In this article, we will discuss Top 10 Stock Picks of Touk Sinantha’s AltraVue Capital. You can skip our detailed analysis of AltraVue Capital’s strategy and Touk Sinantha’s investment style and go directly to Top 5 Stock Picks of Touk Sinantha’s AltraVue Capital.
Touk Sinantha is a co-founder at AltraVue Capital, which is an investment management firm based out of Bellevue, Washington. The company was incorporated in 2016 and offers investment advisory and financial planning services to its clients. Touk Sinantha holds a CFA charter and has over 11 years of experience in the financial services sector.
AltraVue Capital looks for value stocks that have the potential to generate superior long-term returns. The fund’s investment strategy entails having a concentrated portfolio of quality businesses that are overlooked by the market. As of the second quarter of 2022, the fund has a top 10 holding concentration of 54.24%, and the fund’s top stock pick remained StoneX Group Inc. (NASDAQ:SNEX) during the quarter.
AltraVue Capital’s last filing for Q2 2022 revealed that the fund currently owns 33 stocks across 7 sectors. The fund remains largely invested in the financial services and IT sector.
Photo by Adam Nowakowski on Unsplash
Our Methodology
We picked the top 10 stocks from AltraVue Capital’s portfolio as of its Q2 2022 filing.
Top 10 Stock Picks of Touk Sinantha’s AltraVue Capital
10. Palantir Technologies Inc. (NYSE:PLTR)
AltraVue Capital: $23,557,000
Percentage of AltraVue Capital’s Portfolio: 3.46%
Number of Hedge Fund Holders: 26
Palantir Technologies Inc. (NYSE:PLTR) offers enterprises tools to manage big data sets to provide insights and intelligence. AltraVue Capital added to its stake in Palantir Technologies Inc. (NYSE:PLTR) by 27% during Q2 2022 and currently has a $23.5 million stake in the company. Palantir Technologies Inc. (NYSE:PLTR) constituted 3.46% of the fund’s 13F portfolio at the end of Q2 2022.
Q2 2022 was a good quarter for Palantir Technologies Inc. (NYSE:PLTR), as the company reported revenue of $473.0 million, up 25.9% from $375.6 million in the same period last year. The company reported a normalized EPS of $-0.01, missing the consensus estimate by $0.04. The management expects revenue for the third quarter of 2022 to be in the range of $474 million and $475 million.
Here is what Tao Value has to say about Palantir Technologies Inc. (NYSE:PLTR) in its Q4 2021 investor letter:
We have no new position this quarter and have made below changes to our portfolio. We also sold Palantir (PLTR) as I identified it subject to high retail bubble risk (using above method) and are not part of our core “Mindful Compounder” holdings.
In addition to Palantir Technologies Inc. (NYSE:PLTR), AltraVue Capital had investments in Avid Bioservices, Inc. (NASDAQ:CDMO), ePlus inc. (NASDAQ:PLUS), and StoneX Group Inc. (NASDAQ:SNEX).
9. Dollar General Corporation (NYSE:DG)
AltraVue Capital: $27,703,000
Percentage of AltraVue Capital’s Portfolio: 4.07%
Number of Hedge Fund Holders: 51
Dollar General Corporation (NYSE:DG) is a leading American retailer present in 47 states across the country in over 18 thousand locations. Touk Sinantha didn’t make any changes to her stake in Dollar General Corporation (NYSE:DG) during Q2 2022. The fund, as of end of the June quarter, held 112,870 shares of the company.
On September 16, Matthew Boss, an analyst at JPMorgan, increased his price target on shares of Dollar General Corporation (NYSE: DG) to $294 from the previous $287. The analyst noted that the retail environment saw a better operating environment at the start of the third quarter in August, and the CEOs remain firm on their outlook for the next two quarters.
Here’s what LRT Capital Management said about Dollar General Corporation (NYSE: DG) in its Q3 2021 investor letter:
Executive Summary
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.
Company Overview
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation.
The first Dollar General store opened on June 1, 1955 in Springfield Kentucky. The simple concept was that no item in the store would cost more than one dollar. The company changed its name to Dollar General Corporation in 1968 when Dollar General became publicly traded. At the time of its initial public offering, the business generated more than $40 million in annual sales. The company’s common stock was publicly traded from 1968 until July 2007, when it was taken private by KKR. The company went public again in November 2009, under the ticker DG.
Today, Dollar General is an evolved, and phenomenal business with more room for growth. Annual sales reached a record $33.7 billion in fiscal year 2021 after consecutively growing the top line for many years. The company’s main products are every-day necessities and consumables purchased by lower income consumers on tight budgets…
8. BGC Partners, Inc. (NASDAQ:BGCP)
AltraVue Capital: $28,402,000
Percentage of AltraVue Capital’s Portfolio: 4.17%
Number of Hedge Fund Holders: 25
BGC Partners, Inc. (NASDAQ:BGCP) is a global provider of broker and financial technology services. The company’s offerings include products in fixed income securities and trading platform for investing in the equity markets.
