10 Stocks to Buy According to James Morrow’s Callodine Capital Management

Published October 17, 2022 at 9:09 am EDT Updated August 19, 2026 at 8:39 am EDT

In this article, we discuss 10 stocks to buy according to James Morrow’s Callodine Capital Management.

In 2018, James Morrow founded Callodine Capital Management, the Callodine Group’s investing division. The Callodine Group aims to provide prospects with attractive values across the board of the capital markets through its asset management businesses.

Morrow graduated with a bachelor’s degree in finance from the University of Buffalo before receiving his MBA from the University of Chicago. After that, he worked for Chase Manhattan Bank in distressed debt. At Fidelity Investments Inc., Morrow spent 19 years overseeing $40 billion in assets spread across various equity-income strategies, including a $3 to $5 billion energy portfolio. He now works with Callodine Capital Management as a director.

10 Stocks to Buy According to James Morrow's Callodine Capital Management

Investments, Finance

Callodine Capital Management specializes in long/short and long-only dividend-paying equities investing techniques. The fund asserts that stable pricing, anticipated profit growth, and knowledge of the underlying growth drivers should be matched with a strong dividend yield. It makes cash-generating investments in businesses across various sectors, including real estate investment trusts, business development companies, and specialty income niches like high yield, convertible, preferred, and master limited partnerships.

As of Q2 2022, Callodine Capital Management holds a 13F portfolio valued at $337.47 million, up from $311.48 million in the previous quarter. Some of the hedge fund’s notable holdings in the second quarter included Newmont Corporation (NYSE:NEM), Energy Transfer LP (NYSE:ET), and Stellantis N.V. (NYSE:STLA).

Our Methodology

The following equities were selected from James Morrow’s Q2 portfolio. Insider Monkey’s extensive database of 895 illustrious hedge funds was used to calculate the popularity of each business among hedge funds in the second quarter of 2022.

Stocks to Buy According to James Morrow’s Callodine Capital Management

10. PennantPark Investment Corporation (NYSE:PNNT)

Callodine Capital Management’s Stake Value: $11,209,000

Percentage of Callodine Capital Management’s 13F Portfolio: 3.32%

Number of Hedge Fund Holders: 11

PennantPark Investment Corporation (NYSE:PNNT), a publicly listed business development corporation, specializes in direct and mezzanine investments in middle-market companies. Ron Mass’ Almitas Capital is the largest shareholder of PennantPark Investment Corporation, with a $15.13 million stake, representing a 19% increase in holding size over the previous quarter.

James Morrow first picked up PennantPark Investment Corporation for Callodine Capital Management’s portfolio in the second quarter of 2020. The hedge fund increased its stake by 2% in Q2 2022 to bring its total holding up to 1.81 million shares worth $11.21 million as of June 30.

PennantPark Investment Corporation was in 11 hedge fund portfolios at the end of the second quarter of 2022, compared to 13 funds in the first quarter of 2022.

Newmont Corporation, Energy Transfer LP, and Stellantis N.V. are some of the notable stocks to buy according to James Morrow’s Callodine Capital Management, just like PennantPark Investment Corporation.

9. Viatris Inc. (NASDAQ:VTRS)

Callodine Capital Management’s Stake Value: $11,269,000

Percentage of Callodine Capital Management’s 13F Portfolio: 3.33%

Number of Hedge Fund Holders: 50

Viatris Inc. (NASDAQ:VTRS) is a global healthcare organization. The firm has 1,400 authorized medicinal compounds in its portfolio and develops and distributes a range of medications. In addition, it owns branded medications such as Lipitor, Xanax, and Viagra, complicated generics, bio-similars, over-the-counter medications, and pharmaceutical components. The most prominent stake in Viatris Inc. was held by Stephen Dubois’ Camber Capital Management, which reported having $240.81 million worth of Viatris shares as of the end of June.

Callodine Capital Management boosted its Viatris Inc. stake by 11% or 101,273 shares during Q2. The hedge fund held 1.08 million shares worth $11.27 million as of June 30. Representing 3.33% of the fund’s 13F portfolio, Viatris Inc. was Callodine Capital Management’s ninth-largest stock pick.

