In this article, we present the list of 10 mid-cap stocks hedge funds are talking about.
Mid-cap companies are those with a market capitalization that ranges from $2 billion to $10 billion. These companies offer investors many advantages that small and large companies lack, such as lower risk than the former and higher growth opportunities than the latter. These types of businesses have a good combination of stability and growth potential that should make them important additions to any portfolio.
Taking a look at their long-term results, mid-cap stocks have outperformed growth stocks in almost all markets. Mid-Cap stocks contain the potential to be tomorrow’s large-caps or yesterday’s fallen large-caps. Mid-cap companies’ shares have the potential for growth as they increase their market share in the markets in which they operate, or expand into new markets. They are frequently subject to mergers and acquisitions by large-cap firms as well.
We are currently in a stock picker’s market. Insider Monkey has reviewed several investor letters from hedge funds and famous investors to identify the stock market pockets that the smart money is currently focusing on. For letters from hedge funds and prominent investors, please see our hedge fund investor letters 2021 Q4 page.
Investments, Finance
10 Mid-Cap Stocks Hedge Funds Are Talking About
10. Anaplan, Inc. (NYSE:PLAN)
Market Cap as of March 11, 2022: $6.8 billion
Number of Hedge Fund Holders: 47
Alger, an investment management firm, published its “Alger Mid Cap Focus Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. During the quarter, the largest portfolio sector weightings for the fund were Consumer Discretionary and Information Technology. The fund’s largest sector overweight was Consumer Discretionary. Class Z shares of the Alger Mid Cap Focus Fund outperformed the Russell Midcap Growth Index during the first quarter of 2021. You can view the fund’s top 5 holdings to have a peek at their top bets for 2022.
In its Q1 2021 investor letter, the fund mentioned Anaplan, Inc. (NYSE:PLAN) and shared its insights on the company. Anaplan, Inc. (NYSE:PLAN) is a San Francisco, California-based software company that currently has a $6.6 billion market capitalization. Since the beginning of the year, Anaplan, Inc. (NYSE:PLAN) shares have delivered a 0.76% return, while its 12-month returns are down by 22.08%. As of March 11, 2022, the stock closed at $46.20 per share.
Here is what Alger Mid Cap Focus Fund had to say about Anaplan, Inc. (NYSE:PLAN) in its Q1 2021 investor letter:
“Anaplan, Inc. (NYSE:PLAN) was among the top detractors from performance. Anaplan, Inc. (NYSE:PLAN) is a leading provider of cloud-based business planning software. Anaplan’s software platform aims to solve the most complex planning needs of large global enterprises across various business lines. Unlike traditional business planning software, which is often rigid, siloed and opaque, Anaplan’s platform is designed to enable broader enterprise participation and better workforce collaboration during the business planning process. Through better planning, large enterprises can more effectively allocate resources to cut costs and generate revenue. Today Anaplan has over 1,600 customers across a variety of end markets and business use cases.
Anaplan, Inc. (NYSE:PLAN) shares underperformed in the first quarter as part of a broader sector rotation as high-growth software stocks fell out of favor relative to more cyclically exposed investment opportunities. We believe Anaplan’s focus on growth over near-term profit generation negatively impacts the company’s stock in a rising interest rate environment.
Fundamentally, Anaplan had strong fourth quarter earnings result, with the company seeing an acceleration of billings growth and a strong demand pipeline as companies realize the need for a more flexible digital planning solution.”
9. Tenet Healthcare Corporation (NYSE:THC)
Market Cap as of March 11, 2022: $9.3 billion
Number of Hedge Fund Holders: 49
Oakmark Funds, an investment management firm, published its “Oakmark Global Fund” third quarter 2021 investor letter – a copy of which can be seen here. A loss of 3.33% was reported by the fund in the third quarter of 2021, which compares to a small loss for the MSCI World Index and 1.1% dip for the Lipper Global Fund Index. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2022.
Oakmark Funds, in its Q3 2021 investor letter, mentioned Tenet Healthcare Corporation (NYSE:THC) and discussed its stance on the firm. Tenet Healthcare Corporation (NYSE:THC) is a Dallas, Texas-based multinational healthcare services company with a $9.5 billion market capitalization. Tenet Healthcare Corporation (NYSE:THC) has delivered a 9.00% return since the beginning of the year, while its 12-month returns are up by 61.04%. The stock closed at $89.04 per share on March 11, 2022.
