In this article, we present the list of top 10 stock picks of Ron Mass’ Almitas Capital at the end of the second quarter. If you want to skip the fund’s history, recent performance and details about its overall portfolio, please go directly to 5 Best Stocks to Buy According to Ron Mass’ Almitas Capital.
The hedge fund industry comprises many players who are usually differentiated based on strategies they deploy to deliver superior returns to their investors while keeping risks under control. Some funds are classified as multi strategies meaning they employ multiple strategies across asset classes to diversify their portfolios. In contrast, others focus on just one strategy – value, growth, activism, macro and others – with the aim of being the best in that category. Santa Monica, California-based Almitas Capital, is one such fund.
Founded in 2012 by Ronald “Ron” Mass, Almitas Capital manages investment portfolios utilizing primarily closed-end funds, mortgage REITs, and value equity strategies. The fund employs fundamental and statistical analysis to identify debt and equity securities trading at discounts to intrinsic value with catalysts that can help bridge that gap. Prior to founding Almitas, Mr. Mass was a senior portfolio manager at Western Asset Management for over 20 years. At Western Asset Management, Mr. Mass headed the asset-backed securities (ABS) and mortgage-backed securities (MBS) portfolio management teams. He graduated from the University of California, Los Angeles, with a bachelor’s degree in economics and business. Before joining Western Asset Management, he was a research associate at Credit Suisse First Boston, which he joined right after college. He is also a CFA Charterholder and a member of the CFA Institute.
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Almitas Capital’s Portfolio
Almitas Capital’s last filed Form ADV shows that the firm manages assets north of $600 million. At the end of June, the aggregate value of Almitas Capital’s 13F holdings was $193.45 million, representing an increase of 15.4% from the $167.637 million reported by the fund at the end of March. Since the fund employs strategies that identify securities trading at a discount, most of the securities it was invested in at the end of Q2 were ETFs, REITs and business development companies (BDCs) which are entities that updated their NAVs regularly. Almitas Capital’ top 10 stock picks, which included names like Great Ajax Corp. (NYSE:AJX), AGNC Investment Corp. (NASDAQ:AGNC), and PennantPark Investment Corporation (NYSE:PNNT), in aggregate, accounted for 56.73% of its 13F portfolio value at the end of Q2.
Our Methodology
At Insider Monkey, we cover the portfolios of 895 hedge funds, closely tracking the stocks they buy and sell. We selected the ten stocks discussed in this article based on the 13F regulatory filing submitted by Almitas Capital with the SEC for the quarter ending June 30. We haven’t included Altimas Capital’s investments in ETFs in our rankings.
10 Best Stocks to Buy According to Ron Mass’ Almitas Capital
10. Radian Group Inc (NYSE:RDN)
Almitas Capital’s Stake Value: $2,200,000
Percentage of Almitas Capital’s 13F Portfolio: 1.13%
Number of Hedge Fund Holders: 31
Founded in 1977, Radian Group Inc (NYSE:RDN) is a mortgage insurance company headquartered in Philadelphia, Pennsylvania. It specializes in mortgage insurance and provides credit enhancement services to the mortgage lending industry in the United States. Radian Group Inc (NYSE:RDN) also offers risk management products and services to financial institutions and investors in the secondary mortgage market.
Despite the carnage in the broader market this year, Radian Group Inc’s (NYSE:RDN) stock has managed to buck the trend and has lost less than 2% of its value year-to-date. On August 18, Bank of America analyst Mihir Bhartia released a note in which he upgraded Radian Group Inc’s (NYSE:RDN) stock to ‘Neutral’ from ‘Underperform’ while upping his price target to $24 from $22.5. In his note, Mr. Bhartia explained his decision saying, “Radian’s upgrade to Neutral reflects its impressive Q2 capital return balanced by meaningful execution risk for its homegenius segment. At current prices, the stock offers 3% upside potential/8% total return.”
9. Safeguard Scientifics, Inc (NYSE:SFE)
Almitas Capital’s Stake Value: $2,661,000
Percentage of Almitas Capital’s 13F Portfolio: 1.37%
Number of Hedge Fund Holders: 8
Almitas Capital upped its stake in Safeguard Scientifics, Inc (NYSE:SFE) by 2% to 713,445 shares in Q2. However, during the same period, John A. Levin’s Levin Capital Strategies and Jim Simons’ Renaissance Technologies slashed their holding in the company by 74% to 20,553 shares and by 64% to 39,934 shares, respectively.
