In this article, we will take a look at the Top 5 Stock Picks of Gavin Abrams’ Abrams Bison Investments. To read our analysis of Abrams’ profile, investment strategy, and methodology of this list, go directly to the Top 10 Stock Picks of Gavin Abrams’ Abrams Bison Investments.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $84.15 million
Percentage of Abrams Bison Investments portfolio: 9.51%
Number of Hedge Funds: 67
Based in California, Applied Materials, Inc. (NASDAQ:AMAT) is a semiconductor equipment manufacturing company. Abrams Bison Investments increased stakes in the company by 32% in the second quarter of 2022. The hedge held 925,000 shares in Applied Materials, Inc. (NASDAQ:AMAT) worth $84.15 million at the end of Q2 2022.
4. The Progressive Corporation (NYSE:PGR)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $84.41 million
Percentage of Abrams Bison Investments portfolio: 9.54%
Number of Hedge Funds: 54
The Progressive Corporation (NYSE:PGR) is an Ohio-based insurance holding company that operates in three segments – Personal Lines, Commercial Lines, and Property. Riding on increased premiums, the company stock is rising. On 17 August 2022, there was a 3.1% hike in the company stock’s value. In the second fiscal quarter, The Progressive Corporation (NYSE:PGR) reported a normalized EPS of $0.79. The company’s revenue in the second quarter came in at $12.42 billion.
Raymond James analyst C. Gregory Peters kept an Outperform rating on shares and raised the firm’s price target to $140 from $135.
Overall, the company remained a popular stock among hedge funds. At the end of the second quarter of 2022, 54 hedge funds in the database of Insider Monkey held stakes worth $1.82 billion in The Progressive Corporation (NYSE:PGR). As of September 12, Orbis Investment Management owned shares worth $542.01 million in The Progressive Corporation (NYSE:PGR), making it the largest shareholder.
Here is what LRT Capital Management has to say about The Progressive Corporation (NYSE:PGR) in its Q1 2022 investor letter:
Progressive is a leading U.S. auto insurer that has pioneered telemetrics as a source of differentiation in its underwriting and it operates through a direct (non-agency) sales model. We believe that the company’s sales model, which is still the minority model in the industry, confers on the company a durable process-based cost advantage that has allowed the company to deliver industry leading combined ratios (a standard measure of profitability in the insurance industry).
The company has plenty of room to grow and take market share from players such as State Farm, Farmers and Nationwide. The cost advantages conferred by the direct sales model are unstoppable, and the scale advantages the company has in advertising and other customer acquisition costs furthers its strong competitive position. We believe the industry structure is going to evolve towards a duopoly with Progressive and GEICO as the two main players.
While we do not believe telemetrics itself confers any competitive advantage as it is a technology that has been copied by other players, Progressive is a very innovative company, and it has evolved from being an insurer for the highest risk drivers to one that now targets the general population. GEICO on the other hand began its life as an insurer for the best drivers and has now evolved in the direction of insuring everyone. On the surface the companies are similar, but their different pasts continue to shape their corporate cultures and are evident in subtle ways in their decision-making processes arounds expense management and claims processing.
The company has a very conservative investment portfolio with over $44 billion in fixed income securities. 75% of their portfolio is held in securities with a duration of under five years, which means that an increase in interest rates will benefit the company as the portfolio will relatively rapidly reprice into higher yielding securities.
3. HCA Healthcare, Inc. (NYSE:HCA)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $103.35 million
Percentage of Abrams Bison Investments portfolio: 11.68%
Number of Hedge Funds: 63
Headquartered in Tennessee, HCA Healthcare, Inc. (NYSE:HCA) provides healthcare services in the US. Abrams Bison Investments has been a significant shareholder in the company stock since 2020. In the second quarter of 2022, the hedge fund increased its position in the stock by 4%, bringing the total value of stakes owned by Abrams Bison Investments to $103.35 million. This represents 11.68% of the hedge fund’s total portfolio.
In the Q2 fiscal year report, the company reported $14.82 billion in revenue and normalized EPS of $4.21. Both beat the estimates by $90.20 million and $0.50, respectively.
John Ransom, an analyst at Raymond James, kept an Outperform rating on the shares in September 2022.
When looking at the institutional investors followed by Insider Monkey, Harris Associates, holds the biggest position in HCA Healthcare, Inc. (NYSE:HCA).
2. Pioneer Natural Resources Company (NYSE:PXD)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $133.40 million
Percentage of Abrams Bison Investments portfolio: 15.08%
Number of Hedge Funds: 56
Pioneer Natural Resources Company (NYSE:PXD) is an oil and gas exploration company. The year has been good for energy stocks which gave high returns to investors. Amongst these stocks Pioneer Natural Resources Company (NYSE:PXD) was a prominent name. The company has a good dividend history and has been paying dividends for 4 years. In August 2022, Pioneer Natural Resources Company (NYSE:PXD) reported a dividend of $1.10 with a 1.81% dividend yield.
Citi analyst Scott Gruber maintained a Buy rating on the shares and lowered the firm’s price target for Pioneer Natural from $260 to $257.
In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks, and Pioneer Natural Resources Company (NYSE:PXD) was one of them. Here is what the fund said:
Pioneer Natural Resources (NYSE:PXD) performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.
1. TD SYNNEX Corporation (NYSE:SNX)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $197.75 million
Percentage of Abrams Bison Investments portfolio: 22.34%
Number of Hedge Funds: 19
Operating in the information technology sector, TD SYNNEX Corporation (NYSE:SNX) provides business process services in the United States and internationally. Abrams Bison Investments holds shares worth $197.59 million in TD SYNNEX Corporation (NYSE:SNX).
On Oct 6 2022, RBC Capital analyst Ashish Sabadra initiated coverage of TD Synnex with a Sector Perform rating and $95 price target.
You can also take a look at Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks and 10 Best Stocks to Buy Now According to Billionaire Andreas Halvorsen.
