In this article, we discuss the top 5 stock picks of Travis Cocke’s Voss Capital. If you want our detailed analysis of these stocks, go directly to Top 10 Stock Picks of Travis Cocke’s Voss Capital.
5. International Money Express, Inc. (NASDAQ:IMXI)
Voss Capital’s Stake Value: $16,783,000
Percentage of Voss Capital’s 13F Portfolio: 6.89%
Number of Hedge Fund Holders: 19
International Money Express, Inc. (NASDAQ:IMXI) is a Miami-based company that offers money remittance services in the United States, Latin America, Mexico, Africa, Central and South America, and the Caribbean. The company also provides financial processing solutions and payment services such as online payment options, prepaid debit cards, and direct deposit payroll cards.
Voss Capital purchased a stake in International Money Express, Inc. (NASDAQ:IMXI) in Q2 2021, buying 766,467 shares of the company, worth $11.3 million. The hedge fund elevated its position in International Money Express, Inc. (NASDAQ:IMXI) in the third quarter of 2021 by 31.12%, holding more than 1 million shares amounting to $16.7 million. The stock accounts for 6.89% of Travis Cocke’s third quarter investments.
On November 4, Credit Suisse analyst Nik Cremo maintained International Money Express, Inc. (NASDAQ:IMXI) with a Neutral rating and raised the price target on the shares from $18.5 to $19.
Headlands Capital is the leading stakeholder of International Money Express, Inc. (NASDAQ:IMXI) as of Q3 2021, with 1.6 million shares worth $28.3 million. Overall, 19 hedge funds were bullish on the stock in the third quarter.
Here is what Voss Capital has to say about International Money Express, Inc. (NASDAQ:IMXI) in its Q2 2021 investor letter:
“We believe Intermex (International Money Express, IMXI) is a compelling long. IMXI is an international money remittance company that focuses primarily on transactions emanating from the United States and going to Mexico and Guatemala. They make their money by charging a fixed fee for each remittance transaction (85% of revenue), and to a lesser degree from foreign exchange arbitrage on transactions (14%). Their customer base is primarily low-income and under-banked immigrants from Mexico and Guatemala with family/friends remaining in their home country that need financial support. We believe IMXI is a simple story to understand, with a clean capital structure, very low capital intensity (outside of some working capital swings), a strong brand, savvy management, and excellent ongoing execution (e.g., 15-20% growth at high incremental margins). We believe there are flaws in the negative narrative surrounding the company that we can exploit, namely the skepticism around the sustainability of its growth, the stickiness of the customer base, and a misunderstanding about the economics of a digital remittance transaction versus in-person.
The consensus narrative on Wall Street is that IMXI is making a strategic error by not going “all in” on digital transactions, as MoneyGram (MGI), Western Union (WU), and well-backed private competitors like Remitly and Wise are. You will hear that the wave of VC money shows you what the future beholds, and remittances initiated via physical brick & mortar stores are dying. As the digital transition occurs, Intermex will lose their customer base, and given the operating leverage in the model, profitability will be hit hard. Bears also argue that digital is cheaper, easier, and should create a stickier customer base in the long term. Furthermore, Intermex’s focus on only a few markets makes it hard to scale the business and they will quickly run into a wall on growth. (Click here to read the full text)
4. Extreme Networks, Inc. (NASDAQ:EXTR)
Voss Capital’s Stake Value: $18,866,000
Percentage of Voss Capital’s 13F Portfolio: 7.74%
Number of Hedge Fund Holders: 20
Extreme Networks, Inc. (NASDAQ:EXTR), a North Carolina-based company providing software-driven networking solutions worldwide, is one of the top stock picks of Travis Cocke’s Voss Capital as of Q3 2021. The hedge fund elevated its position in Extreme Networks, Inc. (NASDAQ:EXTR) by 16% in the third quarter, holding 1.9 million shares worth $18.8 million. The Extreme Networks, Inc. (NASDAQ:EXTR) stock represents 7.74% of the fund’s total Q3 securities.
Needham analyst Alex Henderson maintained a Buy rating on Extreme Networks, Inc. (NASDAQ:EXTR) on December 28 and set a price target of $18.50.
Publishing its financial results for Q4 2021 on January 27, Extreme Networks, Inc. (NASDAQ:EXTR) posted earnings per share of $0.21, beating estimates by $0.04. The $280.90 million revenue jumped 16.1% from the prior-year quarter, outperforming consensus estimates by $8.83 million.
A total of 20 hedge funds monitored by Insider Monkey in Q3 2021 were bullish on Extreme Networks, Inc. (NASDAQ:EXTR), with stakes equaling $123.8 million. Arrowstreet Capital held the leading stake in Extreme Networks, Inc. (NASDAQ:EXTR) during the third quarter, owning 2.25 million shares worth $22.1 million.
3. Sierra Wireless, Inc. (NASDAQ:SWIR)
Voss Capital’s Stake Value: $19,032,000
Percentage of Voss Capital’s 13F Portfolio: 7.81%
Number of Hedge Fund Holders: 14
Sierra Wireless, Inc. (NASDAQ:SWIR) is a Canadian company that provides device-to-cloud IoT solutions, connectivity services, cloud management software, and cellular modules and gateways to enterprise and industrial customers in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
Travis Cocke initially purchased shares of Sierra Wireless, Inc. (NASDAQ:SWIR) in the second quarter of 2021, and he boosted his position in the company by 423% in Q3 2021, holding 1.2 million shares worth $19 million. The Sierra Wireless, Inc. (NASDAQ:SWIR) stock accounts for 7.81% of his Q3 13F portfolio.
