In this article, we will discuss the 10 stocks to buy according to James Mitarotonda’s Barington Capital.
James Mitarotonda serves as the chairman of board, president, and CEO of Barington Capital, a prestigious investment firm that was founded by Mitarotonda in 2000. In addition to his role as the president of his investment firm, he is a seasoned public company director. He is a director at The Eastern Company (NASDAQ:EML) and Rambus Inc. (NASDAQ:RMBS) presently, where he owns significant stakes, as discussed in detail below. Prior to that, Mitarotonda served as a director in several companies including Avon Products, Inc., OMNOVA Solutions, The Jones Group, and Ameron International Corporation, among others.
Before founding Barington Capital, James Mitarotonda worked at Bloomingdale’s and Citibank in the operations department. He was also the co-founder, chairman, and CEO of Commonwealth Associates, now known as Comvest. He received a Bachelor’s degree in economics from Queens College, and an MBA from Stern School of Business at New York University. He now serves on the Board of Trustees for Queens College.
With a personal net worth of almost $73 million, Mitarotonda manages an impressive portfolio worth over $107.2 million for Barington Capital.
He is considered a fundamental, value-oriented activist investor, who prefers to invest in undervalued public companies. His investment strategy is built upon finding undervalued firms, changing their corporate strategy, improving operational workflow, corporate governance, and capital allocation so that the stock value appreciates.
The top ten holdings comprise 99.35% of the portfolio, with investments concentrated in information technology, industrials, consumer discretionary, healthcare, and consumer staples sectors.
Some of the most notable stocks in Mitarotonda’s Q2 2021 portfolio include Bath & Body Works, Inc. (NYSE:BBWI), Standex International Corporation (NYSE:SXI), Cedar Realty Trust, Inc. (NYSE:CDR), and Rambus Inc. (NASDAQ:RMBS), among others discussed at length ahead.
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With this context in mind, let’s discuss the 10 stocks to buy according to James Mitarotonda’s Barington Capital. We used Barington Capital’s 13F portfolio for the second quarter of 2021 to rank these stocks. The list was compiled according to the value of each holding in the investment portfolio.
Top Stocks to Buy According to James Mitarotonda’s Barington Capital
10. Vornado Realty Trust (NYSE:VNO)
Mitarotonda’s Stake Value: $933,000
Percentage of Mitarotonda’s 13F Portfolio: 0.87%
Number of Hedge Fund Holders: 29
Vornado Realty Trust (NYSE:VNO) is the tenth stock on our list of stocks to buy according to James Mitarotonda’s Barington Capital. This is a real estate investment trust (REIT), with offices in New York City. Vornado Realty Trust primarily invests in Manhattan office buildings and street retail. Some of the noteworthy properties owned by the trust include New York Marriott Marquis, Crowne Plaza Hotel – Times Square, Fuller Building, and Hotel Pennsylvania, among others.
Mitarotonda’s Barington Capital owns 20,000 shares in Vornado Realty Trust, valued at $933,000, making up 0.87% of Mitarotonda’s 13F portfolio.
BofA analyst James Feldman upgraded the stock from Underperform to Neutral. He suggested that the risk and rewards for Vornado Realty Trust are more balanced, though decreasing rents in New York, elevated sublease space, and excessive capital expenditure still remain a cause for concern regarding Vornado Realty Trust.
Jonathan Kolatch’s Redwood Capital Management is the leading stakeholder in Vornado Realty Trust, with 931,901 shares worth $43.4 million.
Baron Funds mentioned Vornado Realty Trust in its Q2 2021 investor letter. Here is what they said:
“Vornado Realty Trust: Vornado is a REIT that owns a high-quality portfolio of office and street retail assets concentrated in New York City. As economic activity improves and employees return to work, we expect leasing and occupancy trends to improve. At its recent price of $47, we believe the shares are attractively valued at a 40% discount to our estimate of net asset value of $78 per share.”
9. Encompass Health Corporation (NYSE:EHC)
Mitarotonda’s Stake Value: $1,951,000
Percentage of Mitarotonda’s 13F Portfolio: 1.81%
Number of Hedge Fund Holders: 42
Encompass Health Corporation (NYSE:EHC) is the ninth stock on our list of the ten stocks to buy according to James Mitarotonda’s Barington Capital. Encompass Health Corporation is an Alabama-based post-acute healthcare services provider. As one of the largest and most significant providers of post-acute healthcare in the United States, Encompass Health Corporation offers proper facilities for its services, and home-based post-acute care as well. The rehabilitation centers, hospice agencies, and home healthcare services by Encompass Health Corporation serve across 36 states in the US, as well as Puerto Rico.