AltraVue Capital increased its investment in BGC Partners, Inc. (NASDAQ:BGCP) by 13% during Q2 2022, and the total investment of the fund in the company amounted to $28.4 million at the end of the quarter.
BGC Partners, Inc. (NASDAQ:BGCP) reported revenue of $435.7 million during Q2 2022, down 14.9% YoY and missing the market consensus estimate by $4.7 million. The company posted a normalized EPS of $0.17 for the quarter, beating the market estimate by $0.01. BGC Partners, Inc. (NASDAQ:BGCP) generates a significant portion of its revenues in non-U.S dollar-denominated currencies. The company experienced volatile currency movements during the quarter as the US dollar continued to strengthen.
As per Insider’s Monkey database, 25 hedge funds owned stakes in BGC Partners, Inc. (NASDAQ:BGCP) at the end of the June quarter, while Rubric Capital Management remained the leading hedge fund with the biggest holding in the stock. The fund owned 16,250,000 shares of the company at the end of Q2 2022.
7. UFP Technologies, Inc. (NASDAQ:UFPT)
AltraVue Capital: $28,678,000
Percentage of AltraVue Capital’s Portfolio: 4.21%
Number of Hedge Fund Holders: 5
UFP Technologies, Inc. (NASDAQ:UFPT) designs and manufactures components and packaging material for the medical sector. Touk Sinantha sold some of her stake in UFP Technologies, Inc. (NASDAQ:UFPT) in Q2 2022. The fund reduced its exposure to the company by 7% during the quarter. UFP Technologies, Inc. (NASDAQ:UFPT) has had a great 2022 as the company’s stock is up 20.19% YTD compared to Nasdaq’s decline of 30.20%.
UFP Technologies, Inc. (NASDAQ:UFPT) reported stellar results for Q2 2022 with revenue of $94.34 million, up 86.25% YoY and beating the market estimate by $18.44 million. The company reported a normalized EPS of $1.17, beating the market consensus estimate by $0.43. The CEO stated that the strong growth during the previous quarter was mainly attributable to the resolution of the company’s supply chain issues.
Here’s what Diamond Hill Capital Management said about UFP Technologies, Inc. (NASDAQ:UFPT) in its Q2 2022 investor letter:
UFP Technologies, Inc. (NASDAQ:UFPT is an innovative designer and custom manufacturer of components, sub-assemblies, packaging and products primarily for the medical market. It is executing well on its strategy to drive growth both organically and via acquisitions. We like management’s focus on its med-tech segment, which is now approximately 80% of its business and has higher margins and greater organic growth potential. The global medical device market is large and growing, as is the overall use of specialty materials that UFPT has experience with across a broad range of applications. We believe there will be growing need for the increasingly specialized/customized aspects of the business.
6. Baker Hughes Company (NASDAQ:BKR)
AltraVue Capital: $33,786,000
Percentage of AltraVue Capital’s Portfolio: 4.96%
Number of Hedge Fund Holders: 30
Baker Hughes Company (NASDAQ:BKR) is a provider of oilfield equipment and services. The company is also involved in industrial power generation as well. AltraVue Capital’s stake in the company remained unchanged during Q2 2022 at $33.8 million.
Keith Mackey, an analyst at RBC Capital, decreased his price target on Baker Hughes Company (NASDAQ:BKR) to $35 from the previous $36. The analyst expects the company to face headwinds in the short-term, which will weigh on its EBITDA in the second half of 2022. However, the analyst has maintained an Outperform rating on the stock as he expects better cost structure for the company going forward in 2023.
Here is what Sound Shore Fund has to say about Baker Hughes Company (NASDAQ:BKR) in its Q1 2022 investor letter:
Energy was the best performing sector which was reflected in our top contributors. Energy technology provider Baker Hughes finished higher, driven by stronger than expected order growth in its liquid natural gas (LNG) turbo-machinery segment and increasing global rig count. Both companies have strong balance sheets with little debt and are returning capital via dividends and stock repurchases. Soaring energy prices and Europe’s unfortunate reliance on Russian supply reinforced our belief that low cost natural gas is both a strategic and economic advantage for the United States. Over the last several years, the pandemic, supply disruptions and lack of investment, along with extreme weather conditions had already driven prices higher. Still, natural gas is expected to play a critical role in the transition to renewable energy sources and these two investments benefit from the increased demand.
Baker is the dominant player in LNG projects and its growing backlog is a positive indicator of how this business may drive future earnings. They are also a leader in carbon capture technology and the development of hydrogen as a clean, alternative fuel source. Carbon capture technology is considered critical to delivering CO2 reductions needed to meet global climate and net-zero emissions targets. Applicable to both the energy and industrial sectors, carbon capture is among the most promising de-carbonization solutions for both existing facilities and new greenfield projects. We were able to purchase the stock at a below normal valuation and an attractive 8% free cash flow yield and we remain positive on its future prospects.
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Disclosure: None. Top 10 Stock Picks of Touk Sinantha’s AltraVue Capital is originally published on Insider Monkey