In this article, we look at the Top 5 Stock Picks of Naval Khera’s Brightline Capital. If you want to read our detailed analysis of the Mr. Khera’s portfolio, take a look at Top 10 Stock Picks of Naval Khera’s Brightline Capital.
5. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)
Mr. Khera’s Stake Value: $13.6 million
Percentage of Mr. Khera’s 13F Portfolio: 9.16%
Number of Hedge Fund Holders: 26
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is an American company headquartered in Purchase, New York and founded in 1992. It primarily offers outsourced aircraft and other aviation operating services. In addition to providing aircraft, it also provides other services such as crew, maintenance and service.
In its third quarter 2021 earnings report, Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) revealed that it had earned $1.02 billion in revenue and $4.88 in non-GAAP EPS, beating analyst estimates on both counts. Stiffel set the company’s share price target to $90 as it resumed coverage in June 2021.
Mr. Khera’s Brightline Capital held 200,000 shares of Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) during the second quarter of this year, in a stake that equaled $13.6 million and represented 9.16% of the overall portfolio. During the same time, 26 of the 873 hedge funds polled by Insider Monkey had holdings in the company.
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)’s largest shareholder is David Einhorn’s Greenlight Capital who owns $103 million of equity through 1.5 million shares.
In a second quarter 2021 letter, Greenlight Capital had the following to say about Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW):
Air Freight
COVID caused a dramatic reduction in passenger aviation. Passenger planes often carry freight in their bellies. With planes grounded, capacity came out of the industry. At the same time, freight demand expanded both due to the recovering economy and growing ecommerce, which often emphasizes air shipments. While there has been some recovery in passenger aviation, airlines are emphasizing narrow-body planes, which carry less freight than wide-body planes. Compared to 2019, current air freight demand is about 10% higher and capacity is about 10% lower. The result is that cargo rates have exploded.
Supply will be slow to come on-line. Some passenger planes are being converted to freighters, but conversion capacity for wide-bodies is limited and the aggregate impact of this will be modest. Meanwhile, air freight companies trade at tiny multiples of what investors assume to be peak profits. The implied cost of equity is quite high, which makes it difficult to justify adding assets. As a result, air freight companies are in no rush to order new planes, and in any case, new orders would take several years to build. The result is rates and profits are likely to be higher than expected for quite some time.
We own Atlas Air Worldwide (AAWW), which is poised to benefit. It trades at around 5x this year’s consensus earnings estimates.”
4. Dana Incorporated (NYSE:DAN)
Mr. Khera’s Stake Value: $16 million
Percentage of Mr. Khera’s 13F Portfolio: 10.79%
Number of Hedge Fund Holders: 24
Dana Incorporated (NYSE:DAN) is an American company headquartered in Purchase, New York, and founded in 1992. It primarily offers outsourced aircraft and other aviation operating services. In addition to providing aircraft, it also provides other services such as crew, maintenance and service.
In its third quarter 2021 earnings report, Dana Incorporated (NYSE:DAN) reported $2.2 billion in revenue and $0.41 in non-GAAP EPS, beating analyst estimates for revenue. RBC Capital reduced the company’s share price target to $25 in October 2021 citing the Q3 earnings miss and reduced guidance for the fiscal year.
Mr. Khera’s Brightline Capital held 675,000 shares of Dana Incorporated (NYSE:DAN) during the second quarter of this year, in a stake worth $16 million and 9.16% of its portfolio. During the same time, 24 of the 873 hedge funds polled by Insider Monkey had holdings in the logistics company.
Dana Incorporated (NYSE:DAN)’s largest shareholder is Carl Icahn’s Icahn Capital LP who owns $285 million of equity through 12 million shares.
3. The Chemours Company (NYSE:CC)
Mr. Khera’s Stake Value: $16.1 million
Percentage of Mr. Khera’s 13F Portfolio: 10.89%
Number of Hedge Fund Holders: 24
The Chemours Company (NYSE:CC) is an American chemicals company founded in 2014 and headquartered in Wilmington, Delaware. It provides substances called performance chemicals, that allow its customers to target several sectors such as the gold industry.
