Curreen Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 11.82% for the quarter, outperforming their benchmark, the S&P 500 Index which returned 8.93% in the same quarter. You should check out Curreen Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the said letter, Curreen Capital highlighted a few stocks and Conduent Inc (NASDAQ:CNDT) is one of them. Conduent Inc (NASDAQ:CNDT) is a provider of Business Process Services to government, healthcare, energy, automotive, aerospace and defense sectors. Year-to-date, Conduent Inc (NASDAQ:CNDT) stock lost 41% and on October 21st it had a closing price of $3.66. Here is what Curreen Capital said:
“We owned shares of Conduent from January 2017 (after its spinoff from Xerox) to October 2018. It was a fine business then, though it did not succeed in restarting the growth that had characterized the company before Xerox acquired it. After we sold, the business struggled, and there was a soap-opera-style drama between the CEO and chairman and the company’s largest shareholder – Carl Icahn’s organization. An Icahn-selected board member resigned in April 2019, with a letter angrily complaining about the CEO and chairman – both of whom left the business within five months.
With lame-duck management, unpredictable drama, and continued operating weakness, there was little demand for the stock – which dropped from $13+ in April 2019 to $1.54 at its low in March 2020.
Clifford Skelton became COO in June 2019, interim CEO in August 2020, and CEO in February 2020. He has quietly worked to address Conduent’s key issues – weak sales being the most visible and pressing. Skelton hired Lou Keys, who reorganized Conduent’s sales force and began driving results. Q1 2020 earnings showed improved new business sales, with continued weakness in renewals. Skelton, the general counsel, and a director all bought stock a week after Q1 results were released. Q2 2020 earnings showed further improvement, with signings up 89% year-over-year.
Conduent’s business has had a rough time, but for the first time in years, operations are showing signs of sales growth. Successfully restarting the company’s sales engine would drive many benefits – especially as operating leverage would (finally!) start to work in Conduent’s favor and propel earnings higher. This would also do wonders for the stock, which currently trades at an extremely attractive upside-to-downside ratio.
The information we have now is that Conduent’s sales are improving—a key factor for their turnaround to be successful—and that several insiders put up their own money to buy shares. These are positive signs, but risks remain and I am monitoring the business with cautious optimism. Key factors to watch are continued sales growth, and sales translating into revenues and improving operating profit.
We bought shares of Conduent in early August at $4.06/share. The stock then fell – with no new information. I added to our position at $3.59/share, using the proceeds from selling some of our shares in TopBuild (we received $155.64 for our shares).”
In Q2 2020, the number of bullish hedge fund positions on Conduent Inc (NASDAQ:CNDT) stock increased by about 17% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Conduent’s growth potential. Our calculations showed that Conduent Inc (NASDAQ:CNDT) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