Here is what Oakmark Funds had to say about Tenet Healthcare Corporation (NYSE:THC) in its Q3 2021 investor letter:
“Tenet Healthcare Corporation (NYSE:THC) may be best known as the second-largest public hospital chain in the U.S., but its largest business is outpatient acute care centers. In early 2020, investors fled the health care industry because of the great uncertainty that the pandemic presented. The early days of the pandemic were very hard on the hospital industry especially, but as the Covid-19 surge peaked and diminished, hospitals were able to schedule elective procedures and engage in profitable activities.”
8. XPO Logistics, Inc. (NYSE:XPO)
Market Cap as of March 11, 2022: $8 billion
Number of Hedge Fund Holders: 53
ClearBridge Investments, an investment management firm, published its “Mid Cap Growth Strategy” third quarter 2021 investor letter – a copy of which can be downloaded here. During the third quarter, the ClearBridge Mid Cap Growth Strategy outperformed the benchmark Russell Midcap Growth Index. On an absolute basis, the Strategy had gains across seven of the 10 sectors in which it was invested during the quarter (out of 11 sectors total), with the IT and health care sectors being the leading contributors. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2022.
ClearBridge Mid Cap Growth Strategy mentioned XPO Logistics, Inc. (NYSE:XPO) and discussed its stance on the firm in the fund’s Q3 2021 investor letter. XPO Logistics, Inc. (NYSE:XPO) is a Greenwich, Connecticut-based freight transportation company with an $8 billion market capitalization. XPO Logistics, Inc. (NYSE:XPO) has lost 8.98% since the beginning of the year, while its 12-month returns are down by 3.06%. The stock closed at $70.48 per share on March 11, 2022.
Here is what ClearBridge Mid Cap Growth Strategy had to say about XPO Logistics, Inc. (NYSE:XPO) in its Q3 2021 investor letter:
“The Strategy also gained shares of GXO Logistics following its spinoff from existing holding XPO Logistics, Inc. (NYSE:XPO). GXO is the largest pure play contract logistics company globally, handling warehousing/distribution, order fulfillment and e-commerce, but its value had been hidden as one of five divisions inside parent XPO Logistics, Inc. (NYSE:XPO).”
7. Bausch Health Companies (NYSE:BHC)
Market Cap as of March 11, 2022: $8 billion
Number of Hedge Fund Holders: 53
Miller Value Partners recently released its Q1 2021 Investor Letter, a copy of which you can download here. The Miller Opportunity Trust posted solid gains in Q1 2021, with Class I up 16.67%, outperforming its benchmark, the S&P 500 Index, which returned 6.17% in the same quarter. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In its Q1 2021 investor letter, the fund highlighted a few stocks, and Bausch Health Companies Inc. (NYSE:BHC) was one of them. Bausch Health Companies Inc. (NYSE:BHC) is a pharmaceutical company. Over the past 12 months, Bausch Health Companies Inc. (NYSE:BHC)’s stock is down by 33.05%. Here is what the fund said:
“Bausch Health Companies Inc. (NYSE:BHC) climbed 55% during the period. Glenview (6% owner) sent a letter to the company in early February arguing the company has not acted to unlock shareholder value and urging the company to sell its eye care business. Shortly after, activist investor Carl Icahn disclosing a 7.83% stake in the company. The company responded to the filing saying that they remain committed to splitting the business into two parts, but are open to pursuing all opportunities. The company reported strong 4Q results with better-than-expected 2021 guidance. 4Q revenue came in at $2,213M slightly ahead of consensus of $2,165M and EPS of $1.34 beat consensus of $1.12. The company guided for 2021 revenue of $8.6-8.8B coming in ahead of expectations of $8.55B with EBITDA of $3.4-3.55B ahead of $3.46B estimated. The company announced the transition of Paul Herendeen to an advisory role to be succeeded by Sam Eldessouky, previously senior vice president, controller and chief accounting officer. Finally, the company announced the sale of Amoun Pharmaceutical for $740M, which was relatively in line with estimates and should help support debt reduction targets ahead of the planned spin-off of Bausch + Lomb eye care business.”
6. Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH)
Market Cap as of March 11, 2022: $3.9 billion
Number of Hedge Fund Holders: 55
Pershing Square Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. An annual portfolio net return of 26.9% was recorded by the fund for 2021, versus the S&P 500 Index, the FTSE 100, and MSCI World Index, which delivered 28.7%, 17.4%, and 22.3% returns respectively for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Pershing Square Capital Management, in its Q4 2021 investor letter, mentioned Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) and discussed its stance on the firm. Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) is a United States-based blank check company with a $3.9 billion market capitalization. Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) is up by 0.30% since the beginning of the year, while its 12-month losses stand at 30.35%. The stock closed at $19.78 per share on March 11, 2022.
