In this article, we discuss 10 stocks to buy according to Mark McMeans’ Brasada Capital Management.
Mark McMeans is the chief executive officer and founding partner of Brasada Capital Management. He graduated from the University of Texas with a Bachelor of Business Administration in accounting. He also acquired an MBA degree in finance from Rice University in Houston, Texas. McMeans is a CFA charterholder and a CPA, and he uses his experience to assist the company in navigating equity market circumstances through cross-market contacts.
He spent sixteen years with AIM Investments as director of equity investments and as managing director of AIM Capital Management, as well as president and chief operating officer of AIM Private Asset Management, before establishing Brasada Capital Management. He was also a global partner at AIM’s parent firm, Invesco. Before joining AIM, McMeans worked at JP Morgan Chase and KPMG.
Mark McMeans of Brasada Capital
McMeans and James Gabriel Birdsall, two former senior managers who had previously spent a substantial amount of time working together at Invesco, founded the Houston-based hedge fund, Brasada Capital Management, in June 2008. The fund uses alternative stock and fixed-income strategies for institutional and accredited investors. For the first six months of 2022, it had a net return of -25.7%. At the end of Q2 2022, Brasada Capital Management owned investments in various sectors. The hedge fund’s portfolio had a value of $445.61 million at the end of the second quarter of 2022, down from $1.06 billion in the first quarter of 2022. The most notable stocks held by the hedge fund in Q2 2022 included Apple Inc. (NASDAQ:AAPL), Visa Inc. (NYSE:V), and Mastercard Incorporated (NYSE:MA).
Our Methodology
We selected top stocks from Brasada Capital Management’s 13F portfolio as of the second quarter of 2022. The equities are ranked based on their position in the portfolio.
Stocks to Buy According to Mark McMeans’ Brasada Capital Management
10. ANSYS, Inc. (NASDAQ:ANSS)
Brasada Capital Management’s Stake Value: $10,458,000
Percentage of Brasada Capital Management’s 13F Portfolio: 2.34%
Number of Hedge Fund Holders: 42
ANSYS, Inc. (NASDAQ:ANSS) is a publicly traded business with its main office in Canonsburg, Pennsylvania. The company develops and markets multi-physics engineering simulation software for product development, testing, and operations. ANSYS, Inc. is trading at an EV/EBITDA (TTM) ratio of 37.25x and a P/E (TTM) ratio of 51.93x.
Wolfe Research analyst Gal Munda commenced coverage of ANSYS, Inc. on August 16, assigning the stock an ‘Outperform’ rating and a $320 price target. The hedge fund chaired by Mark McMeans held close to 43,703 shares in ANSYS, Inc., worth over $10.46 million. It is the tenth-largest holding of Brasada Capital Management. However, the hedge fund’s stake in ANSYS, Inc. decreased by 4% in the second quarter of 2022.
According to Insider Monkey’s database, ANSYS, Inc. was part of 42 public hedge fund portfolios as of Q2 2022. The total value of their stakes was $1.32 billion. In the second quarter of 2022, ANSYS, Inc.’s largest shareholder was Robert Joseph Caruso’s Select Equity Group, which owned 1.29 million shares worth $307.94 million. The hedge fund boosted its stake in ANSYS, Inc. by 162%.
Just like Apple Inc., Visa Inc., and Mastercard Incorporated, ANSYS, Inc. is one of the notable stocks in the portfolio of Mark McMeans’ Brasada Capital Management.
Baron Funds, in its first quarter 2022 investor letter, mentioned ANSYS, Inc.. Here is what the fund said:
“ANSYS, Inc. is a leading provider of physics-based simulation software. Despite quarterly financial results that exceeded expectations, the stock was pressured because of management guidance for slower free-cash-flow growth next year, coupled with the general rotation away from growth stocks. We believe ANSYS remains well positioned to benefit from the increasing demand for simulation software by leveraging its growing product offerings, partnerships, expanding distribution, and deep customer relationships. In addition, management continues to describe attractive expansion opportunities within its largest customers across all key geographies.”
