Below we present the list of the top 5 must-have finance stocks according to Parsa Kiai’s Steamboat Capital Partners. For our methodology and a more comprehensive list, go directly to Top 10 Must-Have Finance Stocks According to Parsa Kiai’s Steamboat Capital Partners.
5. CURO Group Holdings Corp. (NYSE:CURO)
CURO Group Holdings Corp. (NYSE:CURO) ranks third on the list of Steamboat Capital Partners’ top finance stock picks, with the fund owning 952,425 CURO shares on September 30 worth $16.51 million. Hedge fund ownership of CURO nearly doubled between the third quarter of 2020 and the first quarter of 2021, but decline by over 25% during the following two quarters.
The financing and loan services company completed its acquisition of consumer finance company Heights Finance at the end of 2021. CURO Group Holdings Corp. (NYSE:CURO) expects the deal to be accretive to the tune of $0.60 per share in 2022 and further bolsters the company’s geographic footprint.
CURO Group Holdings Corp. (NYSE:CURO) beat consensus Q3 revenue estimates, pulling in $209.28 million thanks in part to strong loan growth in Canada, where lending balances grew by 37% and revenue jumped by 63% year-over-year. CURO acquired Canadian point-of-sale (POS) company Flexiti early in 2021 and the division had a strong Q3, with originations more than doubling year-over-year.
4. International Money Express, Inc. (NASDAQ:IMXI)
Steamboat Capital sold off nearly half of its stake in its former top holding International Money Express, Inc. (NASDAQ:IMXI) during Q3, though the stock nonetheless remained one of its top 10 holdings and its fourth-largest finance holding. Steamboat owned 949,014 IMXI shares on September 30 valued at $15.85 million.
International Money Express, Inc. (NASDAQ:IMXI) was owned by 19 of the hedge funds tracked by Insider Monkey’s database on September 30, which represents a high in hedge fund ownership of the international money remittance company’s shares.
One of those hedge funds is Travis Cocke’s Voss Capital, which called IMXI a “compelling long” in its Q2 2021 investor letter. The fund, which bought more shares of International Money Express, Inc. (NASDAQ:IMXI) during Q3, likes the company’s capital-light business, its strong brand in core countries like Guatemala and Mexico, and its strong execution. The fund believes that the market is being unfairly critical of the company not going all-in on digital transactions, as Voss Capital believes IMXI’s customer base will be slow to adopt digital payments.
Voss Capital, an investment management firm, published its “Voss Value Offshore Fund” second-quarter 2021 investor letter and mentioned International Money Express, Inc. (NASDAQ:IMXI). Here‘s what the fund said:
“We believe Intermex (International Money Express, IMXI) is a compelling long. IMXI is an international money remittance company that focuses primarily on transactions emanating from the United States and going to Mexico and Guatemala. They make their money by charging a fixed fee for each remittance transaction (85% of revenue), and to a lesser degree from foreign exchange arbitrage on transactions (14%). Their customer base is primarily low-income and under-banked immigrants from Mexico and Guatemala with family/friends remaining in their home country that need financial support. We believe IMXI is a simple story to understand, with a clean capital structure, very low capital intensity (outside of some working capital swings), a strong brand, savvy management, and excellent ongoing execution (e.g., 15-20% growth at high incremental margins). We believe there are flaws in the negative narrative surrounding the company that we can exploit, namely the skepticism around the sustainability of its growth, the stickiness of the customer base, and a misunderstanding about the economics of a digital remittance transaction versus in-person.
The consensus narrative on Wall Street is that IMXI is making a strategic error by not going “all in” on digital transactions, as MoneyGram (MGI), Western Union (WU), and well-backed private competitors like Remitly and Wise are. You will hear that the wave of the VC money shows you what the future beholds, and remittances initiated via physical brick & mortar stores are dying. As the digital transition occurs, Intermex will lose their customer base, and given the operating leverage in the model, profitability will be hit hard. Bears also argue that digital is cheaper, easier, and should create a stickier customer base in the long term. Furthermore, Intermex’s focus on only a few markets makes it hard to scale the business and they will quickly run into a wall on growth…” (Click here to see the full text)
3. Equitable Holdings Inc. (NYSE:EQH)
Closing out the first half of our list of Steamboat Capital Partners’ top finance stock picks is financial services company Equitable Holdings Inc (NYSE:EQH), which the investment advisor owned 492,145 shares of on September 30 worth $14.59 million. Steamboat timed its entry into EQH exceptionally well, initiating a position in Q2 2020. Equitable Holdings Inc (NYSE:EQH) shares have gained 75% since the end of that quarter.
As with Donnelley Financial, Equitable Holdings Inc (NYSE:EQH) is coming off a very strong Q3 during which it grew its EPS by 56% year-over-year to $1.94, beating estimates by 39%. Revenue hit $3.62 billion, also topping estimates, while assets under management hit a record high of $871 billion, up by 17%. Hedge funds appear to be impressed by Equitable Holdings’ investment income reallocation and risk management initiatives over the past few years, which have better positioned the company to thrive amid the evolving regulatory landscape.
Stocks like Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB), and Amazon.com, Inc. (NASDAQ:AMZN) may be sexier, but Steamboat Capital Partners’ top five finance stock picks have some star power of their own, including Paypal Holdings, Inc. (NASDAQ:PYPL). Check them out at the link below.
2. Victory Capital Holdings, Inc. (NASDAQ:VCTR)
515,361 shares of Victory Capital Holdings, Inc. (NASDAQ:VCTR) were held in the 13F portfolio of Steamboat Capital Partners on September 30, down by 13% quarter-over-quarter. The position was valued at $18.04 million and ranked as the fund’s second-most valuable finance position. The holding has been a successful one for the fund, as VCTR shares have nearly doubled in value since Steamboat first took a stake in Victory Capital Holdings, Inc. (NASDAQ:VCTR) in Q4 of 2019.
The investment management firm, which had $162.6 billion in assets under management on October 31, has achieved EBITDA margins of greater than 50% over each of the past five quarters. Victory Capital Holdings, Inc. (NASDAQ:VCTR) announced in November that it will acquire investment platform WestEnd Advisors for $480 million, a deal that will be immediately accretive to earnings and which aligns with the company’s new strategy of targeting companies that will boost its flows.
1. Virtus Investment Partners Inc. (NASDAQ:VRTS)
Topping the list of Steamboat Capital Partners’ must-have finance stocks is Virtus Investment Partners Inc (NASDAQ:VRTS), which also ranks as its top overall stock pick. The fund owned 104,264 shares of VRTS on September 30, a 50% hike from a quarter earlier. Hedge fund ownership of the asset management company doubled between mid-2020 and the end of September 2021, while the company’s stock price tripled in value.
One of Billionaire Steve Cohen’s Top 5 Small-Cap Stock Picks, Virtus Investment Partners Inc (NASDAQ:VRTS) grew its assets under management to $187.2 billion at the end of 2021, a 6% increase quarter-over-quarter. However, the boost was primarily attributed to market performance as well as the addition of Westchester Capital Management’s assets, as net flows were close to even during Q4.
Virtus Investment Partners Inc (NASDAQ:VRTS) pulled in $266.3 million in Q4 revenue, which easily topped the lone analyst estimate that called for just $225.7 million. The company also announced an 83% hike to its quarterly cash dividend in August, boosting it to $1.50 per share which gives it a yield of 2.23%.
You can also take a peek at the 10 Best Dividend Paying Stocks To Buy According to David Harding’s Winton Capital Management and 10 Stocks to Buy Amid Rising Interest Rates.
