In this article, we will discuss Top 5 Stock Picks of Touk Sinantha’s AltraVue Capital. For the full list and the investment strategy of AltraVue Capital, head on to Top 10 Stock Picks of Touk Sinantha’s AltraVue Capital.
5. UnitedHealth Group Incorporated (NYSE:UNH)
AltraVue Capital: $33,879,000
Percentage of AltraVue Capital’s Portfolio: 4.98%
Number of Hedge Fund Holders: 91
One of the biggest private health insurers, UnitedHealth Group Incorporated (NYSE:UNH) serves 50 million members worldwide. In the last quarter, AltraVue Capital didn’t make any changes to its stake in UnitedHealth Group Incorporated (NYSE:UNH) during Q2 2022. The company’s stock constitutes 4.98% of the fund’s portfolio at the end of the second quarter 2022.
John Ransom, an analyst at Raymond James, increased his price target on UnitedHealth Group Incorporated (NYSE:UNH) to $635 from $620 previously. Recently, a judge ruled in favor of UnitedHealth Group Incorporated (NYSE:UNH), allowing it to proceed forward with its acquisition of Change Healthcare Inc. (NASDAQ:CHNG) which is the reason why the analyst raised his price target on the company’s stock.
Here is what RiverPark Wedgewood Fund has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2022 investor letter:
UnitedHealth Group also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services.
The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.
4. Nomad Foods Limited (NYSE:NOMD)
AltraVue Capital: $36,829,000
Percentage of AltraVue Capital’s Portfolio: 5.41%
Number of Hedge Fund Holders: 23
Nomad Foods Limited (NYSE:NOMD) is involved in the distribution and manufacturing of frozen foods products in Europe. AltraVue Capital increased its stake value in Nomad Foods Limited (NYSE:NOMD) by 1% during Q2 2022. The number of shares held of the company by the fund amounted to 1,842,363 at the end of the second quarter of 2022.
Nomad Foods Limited (NYSE:NOMD) reported Q2 2022 revenue of $718.19 million, up a slight 1.85% YoY, beating the market estimate by $22.33 million. The normalized EPS of $0.41 missed the consensus estimate by $0.02. The management remains confident on delivering its long-term EPS target of €2.30 in 2025.
At the end of Q2 2022, 23 hedge funds in Insider Monkey’s database were long on Nomad Foods Limited (NYSE:NOMD), and Polaris Capital Management was the leading stakeholder in the company at the end of the quarter, with a total holding worth $146 million in the company.
3. Avid Bioservices, Inc. (NASDAQ:CDMO)
AltraVue Capital: $41,739,000
Percentage of AltraVue Capital’s Portfolio: 6.13%
Number of Hedge Fund Holders: 17
Avid Bioservices, Inc. (NASDAQ:CDMO) is a clinical-stage biopharmaceutical firm involved in the development of products produced from mammalian cell culture. Touk Sinantha added to her investment in Avid Bioservices, Inc. (NASDAQ:CDMO) by 22% during the previous quarter, and the total value of the fund’s stake in the company amounted to $41.7 million at the end of Q2 2022.
Avid Bioservices, Inc. (NASDAQ:CDMO) performed well in fiscal Q4 2022, reporting revenue of $31.23 million, up 13.11% YoY, beating the market estimate by $2.27 million. The normalized EPS of $0.06 beat the market consensus estimate by $0.04. The management noted that Avid Bioservices, Inc. (NASDAQ:CDMO) remains focused on expansions as they continue to contribute to the company’s topline growth.
Here is what Laughing Water Capital has to say about Avid Bioservices, Inc. (NASDAQ:CDMO) in its Q2 2022 investor letter:
How Cheap is Cheap Enough?
Consider the case of Avid Bioservices (NASDAQ:CDMO), a large molecule, small batch Contract Drug Manufacturing Organization that will be familiar to all but our newest partners, as we owned shares from 1H 2018 until all but exiting our position in the low $30s in Q4 of 2021. Since that time, shares have declined precipitously as the company is both a “growth” stock and in the S&P Biotech ETF (XBI), which has declined ~36% YTD to quarter end. However, in my view Avid Bio is a baby with the bathwater, and we once again made Avid Bioservices a large position during the quarter.
First, unlike most “growth” stocks, Avid Bioservices is not a “disruptor.” You don’t have to make any blind assumptions about total addressable market (TAM), customer acquisition costs (CAC), or churn. There is very little risk of “garbage in, garbage out” when modeling Avid’s future. Rather, Avid’s assumed growth is tied to building additional manufacturing capacity. In my view, it is a much easier task to understand the dynamics of building an additional manufacturing facility than it is to understand the dynamics of alleged TAM, potential CAC, and unknown churn.
Second, unlike most biotech stocks, Avid is a real business, not a binary bet on whether or not a drug will meet its hoped-for end state. Lastly, and most importantly, Avid Bio has one characteristic that staunchly separates it from other high flying growth stocks and biotech stocks that have been punished by the market: it is set to gush cash in the not-too-distant future.
2. ePlus inc. (NASDAQ:PLUS)
AltraVue Capital: $43,380,000
Percentage of AltraVue Capital’s Portfolio: 6.37%
Number of Hedge Fund Holders: 14
ePlus inc. (NASDAQ:PLUS) offers information technology solutions via its several subsidiaries. AltraVue Capital decreased its investment in ePlus inc. (NASDAQ:PLUS) by 1% during Q2 2022. The fund held 816,640 shares of the company at quarter end.
For fiscal Q1, 2023, the company’s normalized EPS of $0.99 was in line with the market consensus estimate. The management in an analyst call commented that the strong demand for the company’s products and services in the technology segment was primarily the driver of revenue growth of the company in fiscal Q1 2023.
1. StoneX Group Inc. (NASDAQ:SNEX)
AltraVue Capital: $70,994,000
Percentage of AltraVue Capital’s Portfolio: 10.43%
Number of Hedge Fund Holders: 21
StoneX Group Inc. (NASDAQ:SNEX) is a global financial services provider operating in global payments, commodities, commercial hedging, securities, and trade clearing and execution services. Touk Sinantha decreased her investment in StoneX Group Inc. (NASDAQ:SNEX) by 1%. The fund held 909,366 shares of StoneX Group Inc. (NASDAQ:SNEX) as the company remained the top holding of the fund at the end of the second quarter of 2022.
StoneX Group Inc. (NASDAQ:SNEX) had a strong fiscal Q3 2022 quarter, reporting revenue of $528.9 million, up 22.5% YoY. The company reported a normalized GAAP EPS of $2.37, beating the market consensus estimate by $0.62. The CEO of the company Sean M. O’Connor stated that the company continues to see robust growth in all segments. However, the retail segment stood out with its performance during the quarter.
As per Insider Money’s proprietary database, 21 hedge funds are bullish on StoneX Group Inc. (NASDAQ:SNEX), as of the end of the second quarter. Nine Ten Partners has the biggest stake in the company, with a total investment value of $85 million at the end of the second quarter of 2022.
You can also take a look at Lakehouse Capital Expects Huge Growth in Visa (V) and Lakehouse Capital Exited its Position in PayPal Holdings (PYPL).
