Below is the list of 5 stocks to buy according to Charles Montanaro’s hedge fund. For a detailed discussion about Charles Montanaro’s investment philosophy and portfolio management strategies please see Top 10 Stocks to Buy According to Charles Montanaro’s Hedge Fund.
5. Paylocity Holding Corporation (NASDAQ:PCTY)
Montanaro Asset Management’s Stake Value: $12.6 million
Percentage of Montanaro Asset Management’s 13F Portfolio: 1.52%
Number of Hedge Fund Holders: 27
In the third quarter investor letter, Alger, an investment management firm, mentioned a few stocks including Paylocity. Here is what Alger stated:
“Paylocity Holding Corp. was among the top contributors to performance. Paylocity is a leading software-as-a-service company that provides cloud-based payroll and human capital management in underserved small to mid-size markets. The majority of new sales activity is with employers that have 50 to 500 employees. Paylocity’s earnings results released in August were positive with improved demand for its products. Sales momentum was also strong with a 28% year-over-year increase for the second quarter, which exceeded consensus expectations. In another positive development, the amount of time required to establish initial meetings, receive decisions from potential clients and complete implementations has returned to normal following previous challenges resulting from the pandemic. The company also reported that the number of employees on the platform has largely recovered, although not yet to 100% of the level prior to COVID-19.”
4. Alarm.com Holdings, Inc. (NASDAQ:ALRM)
Montanaro Asset Management’s Stake Value: $16.4 million
Percentage of Montanaro Asset Management’s 13F Portfolio: 1.97%
Number of Hedge Fund Holders: 21
Alarm.com Holdings, Inc. (NASDAQ:ALRM), the leading platform for intelligently connected property, is one of the underappreciated companies. The company’s stock price surged only 7% in the last twelve months despite strong financial numbers. In addition, the company has been introducing innovative new technology, including video analytics capabilities, to expand its revenue base and market share in both the residential and commercial markets.
As of September, Alarm.com Holdings was in 21 hedge funds’ portfolios. Prominent hedge funds like Ken Fisher’s Fisher Asset Management and Akre Capital Management were among the leading stakeholders in the company.
3. Entegris, Inc. (NASDAQ:ENTG)
Montanaro Asset Management’s Stake Value: $28.5 million
Percentage of Montanaro Asset Management’s 13F Portfolio: 3.43%
Number of Hedge Fund Holders: 26
Charles Montanaro’s hedge fund’s strategy of lifting its stake in Entegris, Inc. (NASDAQ:ENTG) by 7851% during the September quarter appears to be working because shares of the company surged 35% in the last six months alone. Entegris is engaged in providing micro contamination control products, specialty chemicals, and advanced materials handling solutions to the semiconductor and other high-technology industries.
In the third quarter investor letter, Artisan Partners, a high-value-added investment management firm, said that Entegris is a smart long-term buy. Here is what Artisan Partners stated:
“Entegris is one of the largest suppliers of advanced materials (high purity gases/chemicals) and filtration systems used in semiconductor manufacturing. The industry’s incredibly complex production environment is getting increasingly onerous—more process steps, greater purity requirements—which is driving higher demand for Entegris’ products and systems. Furthermore, rising chip content across a broad swath of industries (industrial, auto, communications, consumer) to enable new technological advances (5G, AI/ML, cloud, EVs, autonomous vehicles) has driven semiconductor wafer production growth to ~6% annually. The company’s recently reported results were thesis affirming, and we believe the demand drivers for its products are firmly in place. 70% of the company’s revenues are tied to semiconductor factory utilization, and the broader industry shortages do not appear to be abating anytime soon. The other 30% of revenue is tied to capex which we expect to be flat to slightly up over the next couple of years. Given our building confidence around the near-to-medium term demand environment, we added to our position, bringing it to the top of the GardenSM.”
2. ANSYS, Inc. (NASDAQ:ANSS)
Montanaro Asset Management’s Stake Value: $34.5 million
Percentage of Montanaro Asset Management’s 13F Portfolio: 4.15%
Number of Hedge Fund Holders: 38
ANSYS, Inc. (NASDAQ:ANSS) generated double-digit top and bottom-line growth so far in 2021. Moreover, the company’s strategy of investing in organic growth opportunities along with the acquisition of Zemax will add to its financial momentum in the coming quarters. The company expects to generate $1.8 billion in full-year revenues, up 10.6% from the past year.
As of September, 38 elite funds were bullish about ANSYS. Impax Asset Management was the leading stakeholder in the company with a stake worth $262 million.
1. Nova Ltd. (NASDAQ:NVMI)
Montanaro Asset Management’s Stake Value: $38.3 million
Percentage of Montanaro Asset Management’s 13F Portfolio: 4.62%
Number of Hedge Fund Holders: 22
The stock price of small-cap Nova Ltd. (NASDAQ:NVMI) doubled in the past twelve months amid continued growth for process control systems. The company posted a record quarterly revenue of $112.7 million for the third quarter, up 62% year over year, thanks to an expanded product portfolio and new logistic penetration. The company anticipates record revenues for 2021 and expects to extend that momentum into 2022.
Nova was in 22 hedge funds’ portfolios as of September, according to data tracked by Insider Monkey. Montanaro Asset Management and Renaissance Technologies were among the leading stakeholders in the company.
You can also take a look at 10 Pharmaceutical Stocks to Buy Under $20 According to Jeremy Green’s Redmile Group and 10 Dividend Stocks to Buy According to Hoon Kim’s Quantinno Capital.