9. Canadian Pacific Railway Limited (NYSE:CP)
Brasada Capital Management’s Stake Value: $10,745,000
Percentage of Brasada Capital Management’s 13F Portfolio: 2.41%
Number of Hedge Fund Holders: 42
Canadian Pacific Railway Limited (NYSE:CP) is a holding company that provides rail services. Canadian Pacific Railway Limited is the ninth-largest holding of Mark McMeans’ Brasada Capital Management. McMeans began building his stake in Canadian Pacific Railway Limited in the first quarter of 2021. After selling 1,544 shares of Canadian Pacific Railway Limited in the second quarter of 2022, his hedge fund had a $10.75 million stake in the company.
On July 29, Cameron Doerksen, an analyst at National Bank, increased his price objective on Canadian Pacific Railway Limited from C$93 to C$98 while maintaining a ‘Sector Perform’ rating.
On August 16, Canadian Pacific Railway Limited announced that the Committee on Foreign Investment in the United States had granted regulatory permission for the proposed merger of Canadian Pacific Railway Limited and Kansas City Southern (“KCS”). CP officially completed the acquisition of KCS on December 14, 2021.
42 out of the 895 hedge funds tracked by Insider Monkey were long Canadian Pacific Railway Limited in the second quarter of 2022, with stakes worth $7.01 billion, compared to 41 funds in the previous quarter, holding stakes in the company totaling $8.12 billion.
Here is what ClearBridge Investments said about Canadian Pacific Railway Limited in its Q3 2021 investor letter:
“The other major headwind to relative performance in the quarter was Canadian Pacific Railway Limited. The stock has been a strong performer for the Strategy but negative sentiment around its bidding war for U.S. rail operator Kansas City Southern has weighed on the stock since late May. As a result, the cyclical uptick we expected from the company has been masked by the takeover. Indeed, we have been frustrated by the muted performance among Canadian Pacific Railway Limited and other recently added positions in our structural bucket of growth companies with more cyclical business models or that are undergoing a restructuring that should lead to a step change improvement in earnings. As more regions reopen from COVID-19 and spending rebounds, we expect better performance from our structural names, including Airbus and hospitality and food service provider Compass.”
8. Costco Wholesale Corporation (NASDAQ:COST)
Brasada Capital Management’s Stake Value: $11,430,000
Percentage of Brasada Capital Management’s 13F Portfolio: 2.56%
Number of Hedge Fund Holders: 64
Costco Wholesale Corporation (NASDAQ:COST) is an American membership-only warehouse club chain founded in 1983. On August 4, Scot Ciccarelli, an analyst at Truist, increased his price objective on Costco Wholesale Corporation from $543 to $571 and maintained a ‘Buy’ recommendation on the stock.
By the end of the second quarter, 64 hedge funds monitored by Insider Monkey were bullish on Costco Wholesale Corporation, with collective stakes valued at $4.77 billion. Of the 64 hedge funds, Ken Fisher’s Fisher Asset Management had the most significant position in Costco Wholesale Corporation.
Costco Wholesale Corporation stock is a good option for income investors as the firm has paid a sizable dividend since 2004. On July 27, the company issued a quarterly dividend of $0.90 per share, in line with the previous.
Brasada Capital Management sold 1,398 shares of Costco Wholesale Corporation in the second quarter of 2022, reducing its stake by about 6%. At the end of the quarter, the hedge fund held 23,848 shares of Costco Wholesale Corporation, worth about $11.43 million.
ClearBridge Investments mentioned Costco Wholesale Corporation in its Q4 2021 investor letter. Here is what the fund said:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
7. EPAM Systems, Inc. (NYSE:EPAM)
Brasada Capital Management’s Stake Value: $11,819,000
Percentage of Brasada Capital Management’s 13F Portfolio: 2.65%
Number of Hedge Fund Holders: 36
EPAM Systems, Inc. (NYSE:EPAM) provides services for designing digital platforms and creating software products. On August 9, Susquehanna analyst James Friedman maintained a ‘Positive’ rating on EPAM Systems, Inc. while increasing his price objective to $496 from $370.
