these, Alec Litowitz and Ross Laser’s Magnetar Capital is Valaris Limited (NYSE:VAL)’s largest investor. It owns 22,576 shares that are worth $953 million.
8. Turquoise Hill Resources Ltd. (NYSE:TRQ)
Shah Capital’s Stake Value: $24 million
Percentage of Shah Capital’s 13F Portfolio: 6.25%
Number of Hedge Fund Holders: 22
Turquoise Hill Resources Ltd. (NYSE:TRQ) is a mining company that is headquartered in Montreal, Canada. The firm mines for several different kinds of metals such as copper, gold, and silver, and its main mining site is located in Mongolia.
As part of its second quarter of 2022 portfolio, Shah Capital’s stake in Turquoise Hill Resources Ltd. (NYSE:TRQ) was worth $24 million. It represented 6.25% of the firm’s portfolio and came through the hedge fund holding 901,427 shares of the company. Insider Monkey took a look at 895 hedge fund holdings for this year’s June quarter to discover that 22 had invested in Turquoise Hill Resources Ltd. (NYSE:TRQ).
Turquoise Hill Resources Ltd. (NYSE:TRQ) is currently under the process of having a minority stake sold to a larger company. The deal is worth $1.1 billion and it also stands to provide the company with some much needed working capital financing. However, Pentwater Capital, one of Turquoise Hill Resources Ltd. (NYSE:TRQ)’s largest investors, believes that the deal significantly undervalues the firm’s shares, especially when free cash flow estimates for the next couple of years are taken into account.
Turquoise Hill Resources Ltd. (NYSE:TRQ)’s largest investor is Matthew Halbower’s Pentwater Capital Management which owns 19 million shares that are worth $521 million.
7. China Yuchai International Limited (NYSE:CYD)
Shah Capital’s Stake Value: $33 million
Percentage of Shah Capital’s 13F Portfolio: 8.7%
Number of Hedge Fund Holders: 6
China Yuchai International Limited (NYSE:CYD) is a Singaporean engine manufacturer that sells its products primarily to Chinese companies. The firm manufactures a wide variety of diesel and natural gas engines such as those for trucks, buses, and industrial applications.
China Yuchai International Limited (NYSE:CYD) won a large order for 100 heavy duty truck engines from a Chinese company in September 2022. The firm has not been performing that well of late, as uncertainty in the Chinese economy caused its revenue to drop 63% annually during the first half of this year.
Mr. Shah’s hedge fund owned 3.8 million China Yuchai International Limited (NYSE:CYD) shares by the end of this year’s first quarter, which let it hold a $33 million stake in the company. For the same time period, six out of the 895 hedge funds polled by Insider Monkey had invested in the company.
China Yuchai International Limited (NYSE:CYD)’s largest investor after Shah Capital is Jim Simons’s Renaissance Technologies which holds a $3.7 million stake that comes via 425,893 shares.
6. VEON Ltd. (NASDAQ:VEON)
Shah Capital’s Stake Value: $34 million
Percentage of Shah Capital’s 13F Portfolio: 8.87%
Number of Hedge Fund Holders: 10
VEON Ltd. (NASDAQ:VEON) is a Dutch telecommunications services provider that is headquartered in Amsterdam, Netherlands. The company provides a host of services such as short messages, mobile finance, fixed and wireless broadband, and caller identification.
Shah Capital owned 74 million VEON Ltd. (NASDAQ:VEON) shares as part of its Q2 2022 portfolio. These let it hold a $34 million stake in the company which represented 8.87% of its investment portfolio. During the same time period, ten out of the 895 hedge funds polled by Insider Monkey had invested in the firm.
VEON Ltd. (NASDAQ:VEON)’s shares have taken a beating on the stock market this year, with the fallout from the Russian invasion of Ukraine battering the share price by a massive 78% year to date. Its net debt is 12 times its market capitalization, and any peaceful resolution of the Ukraine crisis stands to be a major upward catalyst for the share price.
VEON Ltd. (NASDAQ:VEON)’s largest investor after Mr. Shah’s hedge fund is David Iben’s Kopernik Global Investors which owns 16 million shares that are worth $7.3 million.
Alongside ReneSola Ltd (NYSE:SOL), New Oriental Education & Technology Group Inc. (NYSE:EDU), and Antero Resources Corporation (NYSE:AR), VEON Ltd. (NASDAQ:VEON) is a top Himanshu Shah stock pick.
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Disclosure: None. Top 10 Stock Picks of Himanshu Shah’s Shah Capital is originally published on Insider Monkey.