On January 20, to strengthen its balance sheet and provide additional liquidity, Sierra Wireless, Inc. (NASDAQ:SWIR) entered into a credit agreement for a new debt financing facility for C$60 million with a 4-years term. CIBC Innovation Banking and the Business Development Bank of Canada were the lenders for this program.
Trigran Investments is the biggest stakeholder of Sierra Wireless, Inc. (NASDAQ:SWIR) as of the third quarter of 2021, owning approximately 5 million shares worth $77.3 million. Overall, according to the Q3 database of Insider Monkey, 14 hedge funds were bullish on Sierra Wireless, Inc. (NASDAQ:SWIR), with collective stakes totaling $178.6 million.
Here is what Voss Capital has to say about Sierra Wireless, Inc. (NASDAQ:SWIR) in its Q3 2021 investor letter:
“We have had some success by investing in hardware-to-software business transitions, specifically with Extreme Networks (EXTR), Avid Technologies (AVID), and PAR Technologies (PAR). Our underlying thesis has been that these transitions are less understood and perceived to be riskier than perpetual software to SaaS software conversion stories. Indeed, transition is typically longer and requires more fundamental disruption, as the hardware R&D/sales process is significantly different than a Perpetual License to SaaS change. However, if you have a large captive customer base and a competent management team to execute on the plan, the rewards can be even greater, since the company often starts from a much lower valuation than a traditional software company.
It is against this backdrop that we introduce a new core sized position (a 6.6% portfolio weight), Sierra Wireless (SWIR). Sierra Wireless has a long and winding corporate history. By our count, they have gone through eight total business pivots from their IPO at the height of the Internet bubble through today, leaving many long-term investors understandably skeptical of yet another strategy pivot by newly appointed CEO Phil Brace…” (Click here to read the full text)
2. Griffon Corporation (NYSE:GFF)
Voss Capital’s Stake Value: $23,370,000
Percentage of Voss Capital’s 13F Portfolio: 9.59%
Number of Hedge Fund Holders: 11
Headquartered in New York, Griffon Corporation (NYSE:GFF) provides consumer and professional home building products in the United States, Europe, Canada, Australia, and internationally. The company was previously known as Instrument Systems Corporation and rebranded to Griffon Corporation (NYSE:GFF) in June 1992.
Voss Capital purchased 950,000 shares of Griffon Corporation (NYSE:GFF) in the third quarter of 2021, worth $23.3 million, representing 9.59% of the fund’s 13F portfolio for the period.
On February 1, Griffon Corporation (NYSE:GFF) declared a $0.09 per share quarterly dividend, in line with previous. The dividend is payable on March 23, to shareholders of record on February 23.
According to Insider Monkey’s Q3 data, 11 hedge funds were long Griffon Corporation (NYSE:GFF), with stakes totaling $156.6 million, as compared to 10 funds in the prior quarter, holding stakes in Griffon Corporation (NYSE:GFF) worth $148.8 million. The biggest stakeholder of the company is GAMCO Investors, with a $92.6 million position at the close of the third quarter of 2021.
1. Rimini Street, Inc. (NASDAQ:RMNI)
Voss Capital’s Stake Value: $27,696,000
Percentage of Voss Capital’s 13F Portfolio: 11.37%
Number of Hedge Fund Holders: 16
Rimini Street, Inc. (NASDAQ:RMNI) is a Nevada-based company specializing in enterprise-level Oracle and SAP software products, services, and technical support for multiple industries. Rimini Street, Inc. (NASDAQ:RMNI) sells its solutions via direct sales organizations in North America, Latin America, Europe, Africa, the Middle East, Asia, and the Asia Pacific.
Travis Cocke owns 2.87 million shares of Rimini Street, Inc. (NASDAQ:RMNI) as of Q3 2021, worth $27.6 million, representing 11.37% of his total third quarter investments. Rimini Street, Inc. (NASDAQ:RMNI) is the biggest holding in Voss Capital’s Q3 portfolio.
On January 19, Roth Capital analyst Richard Baldry upgraded Rimini Street, Inc. (NASDAQ:RMNI) to Buy from Neutral with an $8 price target, suggesting an upside of 53%.
According to Insider Monkey’s Q3 database, 16 hedge funds were long Rimini Street, Inc. (NASDAQ:RMNI), with stakes totaling $289.6 million. Adams Street Partners is the biggest stakeholder of Rimini Street, Inc. (NASDAQ:RMNI) as of Q3 2021, with 23.5 million shares worth $227.40 million.
Here is what Greystone Capital Management has to say about Rimini Street, Inc. (NASDAQ:RMNI) in their Q1 2021 investor letter:
“During the quarter I significantly added to client holdings in Rimini Street which has now become a top four position due to both additional purchases and share price appreciation from our initial cost basis. The reasoning behind the purchases, especially at prices 70-100% above where we initially started buying include information gleaned from management during the company’s February investor day event, as well as what I believe to be the business hitting an operational inflection point. I wrote about Rimini Street in the Q3 2020 letter, but things have progressed quickly in a positive way and there have now emerged what I believe to be multiple paths to achieve a very favorable return moving forward with a strong risk/reward profile.
With a clear valuation disconnect in place from an EV/ARR or EV/Gross Profit basis, Rimini Street is currently one of the cheapest profitable SaaS related stocks among a universe of inferior software companies. While I can point to some clear reasons for the undervaluation (which I believe will be transitory), the valuation discrepancy compared to lower quality businesses trading at high multiples of revenue does not make sense to me. Furthermore, as discussed below, I believe the company is taking the necessary steps to clean up the story which will have the effect of shining a light on the strength of the business and competitive position. (Click to read the full text)
You can also take a look at 10 Stocks to Sell According to Billionaire Daniel Sundheim and Charlie Munger’s Daily Journal Portfolio: Top Stock Picks.