Naval Khera’s Brightline Capital owned 465,000 The Chemours Company (NYSE:CC) shares that were worth $16.1 million and represented 10.89% of his total portfolio value by the end of the second quarter. During the same time period, 24 of the 873 hedge funds polled by Insider Monkey held stakes in the company.
The Chemours Company (NYSE:CC)’s largest shareholder is John Petry’s Sessa Capital who owns 8.8 million shares worth $308 million.
In its second quarter 2021 investor letter, Miller Value Partners had the following to say about The Chemours Company (NYSE:CC):
“The Chemours Co (CC) rose 25.6% during the quarter. The company reported Q1 revenue of $1.436Bn, beating consensus of $1.413Bn and rising +10% Y/Y driven by positive volume contributions across all segments. Earnings Before Income Taxes Depreciation and Amortization (EBITDA) of $268M topped estimates of $265M and rose +4% Y/Y despite a $9M headwind tied to Winter Storm Uri. Better than expected results drove a Free Cash Flow (FCF) improvement of $41M Y/Y to -$21M and cash balance of $1.0Bn. Management raised Fiscal Year 2021 (FY21) guidance, including EBITDA of $1.1Bn-$1.25Bn (from $1.0Bn-$1.15Bn), Earnings Per Share (EPS) of $2.84-$3.56 (from $2.40-$3.12), and FCF greater than $450M (from >$350M). Additionally, peer Orica and private equity firms Littlejohn and One Rock are said to be among groups that submitted bids for the company’s Mining Solutions business. Binding bids are likely to come as soon as this month and are said to value the unit at over $600M (11% of the current market cap and 7% of FY20 revenue and EBITDA). Lastly, Chemours announced a CEO transition with Mark Vergnano moving to non-executive Chairman of the Board and COO Mark Newman becoming CEO effective July 1st. Mr. Newman has been with Chemours since the 2015 split from DuPont (DD), serving as CFO for four years before moving to the COO role in 2019.”
2. Arconic Corporation (NYSE:ARNC)
Mr. Khera’s Stake Value: $18.5 million
Percentage of Mr. Khera’s 13F Portfolio: 12.46%
Number of Hedge Fund Holders: 30
Arconic Corporation (NYSE:ARNC) is one of the oldest American companies founded in 1888 and headquartered in Pittsburg, Pennsylvania. It primarily deals with the construction and architecture sector, selling products such as roofing, ceiling, pipes, facades and gutters.
In its third quarter 2021 earnings report, Arconic Corporation (NYSE:ARNC) reported $1.89 billion in revenue and $0.15 in GAAP EPS, missing analyst estimates for both. Deutsche Bank, after the earnings, reduced the company’s share price target to $42 in November 2021 citing the share price drops leading to the earnings release.
Mr. Khera’s Brightline Capital held 520,000 shares of Arconic Corporation (NYSE:ARNC) during the second quarter of this year, in a stake worth $18.5 million and representing 12.46% of its portfolio. During the same time, 30 of the 873 hedge funds polled by Insider Monkey had holdings in the company.
Arconic Corporation (NYSE:ARNC)’s largest shareholder is William B. Gray’s Orbis Investment Management who owns $378 million of equity through 10 million shares.
1. Darling Ingredients Inc. (NYSE:DAR)
Mr. Khera’s Stake Value: $20 million
Percentage of Mr. Khera’s 13F Portfolio: 13.62%
Number of Hedge Fund Holders: 41
Darling Ingredients Inc. (NYSE:DAR), as its name suggests, offers ingredients and other solutions for customers in several industries such as fertilizers, animal food, industrial, fuel and bioenergy. It is also the oldest company on our list, having been founded in 1882 and is headquartered in Irving, Texas.
Mr. Khera’s Brightline Capital held 300,000 Darling Ingredients Inc. (NYSE:DAR) shares by the end of the second quarter of this year. These were worth $20 million and represented 13.62% of the investment company’s portfolio. Similarly, in the second quarter, out of the 873 hedge funds polled by Insider Monkey, 41 had held a stake in the company.
Raymond James raised the company’s price target to $105 in an August 2021 investor note, citing strong sustainability and quarterly earnings.
Ian Simm’s Impax Asset Management is Darling Ingredients Inc. (NYSE:DAR)’s biggest investor, with a stake of $190 million through 2.8 million shares.