Safeguard Scientifics, Inc (NYSE:SFE) is a private equity and venture capital holding company that provides capital and management resources to early- and growth-stage technology-driven businesses in healthcare, financial services and digital media industries. It has stakes in many large and small portfolio companies but has not been actively investing for the past few years. Instead, Safeguard Scientifics, Inc (NYSE:SFE) has been liquidating its holding over the years, which can be gauged by its stock price movement. Since touching the $20 level in early 2014, Safeguard Scientifics, Inc’s (NYSE:SFE) stock has been on a consistent decline and currently trades down by more than 50% year-to-date near the $4 level.
8. BrightSpire Capital, Inc. (NYSE:BRSP)
Almitas Capital’s Stake Value: $2,806,000
Percentage of Almitas Capital’s 13F Portfolio: 1.45%
Number of Hedge Fund Holders: 35
With a jaw-dropping dividend yield of 8.62% and a stock that trades around the $8 level, it is no wonder that BrightSpire Capital, Inc. (NYSE:BRSP) made it to Insider Monkey’s lists of 5 Best Dividend Stocks Under $10 and 10 Best Stocks under $10 in 2022 recently.
Formerly known as Colony Credit Real Estate, Inc., the mortgage REIT changed its name to BrightSpire Capital, Inc. (NYSE:BRSP) in June 2021. The company primarily operates in the west and southwestern part of the United States, which account for 70% of its operations. It acquires, finances and manages a portfolio of commercial real estate mezzanine loans, senior mortgage loans, preferred equity, debt securities, and net leased properties.
For its most recent quarter, BrightSpire Capital, Inc. (NYSE:BRSP) reported non-GAAP earnings per share of $0.24 on revenue of $55.33 million on August 3, beating analysts’ expectations by $0.01 and $2.43 million, respectively.
7. New York Mortgage Trust, Inc. (NASDAQ:NYMT)
Almitas Capital’s Stake Value: $2,893,000
Percentage of Almitas Capital’s 13F Portfolio: 1.49%
Number of Hedge Fund Holders: 14
Almitas Capital boosted its stake in New York Mortgage Trust, Inc. (NASDAQ:NYMT) by 55% during the second quarter. Like BrightSpire Capital, Inc. (NYSE:BRSP), New York Mortgage Trust, Inc. (NASDAQ:NYMT) is a mortgage REIT which acquires, invests in, finances, and manages mortgage-related multi-family and single-family residential assets. The company was founded in 2003 and currently manages a portfolio worth $4.6 billion.
New York Mortgage Trust, Inc.’s (NASDAQ:NYMT) stock has lost one-third of its value over the previous year, mainly due to the company’s poor financial performance during that time. In the trailing twelve months, New York Mortgage Trust, Inc. (NASDAQ:NYMT) has reported a net loss of $107.4 million on total revenue of $135.8 million. Despite the lackluster financial performance, the REIT still pays a quarterly dividend of $0.10 per share, which translates into an excellent annual dividend yield of 14.18% based on its last closing price.
6. Ladder Capital Corp (NYSE:LADR)
Almitas Capital’s Stake Value: $3,089,000
Percentage of Almitas Capital’s 13F Portfolio: 1.59%
Number of Hedge Fund Holders: 8
Ladder Capital Corp’s (NYSE:LADR) stock might have lost only around 20% of its value since the first quarter of 2018, but its popularity among smart money investors has come down even more drastically during this period. Among funds covered by Insider Monkey’s database, only 8 disclosed a stake in this mortgage REIT at the end of Q2 this year, down from 28 at the end of Q1 2018. After boosting its stake by 234% during Q2 to nearly 1.5 million shares, billionaire Israel Englander’s Millennium Management held the largest stake in Ladder Capital Corp (NYSE:LADR) among hedge funds we track.
Since its inception in 2008, Ladder Capital Corp (NYSE:LADR) has made over $44 billion in investments and currently manages assets worth close to $6 billion. The REIT is unique in the sense that it is amongst the very few mortgage REITs today that are managed internally, with insiders owning 11% of all of its outstanding shares. In addition, 98% of Ladder Capital Corp’s (NYSE:LADR) loan portfolio consists of first-tier loans, and its loan-to-value ratio stands at 68%, making it much safer than most REITs.
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Disclosure: None. 10 Best Stocks to Buy According to Ron Mass’ Almitas Capital is originally published on Insider Monkey.
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