In its Q4 2021 investor letter, Davis Funds mentioned Viatris Inc.. Here is what the fund said:

“Davis Global Fund added several new positions over the past year, including the pharmaceutical Viatris. Viatris is an unloved global pharmaceutical manufacturer created through the merger of Mylan and Upjohn (Pfizer’s off-patent drugs business). The company is highly diversified, with leading positions across a wide span of generic and specialty/partnered drugs in many countries around the world. While growth for the portfolio overall is moderated by pricing pressures in traditional generics, Viatris has an attractive pipeline of complex drugs (e.g., inhaled drugs, injectables, etc.) and biosimilars, the latter of which are poised to see growth in the years ahead after a long period of regulatory and legal deadlock in the U.S.

Near-term, Viatris is committed to using free cash flow to pay down debt, but we believe its extremely cheap valuation (4–5x owner earnings) and growing cash generation offers a compelling risk/reward proposition that should eventually be recognized by the market.”

8. KKR & Co. Inc. (NYSE:KKR)

Callodine Capital Management’s Stake Value: $11,804,000

Percentage of Callodine Capital Management’s 13F Portfolio: 3.49%

Number of Hedge Fund Holders: 51

KKR & Co. Inc. is a private equity and real estate investment firm specializing in direct and fund-of-fund investments. On August 12, Deutsche Bank analyst Brian Bedell maintained a ‘Buy’ rating and increased his price objective on KKR & Co. Inc. to $68 from $65.

KKR & Co. Inc. was in 51 hedge fund portfolios at the end of June. According to hedge fund data compiled by Insider Monkey, ValueAct Capital had the most valuable position in KKR & Co. Inc., worth close to $1.22 billion, comprising 19.51% of its total 13F portfolio.

Callodine Capital Management upped its stake in KKR & Co. Inc. by 155% in Q2. The hedge fund held 255,000 shares worth $11.80 million as of June 30. Representing 3.49% of the portfolio, up from 1.87% in Q1, KKR & Co. Inc. is the eighth largest holding of Callodine Capital Management.

In its Q2 2022 investor letter, RiverPark Funds mentioned KKR & Co. Inc.. Here is what the firm said:

“We reinitiated a position in KKR & Co. Inc., an alternative asset manager that we have previously owned, after a recent significant fall in its stock price. Much like our current Blackstone holding, most of KKR’s investor capital is long-dated or even permanent (perpetual capital is currently $165 billion, 43% of its fee-paying assets under management), most of their fees (which are highmargin and recurring) are not sensitive to the stock market (fee-paying AUM was $371 billion for 1Q22, up 29% year over year, helping to generate $605 million of fees, up 66% year-overyear), and the company has billions of dollars of uninvested capital available to put to work (KKR has $115 billion of “dry powder” or uncalled capital commitments, an increase of 66% year over year). This combination of large and growing AUM that generates recurring fees, along with the company’s stellar history of opportunistic investing and harvesting, offers a fantastic combination of consistent fee based recurring earnings with the potential for substantial incentive fee upside over time. As with Blackstone, we believe this combination provides a strong foundation for long-term stock performance. Along with the broader markets, KKR’s stock has come under significant pressure over the last several months (falling nearly 40% from its recent November 2021 peak) affording us the opportunity to re-invest in the company at what we believe to be an extremely compelling valuation.”

7. Vistra Corp. (NYSE:VST)

Callodine Capital Management’s Stake Value: $11,997,000

Percentage of Callodine Capital Management’s 13F Portfolio: 3.55%

Number of Hedge Fund Holders: 42

Vistra Corp. (NYSE:VST) is a power producer and retailer of energy in the United States. After purchasing Dynegy in 2018, it currently owns and runs 38 gigawatts of nuclear, coal, and natural gas power in its wholesale producing sector. The retail electricity division of the company serves 4.3 million customers across 20 states.

Callodine Capital Management elevated its position in Vistra Corp. by 9% in Q2 2022, holding 525,043 shares worth over $12 million. The stock accounted for 3.55% of the fund’s total 13F portfolio.

According to Insider Monkey’s database, 42 hedge funds had a stake in Vistra Corp. as of Q2 2022, with the total value of their holdings standing at $1.60 billion. Howard Marks’ Oaktree Capital Management held the most significant position in Vistra Corp. at the end of the second quarter of 2022, valued at $580.39 million.