Mitarotonda’s Barington Capital owns 25,000 shares in Encompass Health Corporation, amounting to $1.95 million, and making up 1.81% of Mitarotonda’s 13F portfolio.
Out of the 873 hedge funds tracked by Insider Monkey, 42 were long Encompass Health Corporation at the end of June, holding stakes worth $864.5 million. This was up from 36 in the first quarter of 2021, with stakes amounting to $836.1 million.
Andrew Mok, from UBS, gave Encompass Health Corporation a Buy rating and set a price target of $98 on September 23. He explained that the company had immense potential for value creation once the rehab facilities are separated from the home health and hospice business, which was scheduled within the next six months.
Barry Rosenstein’s JANA Partners is the biggest stakeholder of the company as of the second quarter, with stakes worth over $158.3 million.
Like Bath & Body Works, Inc., Standex International Corporation, Cedar Realty Trust, Inc., and Rambus Inc., Encompass Health Corporation is one of the top stocks to buy according to James Mitarotonda’s Barington Capital.
8. Natura &Co Holding S.A. (NYSE:NTCO)
Mitarotonda’s Stake Value: $1,962,000
Percentage of Mitarotonda’s 13F Portfolio: 1.82%
Number of Hedge Fund Holders: 5
The eighth stock on our list to of stocks to buy according to James Mitarotonda’s Barington Capital is Natura &Co Holding S.A. (NYSE:NTCO), which is a personal care cosmetics company operating globally. Headquartered in São Paulo, the company has many well-known brands under its domain, including Natura Cosméticos, Aesop, The Body Shop and Avon. Natura &Co Holding S.A. is available in 73 countries, with more than 3200 stores, making it a global brand.
Mitarotonda’s Barington Capital holds stakes worth $1.96 million in the company, and Natura &Co Holding S.A. makes up 1.82% of Mitarotonda’s 13F portfolio.
American mathematician and billionaire hedge fund manager, Jim Simons’ Renaissance Technologies is the largest stakeholder in Natura &Co Holding S.A., with a $48.5 million stake. Overall, 5 hedge funds tracked by Insider Monkey held stakes worth $62.1 million in the Brazilian mega company.
7. Cedar Realty Trust, Inc. (NYSE:CDR)
Mitarotonda’s Stake Value: $2,851,000
Percentage of Mitarotonda’s 13F Portfolio: 2.65%
Number of Hedge Fund Holders: 7
Cedar Realty Trust, Inc. is the next stock on our list of the ten stocks to buy according to James Mitarotonda’s Barington Capital. Cedar Realty Trust, Inc. is an American real estate investment trust focusing its investments mainly on shopping centers in the Mid-Atlantic states.
7 hedge funds tracked by Insider Monkey held stakes valued at $13.25 million in Cedar Realty Trust, Inc. at the end of June, up from 6 in the first quarter, with stakes worth $11.95 million. The largest stakeholder in Cedar Realty Trust, Inc. is Israel Englander’s Millennium Management, owning 237,892 shares worth $4 million, followed by Barington Capital as the second largest stakeholder.
Craig Kucera, an analyst with B. Riley, kept a Buy rating on the stock, raising the price target to $21 on September 10. Kucera said that the company was revisiting strategic alternatives, and cash collection was improving in 2021 because the company was deciding on selling more assets.
Like Bath & Body Works, Inc., Standex International Corporation, Cedar Realty Trust, Inc., and Rambus Inc., Cedar Realty Trust, Inc. is one of the top stocks to buy according to James Mitarotonda’s Barington Capital.
6. Textron Inc. (NYSE:TXT)
Mitarotonda’s Stake Value: $9,026,000
Percentage of Mitarotonda’s 13F Portfolio: 8.41%
Number of Hedge Fund Holders: 22
The sixth stock on our list of the ten stocks to buy according to James Mitarotonda’s Barington Capital is Textron Inc. (NYSE:TXT), which is an American industrial conglomerate based out of Providence, Rhode Island. It started out as a textile company in 1923 by the name of Special Yarns Corporation, specializing in synthetic yarn. Today, Textron Inc. is a well-known name in the global market for aviation, defense, industrials, and finance. The company is now valued in the market at almost $16 billion, with more than 33000 employees across 25 countries, making it one of the most significant stock picks by Barington Capital.
