In this article, we discuss the top 5 stock picks of Steve Leonard’s Pacifica Capital Investments. If you want our detailed analysis of these stocks, go directly to the Top 10 Stock Picks of Steve Leonard’s Pacifica Capital Investments.
5. Jefferies Financial Group Inc. (NYSE:JEF)
Pacifica Capital Investments’ Stake Value: $29,370,000
Percentage of Pacifica Capital Investments’ 13F Portfolio: 9.49%
Number of Hedge Fund Holders: 37
Jefferies Financial Group Inc. (NYSE:JEF) is a New York-based financial services company that specializes in investment banking, institutional brokerage, securities research, mergers and acquisitions, corporate restructuring, and asset management. Steve Leonard, via Pacifica Capital Investments, holds a $29.3 million stake in Jefferies Financial Group Inc. (NYSE:JEF) as of the third quarter, which accounts for 9.49% of the firm’s investment portfolio.
As of Q3 2021, 37 hedge funds in the database of Insider Monkey were bullish on Jefferies Financial Group Inc. (NYSE:JEF), with a stake value of $684 million. This is compared to 29 hedge funds in the preceding quarter, owning stakes valued at $698 million. The leading stakeholder in Jefferies Financial Group Inc. (NYSE:JEF) is Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, with 6.79 million shares worth over $252 million.
Jefferies Financial Group Inc. (NYSE:JEF) posted its Q3 results on September 30. EPS in the period came in at $1.50, beating estimates by $0.50. The Q3 revenue equaled $1.94 billion, exceeding estimates by $196.25 million.
On November 16, Keefe Bruyette analyst Michael Brown downgraded Jefferies Financial Group Inc. (NYSE:JEF) to Market Perform from Outperform with a price target of $46, citing the stock’s valuation as the reason for the downgrade.
Here is what GoodHaven Funds has to say about Jefferies Financial Group Inc. (NYSE:JEF) in its Q2 2021 investor letter:
“Jefferies Financial was our next biggest dollar gainer in the period, yet also remains undervalued in our opinion. We are running out of accolades to describe the string of great results at Jefferies. In their just reported six-month period, the core business earned over 35% return on tangible equity (ROTE) and more than doubled pre-tax income versus the prior year’s six months. Book value and tangible book value/share are now $40.77 and $30.29 respectively. Students of capital allocation should study Rich Handler. Over the last three years, Jefferies has repurchased 123 million shares for $2.6 billion at an average price of $21.04/share. Astute repurchases materially benefit remaining owners. While it’s reasonable to expect some normalization of Jefferies recent great results, Jefferies has gained market share in its core business and has a culture adept at finding new niches to earn good returns, while helping clients, and when existing niches become less profitable. Even if a more normalized ROTE is in store, we think that level will be materially higher than it has been in the recent past.”
4. Alphabet Inc. (NASDAQ:GOOG)
Pacifica Capital Investments’ Stake Value: $32,074,000
Percentage of Pacifica Capital Investments’ 13F Portfolio: 10.36%
Number of Hedge Fund Holders: 156
Alphabet Inc. (NASDAQ:GOOG), a top US tech company, represents 10.36% of Leonard’s Pacifica Capital Investments’ Q3 portfolio, with the firm holding a $32 million stake in the company. Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google and Google subsidiaries, created in 2015 with the intention of increasing transparency and accountability throughout the organization.
Alphabet Inc. (NASDAQ:GOOG) posted on October 26 its Q3 results. EPS for the quarter came in at $27.99, topping estimates by $4.75. The $65.12 billion revenue exceeded estimated revenue by $1.83 billion. Jefferies analyst Brent Thill raised the price target on Alphabet Inc. (NASDAQ:GOOG) from $3,325 to $3,500 and kept a Buy rating on the stock, following the strong Q3 earnings beat.
One of the leading Alphabet Inc. (NASDAQ:GOOG) stakeholders is Harris Associates, with 1.87 million shares valued at over $5 billion. Overall, 156 hedge funds in the database of Insider Monkey reported owning stakes worth $34.95 billion in Alphabet Inc. (NASDAQ:GOOG) as of September this year.
Here is what Oakmark Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet, a U.S. communication services provider, was once again a top contributor for the quarter, solidifying its rank as a top contributing stock for the one-year period. The company’s financial results repeatedly exceeded expectations. In particular, its revenue grew faster than expected and its margin trends improved across all segments. In addition, management has executed $24.4 billion of stock repurchases so far in 2021. After further examination, we recently increased our estimate of Alphabet’s intrinsic value based on the company’s better than expected operating leverage and its notable efficiency improvements. As a result, we continue to believe that Alphabet is trading at a significant discount to its intrinsic value.”