Here’s what Legacy Ridge Capital said about Vistra Corp. in its Q2 2022 investor letter:

“We had a hard time deciding which company we should discuss in this letter. By just about every metric, all our holdings are cheap from both a relative and absolute perspective – especially compared to the performance of commodity prices and the recent pullback in the overall complex of energy stocks. For the first six months of 2022, oil was up 41%, natural gas up 45%, natural gas liquids up 34%, and the futures curve for electricity (in the two biggest deregulated power markets) is up ~30%, but our holdings were only up a measly ~1% by mid-year! The point is all our positions are investment stories worth telling. …”(Click here to see the full text)

6. Agree Realty Corporation (NYSE:ADC)

Callodine Capital Management’s Stake Value: $12,262,000

Percentage of Callodine Capital Management’s 13F Portfolio: 3.63%

Number of Hedge Fund Holders: 19

Agree Realty Corporation (NYSE:ADC) is a publicly listed real estate investment trust that mainly purchases and develops net-leased properties for industry-leading retail tenants. For the past 11 years, Agree Realty Corporation has continuously increased its dividends. As of September 13, the firm paid a monthly dividend of $0.234 per share, with a forward yield of 3.79%.

On October 4, Raymond James analyst RJ Milligan maintained a ‘Strong Buy’ recommendation on the shares of Agree Realty Corporation while reducing his price objective from $85 to $80. Given the high caliber tenant roster and low capital markets risk in carrying out their development strategy, Agree Realty Corporation is anticipated to achieve above-average growth in 2023.

Callodine Capital Management has held a stake in Agree Realty Corporation since Q1 2022. In addition, the hedge fund turned more bullish in the second quarter of 2022, as it upped the size of its Agree Realty Corporation holding by 15%, or 21,074 shares. With nearly 170,000 shares worth $12.26 million as of June 30, Agree Realty Corporation is the sixth largest position in James Morrow’s Callodine Capital Management portfolio.

Agree Realty Corporation is a good investment option according to James Morrow’s Callodine Capital Management like Newmont Corporation, Energy Transfer LP, and Stellantis N.V..

5. Equitable Holdings, Inc. (NYSE:EQH)

Callodine Capital Management’s Stake Value: $12,746,000
Percentage of Callodine Capital Management’s 13F Portfolio: 3.77%
Number of Hedge Fund Holders: 38

Equitable Holdings, Inc. (NYSE:EQH) is a holding company providing financial services. Its two significant franchises are Equitable and AllianceBernstein. Callodine Capital Management first initiated a position in Equitable Holdings, Inc. in Q1 2021 by purchasing 215,000 shares. In the second quarter of 2022, the hedge fund increased its stake in the firm by 7% and held 488,930 shares.

On August 18, Barclays analyst Tracy Benguigui maintained an ‘Overweight’ rating on Equitable Holdings, Inc. while increasing her price target from $32 to $36. In addition, 38 hedge funds were bullish on Equitable Holdings, Inc. at the conclusion of the June quarter, down from 44 funds in the prior quarter.

4. Ares Management Corporation (NYSE:ARES)

Callodine Capital Management’s Stake Value: $13,362,000
Percentage of Callodine Capital Management’s 13F Portfolio: 3.95%
Number of Hedge Fund Holders: 30

Ares Management Corporation (NYSE:ARES), a global alternative investment manager, provides customers with complementary primary and secondary investment alternatives in the asset classes of infrastructure, private equity, real estate, and credit. Mick Hellman’s HMI Capital is the leading shareholder of Ares Management Corporation, with 3.80 million shares worth over $216.01 million.

Benjamin Budish, an analyst at Barclays, initiated coverage of Ares Management Corporation on August 31, rating the stock as ‘Overweight’ with a $92 price target. The analyst began with a positive outlook on the brokers, asset managers, and exchange area.

Callodine Capital Management has owned a stake in Ares Management Corporation since Q2 2019. The hedge fund increased its stake in Ares Management Corporation by 91% in the second quarter of 2022. As a result, the fund held a total of 235,000 shares worth $13.36 million as of June 30, making Ares Management Corporation the fourth-largest stock in its 13F portfolio.

Hedge funds had a bullish outlook on Ares Management Corporation in Q2, as the stock was in 30 hedge fund portfolios at the end of the second quarter, up by eight positions from the prior quarter.

