In this article, we discuss the top 10 stock picks of Peter S. Park’s Park West Asset Management based on Q3 holdings of the fund.
Peter S. Park manages Park West Asset Management, which is based in Larkspur, California. Since November 2002, he has been associated with the hedge fund.
Park West Asset Management generally invests most of its stock assets in consumer goods or services. The three basic hedge fund strategies are long/short investing, event-driven investing, and credit/high yield investing. The hedge fund’s 13F public stock portfolio was valued at $4.21 billion at the end of the third quarter of 2021. The top ten holdings of Park West Asset Management presently account for 47.49% of the Q3 portfolio. The hedge fund made new purchases in 30 equities during the third quarter, increased interests in 30 stocks, dumped 43 equities, and decreased holdings in 18 stocks.
Block, Inc. (NYSE:SQ), Workday, Inc. (NASDAQ:WDAY), and Sea Limited (NYSE:SE), among others, are some of the most important holdings to evaluate based on Peter S. Park’s stock portfolio in the third quarter of 2021.
Peter S. Park’s Park West Asset Management holds 331,400 shares of Block, Inc. as of Q3 2021, a stake that amounts to $79.48 million. On January 7, RBC Capital analyst Daniel Perlin lowered his price objective on Block, Inc. to $203 from $295 but kept an “Outperform” rating on the shares. His stock revaluation reflects the significant multiple drops in the payments market.
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The hedge fund chaired by Peter S. Park holds 224,750 shares in Workday, Inc., worth over $56.16 million. Park West Asset Management’s stake in Workday, Inc. shares increased by 4% in the third quarter of 2021. In November, Needham analyst Scott Berg raised his price target on Workday, Inc. to $360 from $310 and kept a “Buy” rating on the shares.
Park West Asset Management holds 188,000 shares in Sea Limited, valued at over $59.92 million. The hedge fund’s stake in Sea Limited stock increased by 18% in the third quarter of 2021. Sea Limited was upgraded to “Buy” from “Neutral” by BofA analyst Sachin Salgaonkar in January, with a price objective of $287, down from $385. The analyst’s new price target is lower than the consensus, and he has drastically cut his multiples in reaction to the lower expectations.
Our Methodology
Here is a list of top 10 stock picks of Peter S. Park’s Park West Asset Management. We used Park West Asset Management’s 13F portfolio for Q3 2021 for this analysis. The hedge fund data discussed is based on the 867 hedge funds being tracked by Insider Monkey as of the third quarter of 2021.
Top Stock Picks of Peter S. Park’s Park West Asset Management
10. Fortinet, Inc. (NASDAQ:FTNT)
Park West Asset Management Stake Value: $97,072,000
Percentage of Park West Asset Management’s 13F Portfolio: 2.3%
Number of Hedge Fund Holders: 38
Fortinet, Inc. (NASDAQ:FTNT) offers cybersecurity solutions to many companies, including large corporations, communication service providers, and small businesses. Jim Simons’ Renaissance Technologies is Fortinet, Inc.’s most significant stakeholder (NASDAQ:FTNT) as of Q3 2021, holding 1.06 million shares worth almost $309.53 million.
Mizuho analyst Gregg Moskowitz decreased Fortinet, Inc.’s price objective to $335 from $355 in December and maintained a “Neutral” rating. In 2022, the analyst anticipates cautious optimism in the software industry.
The number of hedge funds tracked by Insider Monkey having stakes in Fortinet, Inc. grew to 38 in Q3 2021, up from 32 funds in the preceding quarter. These stakes hold a consolidated value of $1.14 billion, up from $850.55 million.
Along with Block, Inc., Workday, Inc., and Sea Limited, Fortinet, Inc. is one of the stocks to buy according to Peter S. Park’s Park West Asset Management.