3. Starbucks Corporation (NASDAQ:SBUX)
Pacifica Capital Investments’ Stake Value: $44,643,000
Percentage of Pacifica Capital Investments’ 13F Portfolio: 14.42%
Number of Hedge Fund Holders: 58
Starbucks Corporation (NASDAQ:SBUX), the largest American coffeehouse chain, posted a Q3 EPS of $1.00 on October 28, in line with analysts’ consensus estimates. The $8.15 billion revenue for the third quarter missed estimates by -$77.46 million.
Steve Leonard’s Pacifica Capital Investments owns 404,709 shares in Starbucks Corporation (NASDAQ:SBUX) as of September this year, worth $44.6 million, representing 14.42% of the firm’s total investments.
As of Q3 2021, 58 hedge funds tracked by Insider Monkey were bullish on Starbucks Corporation (NASDAQ:SBUX), down from 63 in the preceding quarter, with a total stake value of $4.8 billion. Terry Smith’s Fundsmith LLP is the leading Starbucks Corporation (NASDAQ:SBUX) stakeholder, with a $1.18 billion stake in the company.
Argus analyst John Staszak on November 4 downgraded Starbucks Corporation (NASDAQ:SBUX) to Hold from Buy, citing rising labor costs, supply chain challenges, and increased competition.
Here is what Polen Capital has to say about Starbucks Corporation (NASDAQ:SBUX) in its Q2 2021 investor letter:
“For Starbucks, we believe the underlying businesses for the company remain strong. Starbucks has grappled with the impact of the pandemic, but results have continued to show an ongoing post-pandemic recovery.”
2. Five Below, Inc. (NASDAQ:FIVE)
Pacifica Capital Investments’ Stake Value: $62,525,000
Percentage of Pacifica Capital Investments’ 13F Portfolio: 20.20%
Number of Hedge Fund Holders: 40
Five Below, Inc. (NASDAQ:FIVE) was upgraded to Overweight from Neutral by Morgan Stanley analyst Simeon Gutman on October 7, who kept an unchanged price target of $230 on the stock. He stated that the stock is trading at a discount due to freight and inventory concerns, which are blown out of proportion.
Five Below, Inc. (NASDAQ:FIVE), an American discount store selling products under $5, is one of Steve Leonard’s top stock picks as of Q3. Pacifica Capital Investments holds a $62.5 million stake in the company, which accounts for 20.2% of the firm’s total 13F securities.
At the end of the third quarter of 2021, Balyasny Asset Management was one of the largest stakeholders of Five Below, Inc. (NASDAQ:FIVE), with a $90.6 million position in the company. Overall, 40 hedge funds were bullish on Five Below, Inc. (NASDAQ:FIVE), down from 42 in the preceding quarter.
Here is what Harding Loevner has to say about Five Below, Inc. (NASDAQ:FIVE) in their Q4 2020 investor letter:
“Throughout the year, we tried methodically to rebalance the portfolio between “stay at home” and “return to normal” whenever the market appeared too pessimistic or optimistic about the sustainability of recent, pandemic-driven trends. As the year went on, we found ourselves tilting more towards “return to normal.” We established a new position in US retailer Five Below, a discount chain built around a rather simple concept: fill nondescript big-box locations with as many as possible items priced under US$5 that can tickle the imagination of an American teen or tween. As “pre-2020” as that may sound, we were impressed by the company’s quick resumption of strong same-store sales growth after the lockdowns early in the year. Clearly, Five Below offers a value and entertainment proposition that e-commerce is not able to satisfy and which we can see ourselves “sitting” on potentially for years to come.”
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Pacifica Capital Investments’ Stake Value: $64,572,000
Percentage of Pacifica Capital Investments’ 13F Portfolio: 20.86%
Number of Hedge Fund Holders: 106
Berkshire Hathaway Inc. (NYSE:BRK-B) Class B shares were first issued in 1996, being affordably priced and having a modest share of equity value in the company. Berkshire Hathaway Inc. (NYSE:BRK-B) posted its Q3 results on November 6, with EPS for the quarter being $2.87, missing estimates by -$0.06. The $70.58 billion revenue was up 11.99% from the prior-year quarter, outperforming estimates by $163.14 million.
As of the third quarter, Leonard’s Pacifica Capital Investments holds a $64.5 million stake in Berkshire Hathaway Inc. (NYSE:BRK-B), which is the largest holding in the firm’s portfolio. The stock accounts for 20.86% of Steve Leonard’s Q3 portfolio.
Of the 867 hedge funds tracked by Insider Monkey as of September this year, 106 funds reported owning stakes in Berkshire Hathaway Inc. (NYSE:BRK-B), down from 116 in the previous quarter. The total value of these stakes amounted to $19.4 billion.
You can also take a look at 10 European Stocks to Buy According to Tom Russo’s Hedge Fund and 10 Small-Cap Stocks to Buy According to Australian Billionaire Kerr Neilson.