3. Merck & Co., Inc. (NYSE:MRK)

Callodine Capital Management’s Stake Value: $14,131,000
Percentage of Callodine Capital Management’s 13F Portfolio: 4.18%
Number of Hedge Fund Holders: 79

Merck & Co., Inc. provides health solutions through its prescription medications, vaccines, biologic therapies, animal health, and consumer care products. The company has joint ventures with AstraZeneca PLC (NASDAQ:AZN), Bayer AG, Eisai Co., Ltd., Ridgeback Biotherapeutics, and Gilead Sciences, Inc. (NASDAQ:GILD) to develop and sell long-acting HIV treatments. On October 1, China’s National Medical Products Administration (NMPA) approved Merck & Co., Inc.’s Lynparza oncology drug to treat patients with an advanced form of ovarian cancer.

On September 14, analyst Luisa Hector of Berenberg raised Merck & Co., Inc. from ‘Hold’ to ‘Buy’ with a $100 price objective, up from $95. In addition, fund managers reduced their Merck & Co., Inc. holdings in the second quarter. According to Insider Monkey’s Q2 data, 79 hedge funds had long bets on Merck & Co., Inc. as of June 30, compared to 84 funds in the preceding quarter.

Callodine Capital Management held 155,000 shares in Merck & Co., Inc. worth over $14.13 million at the end of Q2, representing 4.18% of its investment portfolio. The hedge fund boosted its stake in the firm by an impressive 934%.

Chartwell Investment Partners mentioned Merck & Co., Inc. in its Q2 2022 investor letter. Here’s what the fund said:

“In the Dividend Equity accounts, the three best performers in Q2 includes Merck (NYSE:MRK, 3.6%), up 12.0%. Merck, like other pharma companies, is in a defensive business, but the stock also did well as peak-sales estimates for their flagship drug, Keytruda, have gone up (JPMorgan estimates $32 billion in sales by 2026).”

2. Radian Group Inc. (NYSE:RDN)

Callodine Capital Management’s Stake Value: $17,685,000
Percentage of Callodine Capital Management’s 13F Portfolio: 5.24%
Number of Hedge Fund Holders: 31

Radian Group Inc. (NYSE:RDN) supplies mortgage insurance and other services to the realtor and mortgage finance industries. On August 18, BofA analyst Mihir Bhatia upgraded Radian Group to ‘Neutral’ from ‘Underperform’ with a price objective of $24, up from $22.50, following a notable Q2 capital return.

Philadelphia-based Radian Group Inc. is one of the companies in which Callodine Capital Management increased its stake during the second quarter. The weightage of James Morrow’s hedge fund in Radian Group Inc. increased from 4.49% at the end of the first quarter of 2022 to 5.24% at the end of June. The hedge fund increased its stake in the firm by 43%, closing the second quarter with 900,000 shares of Radian Group Inc..

Radian Group Inc. was in 31 hedge fund portfolios at the end of the second quarter of 2022. There were 37 hedge funds in our database with Radian Group Inc. holdings at the end of the prior quarter. Radian Group Inc.’s largest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital, with 2.98 million shares worth $58.54 million.

1. Barings BDC, Inc. (NYSE:BBDC)

Callodine Capital Management’s Stake Value: $18,505,000
Percentage of Callodine Capital Management’s 13F Portfolio: 5.48%
Number of Hedge Fund Holders: 11

Barings BDC, Inc. (NYSE:BBDC) is a specialist financing firm in the United States. Its main business is providing specialized finance to lower middle-market companies. It makes investments in businesses with an EBITDA between $10 million and $75 million that private equity sponsors often support.

Robert Dodd, a Raymond James analyst, downgraded Barings BDC, Inc. on August 11 from ‘Strong Buy’ to ‘Outperform’ with an $11.50 price objective, down from $12.50. Dodd stated in a research note that the low NII rate sensitivity no longer justified the previous rating, despite his belief that the company’s unusual income streams offered it a long-term advantage over more typical BDCs.

11 out of the 895 hedge funds held stakes in Barings BDC, Inc. in the second quarter of 2022, worth $43.89 million, compared to the same number of funds in the preceding quarter, holding stakes in Barings BDC, Inc. totaling $47.55 million.

The most significant stake in Barings BDC, Inc. is held by James Morrow’s Callodine Capital Management. Callodine Capital Management boosted its Barings BDC, Inc. position by 83% or 900,189 shares during Q2. The hedge fund held 1.99 million shares worth $18.51 million as of June 30. Representing 5.48% of the fund’s 13F portfolio, Barings BDC, Inc. was Callodine Capital Management’s top stock pick.

You can also take a peek at 10 Stocks to Buy According to Richard Scott Greeder’s Broad Bay Capital and 10 Stocks to Buy According to Bulldog Investors.

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