In this article, we take a look at the top 5 stocks Kettle Hill Capital Management is buying. If you want to read our comprehensive analysis of Andrew Kurita’s history, investment philosophy, and hedge fund performance, go directly to Top 10 Stocks Kettle Hill Capital Management Is Buying.
5. Vail Resorts, Inc. (NYSE:MTN)
Kettle Hill appears to like the recent results and projections that Vail Resorts, Inc. (NYSE:MTN) has been able to deliver, as the fund opened a new position in the ski resort company during Q3 consisting of 42,934 shares. That holding was valued at $14.34 million on September 30.
Hedge funds have generally been bullish on Vail Resorts, Inc. (NYSE:MTN) even in the face of the pandemic, buying more shares on weakness rather than fleeing the stock and they’ve been rewarded with huge gains, as those shares have nearly doubled in value since the middle of 2020. Vail Resorts, Inc. (NYSE:MTN) announced strong season pass sales for the 2021/2022 season back in September, with unit sales up 42% year-over-year.
4. Bloomin’ Brands Inc. (NASDAQ:BLMN)
Bloomin’ Brands Inc (NASDAQ:BLMN) was another new addition to Kettle Hill’s 13F portfolio during Q3, with the fund opening a stake of 579,992 shares worth an even $14.5 million at the end of September. The restaurant operator has been popular among the hedge funds tracked by Insider Monkey’s database this year, hitting an 8-year high in ownership, which is up by 58% over the past three quarters. Given its meager market cap and burgeoning hedge fund ownership, BLMN has become one of the 5 Best Small-Cap Stocks to Buy According to Hedge Funds.
Bloomin’ Brands Inc (NASDAQ:BLMN)’s third quarter earnings were solid, with results passing estimates and margins improving, even as comps slid slightly. On the plus side, the latter appears to be the result of a popular promo from 2019 making comps more difficult, rather than a reflection of Bloomin’ Brands Inc (NASDAQ:BLMN) losing market share to its restaurant rivals.
3. FMC Corporation (NYSE:FMC)
FMC Corporation (NYSE:FMC) comes in third on our list of the top 10 stocks to buy now according to Kettle Hill Capital Management. The fund bought 235,889 shares of FMC during Q3, building a new position that was valued at $21.6 million on September 30 and which ranked as the fund’s 7th largest holding overall. Hedge funds began selling out of FMC Corporation (NYSE:FMC) this year after shares soared by more than 50% during the previous two years. Just 28 hedge funds were long FMC at the end of Q3, the lowest total since the first quarter of 2016.
Tweedy, Browne Company laid out the ongoing bullish case for FMC Corporation (NYSE:FMC) in its Q3 2021 investor letter, saying that the crop materials products have pricing power thanks to their patents and high barriers of entry due to the regulatory approval process, which is why FMC was able to deliver stellar EBITDA margins and Return on Equity in 2020 of 27% and 25% respectively. The fund also likes FMC’s new product pipeline.
2. Activision Blizzard, Inc. (NASDAQ:ATVI)
Coming in the runner-up position in Activision Blizzard, Inc. (NASDAQ:ATVI), which was Kettle Hill’s second-largest new buy of Q3 2021.289,969 shares of the video game developer were added to Kettle Hill’s portfolio, giving it a position worth $23.22 million. That gives Kettle Hill two video game developers among its top five stock picks, as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has been a favorite of the fund for over two years.
In its Q1 2021 investor letter, Cooper Investors noted that if Activision Blizzard, Inc. (NASDAQ:ATVI) can successfully replicate its Call of Duty model with its other popular franchises like Warcraft and Diablo, Activision Blizzard, Inc. (NASDAQ:ATVI) should be able to significantly increase its free cash flow and transition more into a recurring services provider than a publisher. Mobile and free-to-play versions of Call of Duty were released in 2020 which resulted in the franchise’s operating income more than doubling.
1. Mandiant Inc. (NASDAQ:MNDT)
Topping our list of Kettle Hill’s biggest new stock purchases of Q3 is Mandiant Inc (NASDAQ:MNDT), which also became the fund’s largest 13F position overall. Kettle Hill purchased 1.55 million shares of Mandiant Inc (NASDAQ:MNDT) during Q3, building a position worth $27.58 million on September 30. Kettle Hill’s huge buy was in stark contrast to the overall hedge fund industry’s sentiment, as 38% of former shareholders sold off the stock in Q3, leaving MNDT with its lowest hedge fund ownership since 2014.
Many hedge funds may be concerned about Mandiant Inc (NASDAQ:MNDT)’s lack of a roadmap to return the company to profitability, or management’s transparency when it comes to revealing it if they have one. Mandiant expected to lose $0.12 to $0.13 per share in Q4. It’s also unclear how to company plans to address share dilution or capital allocation as it pursues new growth initiatives.
You can also take a peek at the 10 Best Advertising Stocks to Buy Now and 15 Best Bourbons in the World.