ClearBridge Investments, in its third-quarter 2021 investor letter, mentioned Fortinet, Inc.. Here is what the fund said:
“Performance among our cohort of IT and Internet companies was mixed, with enterprise software makers thriving while more consumer-oriented stocks faced headwinds. Cyber security software maker Fortinet benefited from a heightened awareness of the need to protect against sophisticated attacks. We are attracted to the recurring revenue nature of these software companies that are increasingly delivering their products on a subscription basis through the cloud. Software business models also tend to avoid many of the inflationary issues facing companies with a physical product or service.”
9. Lithia Motors, Inc. (NYSE:LAD)
Park West Asset Management Stake Value: $104,623,000
Percentage of Park West Asset Management’s 13F Portfolio: 2.48%
Number of Hedge Fund Holders: 64
Lithia Motors, Inc. (NYSE:LAD) is a company that runs automotive franchises and sells new and used cars. Domestic, Import, and Luxury are the three categories in which it operates. In the third quarter, Park West Asset Management sold 101,305 shares of Lithia Motors, Inc. stock, reducing its stake by about 24%. The hedge fund still holds 330,000 shares of Lithia Motors, Inc., worth about $104.62 million.
In November, Morgan Stanley analyst Adam Jonas lowered his price target on Lithia Motors, Inc. to $303 from $335 and maintained an “Underweight” rating on the shares. Even though franchise dealers outperformed consensus estimates in the third quarter, Jonas anticipates long-term business difficulties despite peak profitability.
According to our database, the number of Lithia Motors, Inc.’s long hedge funds positions increased at the end of the third quarter of 2021. As a result, there were 64 hedge funds that held a position in Lithia Motors, Inc., compared to 63 funds in the second quarter.
8. Change Healthcare Inc. (NASDAQ:CHNG)
Park West Asset Management Stake Value: $121,452,000
Percentage of Park West Asset Management’s 13F Portfolio: 2.88%
Number of Hedge Fund Holders: 50
Change Healthcare Inc. (NASDAQ:CHNG) is a privately held healthcare technology firm. Following the company’s Q2 earnings, Piper Sandler analyst Sean Wieland boosted his price objective on Change Healthcare Inc. to $26 from $25.75 and reiterated an “Overweight” rating on the stock on January 3.
Park West Asset Management started building its position in Change Healthcare Inc. in the fourth quarter of 2019 and holds 5.80 million shares in the company as of Q3 2021, valued at $121.45 million. Change Healthcare Inc. represents 2.88% of the hedge fund’s 13F portfolio.
Of the 50 hedge funds that were bullish on Change Healthcare Inc. according to the third quarter database of Insider Monkey, Abrams Capital Management is the leading stakeholder of the company, holding 16.98 million shares worth $355.52 million.
7. Nexstar Media Group, Inc. (NASDAQ:NXST)
Park West Asset Management Stake Value: $122,419,000
Percentage of Park West Asset Management’s 13F Portfolio: 2.9%
Number of Hedge Fund Holders: 38
Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media firm that buys, builds, and operates television stations, interactive community websites, and digital media services. In the third quarter of 2021, Peter S. Park increased his stake in Nexstar Media Group, Inc. by 18%, and his position worth about $122.42 million.
In November, Loop Capital analyst Alan Gould boosted Nexstar Media Group, Inc.’s price target to $200 from $175 and maintained a “Buy” rating on the stock following the company’s Q3 earnings, sales, and EBITDA beat.
Nexstar Media Group, Inc. is getting the attention of the smart money, as 38 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the third quarter, up from 34 funds a quarter earlier.
Richie Capital Group, an investment management firm, in its first-quarter 2021 investor letter mentioned Nexstar Media Group, Inc.. Here is what the fund said:
“Nexstar Media Group (NXST – up 28.9%) – The television broadcasting and digital media company reported strong Q4 earnings with revenue growing 25% over the year prior. The company set records across every key financial metric and exceeded management outlook. For the full year, the company boosted free cash flow by 191% partly as a result of the full integration of their Tribune Media acquisition. The company still trades at an attractive valuation and offers a 17% FCF yield. The Supreme Court’s recent ruling allowing the FCC to loosen local media ownership restrictions will support more consolidation within the industry. This is a positive for NXST who is well positioned to acquire strategic assets. You can find our original investment thesis here.”