Here is what Pershing Square Capital Management had to say about Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) in its Q4 2021 investor letter:
“While seeking a transaction for Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH), we are simultaneously looking to improve its structure with the launch of SPARC.
SPARC seeks to improve upon PSTH’s structure:
✓ Investors opt-in to the initial business combination (“IBC”)
✓ Reduced opportunity cost with no investor funding until a target is identified
✓ Amount of capital raised can be precisely tailored to capital requirements of merger partner
✓ Up to 10 years to complete a transaction vs. 2 years for a typical SPAC
✓ No underwriting fees
✓ Pure common stock capital structure other than 20% out-of-the-money warrants on 5.21% of shares outstanding held by Pershing Square funds and SPARC directorsTiming of SPARC distribution assuming receipt of regulatory approval:
If PSTH executes an IBC before SPARC registration statement is declared effective, distribution of SPARs to PSTH shareholders and warrant holders would occur shortly prior to IBC closing.
If PSTH does not consummate an IBC, distribution would occur concurrently with return of PSTH capital in trust…” (Click here to see the full text)
5. Five9, Inc. (NASDAQ:FIVN)
Market Cap as of March 11, 2022: $6.0 billion
Number of Hedge Fund Holders: 56
ClearBridge Investments, an investment management firm, published its “Mid Cap Growth Strategy” first quarter 2021 investor letter – a copy of which can be downloaded here. During the first quarter, the ClearBridge Mid Cap Growth Strategy outperformed the benchmark Russell Midcap Growth Index. You can view the fund’s top 5 holdings to have a peek at their top bets for 2022.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Five9, Inc. (NASDAQ:FIVN), and shared its insights on the company. Five9, Inc. (NASDAQ:FIVN) is a San Ramon, California-based software company that currently has a $6.0 billion market capitalization. Since the beginning of the year, Five9, Inc. (NASDAQ:FIVN) shares have lost 36.37%, while its 12-month losses are 48.12%. As of March 11, 2022, the stock closed at $87.38 per share.
Here is what ClearBridge Investments had to say about Five9, Inc. in its Q1 2021 investor letter:
“Five9, Inc. (NASDAQ:FIVN) is a cloud-based contact center as a service software provider that is replacing aging on-premise legacy solutions that dominate the installed base. Companies are being forced to modernize and cloud penetration is still low; Five9, Inc. (NASDAQ:FIVN) is positioned to benefit and should see further growth driven by its cross-selling add-on modules and an AI product that generates high revenue.”
4. Coupa Software Incorporated (NASDAQ:COUP)
Market Cap as of March 11, 2022: $7.4 billion
Number of Hedge Fund Holders: 59
ClearBridge Investments also published its “Mid Cap Growth Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. While the ClearBridge Mid Cap Growth Strategy trailed its benchmark in the second quarter, it had a strong performance (+14.9%) and relative success (+445 bps over benchmark) during the first half of 2021. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2022.
In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Coupa Software Incorporated (NASDAQ:COUP) and discussed its stance on the firm. Coupa Software Incorporated is a San Mateo, California-based global technology platform with a $7.4 billion market capitalization. Coupa Software Incorporated (NASDAQ:COUP) shares have crashed by 64.20% over the past 12 months, closing at $99.36 per share on March 11, 2022.
Here is what ClearBridge Investments had to say about Coupa Software Incorporated (NASDAQ:COUP) in its Q2 2021 investor letter:
“Within IT, we added positions in Coupa Software Incorporated (NASDAQ:COUP), a leader in the fast growing Business Spend Management market with opportunity to double its total addressable market by harnessing B2B payments with its Coupa Pay product; and AppLovin, a leading mobile gaming advertising network in a unique position to utilize its ad expertise to grow its own mobile game business at low user acquisition costs.”