Mitarotonda’s Barington Capital owns 131,250 shares in Textron Inc., amounting to $9.02 million, and constituting 8.41% of Mitarotonda’s 13F portfolio.
The largest stakeholder in Textron Inc. is Pzena Investment Management, with 7.75 million shares valued at $533.39 million. Overall, 22 hedge funds in Insider Monkey’s exclusive database reported owning stakes in Textron Inc. at the end of June, amounting to $962.3 million. This is compared to 21 hedge funds in the first quarter, with stakes worth $702.1 million.
Textron Inc. announced earnings per share of $0.81 on July 29 for the second quarter of 2021, beating estimates by $0.16. The revenue for the company for the second quarter was $3.19 billion, beating forecasts by $224.65 million.
Cowen analyst Cai von Rumohr upgraded Textron Inc. from Market Perform to Outperform on August 31, setting a price of $95. Rumohr stated that the COVID-19 pandemic resulted in higher demand for business jets, and Textron Inc. is positioned well to become an electrical vertical takeoff and landing leader.
Textron Aviation, a part of the massive conglomerate, also signed a deal with AirSpring on October 12, selling three new Cessna Citation CJ3+ aircraft to AirSpring in a lucrative deal.
Like Bath & Body Works, Inc., Standex International Corporation, Cedar Realty Trust, Inc., and Rambus Inc., Textron Inc. is one of the top stocks to buy according to James Mitarotonda’s Barington Capital.
5. Standex International Corporation (NYSE:SXI)
Mitarotonda’s Stake Value: $11,404,000
Percentage of Mitarotonda’s 13F Portfolio: 10.63%
Number of Hedge Fund Holders: 10
Standex International Corporation is a multinational American manufacturer offering food service equipment, electronics, hydraulics, and engineering technologies. Some of the well-known subsidiaries under the New Hampshire-based corporation are Bakers Pride and Standex Electronics.
Mitarotonda’s Barington Capital owns 120,151 shares in Standex International Corporation, valued at $11.4 million, and representing 10.63% of Mitarotonda’s 13F portfolio.
Cove Street Capital, managed by Jeffrey Bronchick, is the key stakeholder in Standex International Corporation, with stakes worth over $13 million. Out of the 873 hedge funds tracked by Insider Monkey, 10 held stakes in Standex International Corporation, equaling $42.5 million at the end of the second quarter of 2021. When compared to the previous quarter, the hedge funds in Q2 were up from 7 in Q1, valued at $30.1 million.
On August 16, analyst Christopher Howe from Barrington raised the price target on Standex International Corporation to $133, keeping an Outperform rating on the stock. The analyst stated that the markets would soon realize that Standex International Corporation is undervalued, and the price will appreciate in the future.
4. Chico’s FAS, Inc. (NYSE:CHS)
Mitarotonda’s Stake Value: $12,084,000
Percentage of Mitarotonda’s 13F Portfolio: 11.27%
Number of Hedge Fund Holders: 22
The fourth stock on our list of the top 5 stocks to buy according to James Mitarotonda’s Barington Capital is Chico’s FAS, Inc., which is a Florida-based retailer of women’s clothing and accessories. The four stores owned and operated by Chico’s FAS, Inc. include Chico’s Store, White House Black Market, Soma, and TellTale. The company has brick and mortar stores across the United States and Canada, and is serving customers online, benefitting from the e-commerce boom. Chico’s FAS, Inc. is traded as a S&P 600 component.
Mitarotonda’s Barington Capital owns 1.83 million shares worth $12.08 million in Chico’s FAS, Inc.. This stock makes up 11.27% of Mitarotonda’s 13F portfolio.
Out of the elite hedge funds tracked by Insider Monkey, 22 had stakes in Chico’s FAS, Inc., equaling $177.6 million. The biggest stakeholder in the company is Jim Simons’ Renaissance Technologies, owning stakes worth $45.5 million in the clothing retailer.