6. Scientific Games Corporation (NASDAQ:SGMS)
Park West Asset Management Stake Value: $124,908,000
Percentage of Park West Asset Management’s 13F Portfolio: 2.96%
Number of Hedge Fund Holders: 24
Scientific Games Corporation (NASDAQ:SGMS) creates technology-based goods, services, and related content. Gaming, Lottery, SciPlay, and Digital are the company’s business segments. Scientific Games Corporation’s largest investor as of Q3 2021 is Debra Fine’s Fine Capital Partners, owning 9 million shares worth $747.60 million.
In November, Deutsche Bank analyst Carlo Santarelli raised his price target on Scientific Games Corporation to $71 from $63 and maintained a “Hold” rating on the shares. In the third quarter earnings published by Scientific Games Corporation, the EPS totaled $0.96, beating estimates by $0.63.
At the end of the third quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $1.54 billion in Scientific Games Corporation, compared to the same number of funds in the preceding quarter, holding stakes totaling $1.45 billion.
Just like Block, Inc., Workday, Inc., and Sea Limited, Scientific Games Corporation is one of the notable stocks in Peter S. Park’s Park West Asset Management 13F portfolio in Q3.
5. Option Care Health, Inc. (NASDAQ:OPCH)
Park West Asset Management Stake Value: $146,615,000
Percentage of Park West Asset Management’s 13F Portfolio: 3.48%
Number of Hedge Fund Holders: 30
Option Care Health, Inc. (NASDAQ:OPCH) provides infusion services at home and other locations. In addition, the business is involved in infusion treatment clinical management, nursing assistance, and care coordination. Park West Asset Management holds more than 6.04 million shares in Option Care Health, Inc. worth $146.62 million, representing 3.48% of its Q3 portfolio. The hedge fund has increased its stake in the firm by 1% in the third quarter of 2021.
Option Care Health, Inc. collected $891.93 million in revenue during the third quarter, beating analyst estimates by $5.46 million. After the solid Q3 results, Deutsche Bank analyst Pito Chickering boosted his price objective on Option Care Health, Inc. to $32 from $23.50 in November and reiterated a “Buy” rating on the stock.
Option Care Health, Inc. recently saw a decrease in hedge fund sentiment. The number of long hedge fund positions declined to 30 at the end of the third quarter, compared to 31 positions in the previous quarter.
4. ThredUp Inc. (NASDAQ:TDUP)
Park West Asset Management Stake Value: $199,895,000
Percentage of Park West Asset Management’s 13F Portfolio: 4.74%
Number of Hedge Fund Holders: 12
ThredUp Inc. (NASDAQ:TDUP) is a second-hand marketplace for women’s and children’s clothing, shoes, and accessories. In the third quarter, active buyers of ThredUp Inc. totaled 1.4 million, with orders totaling 1.3 million, up 14% and 28% over the previous quarter, respectively.
In November, Guggenheim analyst Seth Sigman commenced coverage of ThredUp Inc. with a “Buy” rating and a $25 price target. Park West Asset Management holds 9.22 million shares in ThredUp Inc., worth over $199.90 million, representing 4.74% of its third quarter portfolio.
As of the end of the third quarter, 12 hedge funds in Insider Monkey’s database held stakes in ThredUp Inc., compared to 13 funds in the second quarter.
3. Vonage Holdings Corp. (NASDAQ:VG)
Park West Asset Management Stake Value: $202,929,000
Percentage of Park West Asset Management’s 13F Portfolio: 4.81%
Number of Hedge Fund Holders: 29
Vonage Holdings Corp. (NASDAQ:VG) provides communication services to customers via cloud-connected devices. Park West Asset Management is Vonage Holdings Corp.’s largest shareholder. It has a $202.93 million stake in the firm. The hedge fund increased its position in Vonage Holdings Corp. by 32% in the third quarter of 2021.