3. Peloton Interactive, Inc. (NASDAQ:PTON)
Market Cap as of March 11, 2022: $7.4 billion
Number of Hedge Fund Holders: 60
Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ fourth quarter 2021 investor letter – a copy of which can be downloaded here. A slim loss of 0.72% was recorded by its Investor Class: ARTMX, while a 0.68% dip was recorded by its Advisor Class: APDMX, and a 0.66% drop by its Institutional Class: APHMX, during the fourth quarter of 2021, all underperforming the Russell Midcap® Growth Index, which delivered a 2.85% return, and the Russell Midcap® Index, which was up by 6.44% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Artisan Mid Cap Fund, in its Q4 2021 investor letter, mentioned Peloton Interactive, Inc. (NASDAQ:PTON) and discussed its stance on the firm. Peloton Interactive, Inc. (NASDAQ:PTON) is a New York, New York-based exercise equipment company with a $7.0 billion market capitalization. Peloton Interactive, Inc. (NASDAQ:PTON) shares are 40.88% in the red since the beginning of the year, while its 12-month losses are an unsightly 81.05%. The stock closed at $21.14 per share on March 11, 2022.
Here is what Artisan Mid Cap Fund had to say about Peloton Interactive, Inc. (NASDAQ:PTON) in its Q4 2021 investor letter:
“We ended our campaigns in Peloton Interactive, Inc. (NASDAQ:PTON). Peloton Interactive, Inc. (NASDAQ:PTON) is a connected fitness franchise known for its stationary exercise bikes that provide live and on-demand cycling classes. When we trimmed our position in 1Q21, we believed the stock’s valuation was reflecting relatively aggressive assumptions about post-pandemic membership growth. However, we underestimated just how much growth would slow by midyear. A seemingly slow launch of the new Peloton Interactive, Inc. (NASDAQ:PTON) treadmill combined with meaningful price cuts on the bike are erasing the company’s margin progress of 2020, resulting in meaningful short-term losses. While we remain optimistic about the company’s long-term potential, we harvested our position given the negative profit cycle dynamics.”
2. Elastic N.V. (NYSE:ESTC)
Market Cap as of March 11, 2022: $6.7 billion
Number of Hedge Fund Holders: 60
Carillon Tower Advisers, an investment management firm, published its “Carillon Eagle Mid Cap Growth Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. Mid-cap stocks overall posted solid gains in the final quarter of 2021. As was the case for the majority of the year, the Russell Midcap® Growth Index (up 2.85%) lagged behind its Russell Midcap® Value Index (up 8.54%) counterpart. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Carillon Eagle Mid Cap Growth Fund, in its Q4 2021 investor letter, mentioned Elastic N.V. (NYSE:ESTC) and discussed its stance on the firm. Elastic N.V. (NYSE:ESTC) is a Mountain View, California-based information technology and data analysis services provider with a $6.7 billion market capitalization. Elastic N.V. (NYSE:ESTC) shares have lost 41.49% return since the beginning of the year, and 38.06% over the past 12 months. The stock closed at $72.02 per share on March 11, 2022.
Here is what Carillon Eagle Mid Cap Growth Fund had to say about Elastic N.V. (NYSE:ESTC) in its Q4 2021 investor letter:
“Elastic N.V. (NYSE:ESTC), a provider of data search technology, with applications including website search and security software management, delivered solid earnings results, with accelerating billings growth and strong new customer additions. While guidance came in above expectations, an overall pullback in enterprise software stocks during the quarter did not leave Elastic unscathed. We believe the company is well positioned to capitalize on cloud adoption, and will increasingly cross-sell software to observe, manage, and secure IT networks.”
1. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC)
Market Cap as of March 11, 2022: $8.0 billion
Number of Hedge Fund Holders: 61
Bernzott Capital Advisors, an investment management firm, published its “US Small Cap Value Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. The fund’s portfolio rose 4.2% (gross), slightly underperforming the Russell 2000 Value’s advance of 4.3%, and somewhat less than the Russell 2500 Value’s gain of 6.3%. Industrials, the sector with the largest allocation at 35.2% of the portfolio, was the largest positive contributor to returns, followed by capital goods holdings. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Bernzott Capital Advisors US Small Cap Value, in its Q4 2021 investor letter, mentioned WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) and discussed its stance on the firm. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is a Phoenix, Arizona-based holding company with an $8.0 billion market capitalization. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) shares are down by 12.19% since the beginning of the year, while their 12-month returns are a positive 29.27%. The stock closed at $35.86 per share on March 11, 2022.
Here is what Bernzott Capital Advisors US Small Cap Value had to say about WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) in its Q4 2021 investor letter:
“WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC): This modular and portable storage space company posted strong earnings with strong growth in rental rates as it increases penetration of value-added products and services such as units equipped with HVAC, ethernet ports, and plumbing. The company is executing well on the Mobile Mini merger. Cash flow generation continues to be a notable positive.”
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Disclosure: None. 10 Mid-Cap Stocks Hedge Funds Are Talking About is originally published on Insider Monkey.