In the Q2 2021 investor letter of Miller Value Partners, the fund mentioned Chico’s FAS, Inc. (NYSE: CHS) and discussed the exceptional performance of the firm in Q1. Here is what they said:
“Chico’s FAS (CHS) was the top contributor over the quarter, advancing 98.8% in conjunction with the vaccine rollout accelerating apparel demand and strong Q1 results. Chico’s reported Q1 net sales of $388M, +37% above consensus and +38.4% year-over-year (Y/Y) driven by +65% growth at Soma and a +13.4% rise in digital. Gross margin rose to 32.7% on improved leverage of occupancy costs and leaner inventory driving significantly higher full-price selling. For Fiscal Year 2021 (FY21), management expects consolidated net sales improvement of 28%-34%, gross margin improvement of 18-20 percentage points, and Selling, General & Administrative expense (SG&A) rate improvement of 500-600 basis points (bps). Guidance at the midpoint implies revenue of $1.73Bn and gross margins of 32.9%, +7% and +180bps above consensus, respectively. Additionally, activist shareholder Barrington Capital issued a letter to the company, calling for a Board refresh and expanding the scope of financial disclosure in an attempt to unlock value of the rapidly growing Soma brand.”
3. Rambus Inc. (NASDAQ:RMBS)
Mitarotonda’s Stake Value: $12,569,000
Percentage of Mitarotonda’s 13F Portfolio: 11.72%
Number of Hedge Fund Holders: 20
Rambus Inc. is the third stock on our list of the top 5 stocks to buy according to James Mitarotonda’s Barington Capital. Rambus Inc. is an American tech company which specializes in interface technologies and architectures that are deployed in digital electronics products.
Barington Capital owns 530,100 shares in Rambus Inc., valued at $12.56 million, which account for 11.72% of Mitarotonda’s 13F portfolio.
As of the end of June, 20 hedge funds out of the 873 tracked by Insider Monkey held reported owning stakes in Rambus Inc., worth $381.7 million. The largest stakeholder of the company is Cynthia Paul’s investment firm, Lynrock Lake. Lynrock owns 7.66 million shares valued at $181.7 million in Rambus Inc..
2. The Eastern Company (NASDAQ:EML)
Mitarotonda’s Stake Value: $17,705,000
Percentage of Mitarotonda’s 13F Portfolio: 16.51%
Number of Hedge Fund Holders: 7
The second stock on our list of the top 5 stocks to buy according to James Mitarotonda’s Barington Capital is The Eastern Company, which is a Connecticut-based company focusing on three core segments: industrial hardware, metal products, and security products. The company owns four major subsidiaries in Canada, Mexico, Taiwan, and Hong Kong.
The industrial hardware includes locks, latches, hinges, sleeper boxes, and other types of hardware used in various markets. The metal products include expansion support anchors, couplers for braking systems, construction clamps, and electronic fittings. Lastly, The Eastern Company also provides security products like electronic and mechanical locks for electronic equipment in consumer markets and the gaming industry.
Mitarotonda’s Barington Capital owns 583,748 shares in The Eastern Company, worth $17.7 million, making up 16.51% of Mitarotonda’s 13F portfolio.
At the end of June, 7 hedge funds tracked by Insider Monkey held stakes in The Eastern Company amounting to $53.4 million. The largest stakeholder in the company is Barington Capital, followed closely by Mario Gabelli’s GAMCO Investors, who own shares in The Eastern Company valued at $15.86 million.
1. Bath & Body Works, Inc. (NYSE:BBWI)
Mitarotonda’s Stake Value: $36,045,000
Percentage of Mitarotonda’s 13F Portfolio: 33.61%
Number of Hedge Fund Holders: N/A
Ranking first on our list of the top 5 stocks to buy according to James Mitarotonda’s Barington Capital is Bath & Body Works, Inc., an American retail store dealing in soaps, lotions, candles, and perfumes. The Ohio-based store has now expanded across 6 continents, and its products are heavily consumed worldwide, since they are affordable and of excellent quality.
Mitarotonda’s Barington Capital owns 500,203 shares in Bath & Body Works, Inc., amounting to $36 million. The stock accounts for 33.61% of Mitarotonda’s 13F portfolio.
The company announced earnings per share for the second quarter on August 18. The actual EPS was $1.34, beating analysts’ consensus estimates by $0.57. The revenue for Bath & Body Works, Inc. for Q2 was $3.32 billion, which exceeded estimates by $1.63 billion. Daniela Nedialkova, an analyst associated with Atlantic Equities, upgraded Bath & Body Works, Inc. to Overweight from Neutral on September 29, with a price target of $82.
Out of the hedge funds tracked by Insider Monkey, Lone Pine Capital, managed by Stephen Mendel, is the largest stakeholder in Bath & Body Works, Inc.. The hedge fund owns 26.2 million shares in the company, worth $1.89 billion.
You can also view Top 10 Stocks to Invest in According to John Smith Clark’s Southpoint Capital Advisors and Carl Icahn’s Stock Portfolio: Top 12 Picks.
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originally published on Insider Monkey.