Ericsson had agreed to buy all of Vonage Holdings Corp.’s (NASDAQ:VG) outstanding shares on November 22. As a result, Citi analyst Michael Rollins downgraded Vonage Holdings Corp. to “Neutral” from “Buy” with a price target of $21, as he does not expect any rival bids for Vonage Holdings Corp. at this time.
At the end of the third quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $843.02 million in Vonage Holdings Corp., as compared to a similar number of funds in the preceding quarter, with stakes equaling $708.09million.
Adestella Investment Management, in its fourth-quarter 2020 investor letter, mentioned Vonage Holdings Corp.. Here is what the fund said:
“Vonage (VG) – the VG thesis has largely played out as expected. The market has gradually shifted its focus from the declining consumer operations to the growing business ones, highlighted by the API unit. As its legacy home phone VOIP solutions continue to become a smaller and smaller portion of the overall pie, we think this trend will continue. If the API unit can continue to grow at 25-30%, that segment alone covers most of the enterprise value at just a ~6x sales multiple before giving any credit to the sizable UCaaS operations. The API unit’s closest comparable, Twilio (TWLO), currently trades at 31x sales, so it’s not unreasonable to think there’s upside to our estimate here. Shares have returned around 80% since our writeup (and slightly higher from our cost as we added in the weeks that followed), but we’ve maintained most of our position as the key growth drivers remain intact.”
2. Caesars Entertainment, Inc. (NASDAQ:CZR)
Park West Asset Management Stake Value: $219,945,000
Percentage of Park West Asset Management’s 13F Portfolio: 5.22%
Number of Hedge Fund Holders: 64
Caesars Entertainment, Inc. (NASDAQ:CZR), located in Reno, Nevada, is an American hotel and casino entertainment corporation. Park West Asset Management began building its stake in Caesars Entertainment, Inc. back in the third quarter of 2020. According to the 13F filings for the third quarter of 2021, the hedge fund holds 1.96 million shares of the company, worth about $219.95 million.
In December, Wells Fargo analyst Daniel Politzer trimmed his price target on Caesars Entertainment, Inc. to $127 from $145 and kept an “Overweight” rating on the shares. The recent decline in USSB/iGaming-exposed equities, according to Politzer, has generated some intriguing possibilities and he recommends Caesars Entertainment, Inc. to anybody who is interested in investing in digital gambling.
As of the end of the third quarter, 64 hedge funds in Insider Monkey’s database of 867 funds held stakes in Caesars Entertainment, Inc., compared to 73 funds in the previous quarter.
1. Enovix Corporation (NASDAQ:ENVX)
Park West Asset Management Stake Value: $228,798,000
Percentage of Park West Asset Management’s 13F Portfolio: 5.43%
Number of Hedge Fund Holders: 23
Enovix Corporation (NASDAQ:ENVX) develops and manufactures innovative silicon-anode lithium-ion batteries. The company’s patented 3D cell layout boosts energy density while also ensuring long cycle life. In November, Enovix Corporation published its financial results for the third quarter, announcing a loss per share of $0.08, beating estimates by $0.02.
Cowen analyst Gabe Daoud initiated coverage of Enovix Corporation on January 4 with an “Outperform” rating and a $32 price target. Park West Asset Management added Enovix Corporation to its portfolio in the third quarter of 2021 by purchasing 12.73 million shares.
Overall, 23 hedge funds monitored by Insider Monkey were bullish on Enovix Corporation in the third quarter. The collective stakes held by these funds are valued at $661.84 million.
You can also take a look at Top 10 Stock Picks of Billionaire Nicholas Pritzker and Top 10 Stock Picks of Barry Rosenstein’s JANA Partners
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This article is originally published at Insider Monkey.