On August 4, EPAM Systems, Inc. published earnings for the second quarter, announcing earnings per share of $2.38, beating estimates by $0.67. In addition, the $1.2 billion revenue for the period was up 36.2% year-over-year, exceeding estimates by $80 million.
At the end of June, 36 hedge funds tracked by Insider Monkey held long positions in EPAM Systems, Inc.. By comparison, 38 hedge funds held stakes in EPAM Systems, Inc. a quarter ago.
Brasada Capital Management has owned a stake in EPAM Systems, Inc. since the fourth quarter of 2017. The hedge fund increased its position in EPAM Systems, Inc. by 3% in the second quarter of 2022. The fund held 40,093 shares worth $11.82 million as of June 30, making EPAM Systems, Inc. the seventh-largest stock in its 13F portfolio.
Here is what Carillon Tower Advisers, an investment management firm, has to say about EPAM Systems, Inc. in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. EPAM Systems offers information technology services. The company struggled amid geopolitical instability given its 14,000 employees in Ukraine and associated operational, relocation, and travel costs. The Fund sold the stock.”
6. NextEra Energy, Inc. (NYSE:NEE)
Brasada Capital Management’s Stake Value: $13,383,000
Percentage of Brasada Capital Management’s 13F Portfolio: 3%
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) is one of the most prominent electric firms in the United States. NextEra Energy, Inc. is also a reliable dividend aristocrat. The company declared a quarterly dividend of $0.425 per share, with a forward yield of 2.01%, on July 29.
According to Insider Monkey’s database, NextEra Energy, Inc. was found in the public stock portfolios of 59 hedge funds at the end of June 2022, compared to 64 funds in the earlier quarter. Fisher Asset Management is the leading stakeholder of NextEra Energy, Inc., with 16.23 million shares worth $1.26 billion.
Regulatory filings revealed that Brasada Capital Management owned 172,768 shares of NextEra Energy, Inc. at the end of the second quarter of 2022, valued at $13.38 million, representing 3% of the portfolio. NextEra Energy, Inc. has been in Brasada Capital Management’s portfolio since the fourth quarter of 2017.
On August 18, Morgan Stanley analyst Stephen Byrd maintained an ‘Equal Weight’ rating on the stock while increasing his price objective on NextEra Energy, Inc. from $83 to $94. In a research note to investors, Byrd stated that the legislation approved by Congress and signed by President Biden will hasten the decarbonization of the American economy, providing the necessary boost to decarbonization technologies that are gaining traction.
Like Apple Inc., Visa Inc., and Mastercard Incorporated, NextEra Energy, Inc. is on the radar of elite investors.
ClearBridge Investments mentioned NextEra Energy, Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“We increased our exposure to the energy transition during the quarter with new positions in Iberdrola (OTCPK:IBDSF), a Spanish-based integrated utility that is also one of the leading renewable energy developers in the world, and NextEra Energy, Inc., an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. The war has opened the eyes of the world that energy independence is critical. Renewables are for many countries the only way to get to the target. It is expected that existing renewable project pipelines will be executed faster, and more projects added to existing pipelines.
The energy transition would be extremely helpful for climate change and Iberdrola ranks well on our ESG matrix. NextEra, meanwhile, recently raised future earnings forecasts, citing a very favorable macro environment for rapid renewable generation expansion driven by decarbonization of the U.S. economy and the relative attractiveness of renewable generation in the context of high natural gas and power prices.”
5. American Tower Corporation (NYSE:AMT)
Brasada Capital Management’s Stake Value: $13,817,000
Percentage of Brasada Capital Management’s 13F Portfolio: 3.1%
Number of Hedge Fund Holders: 52
American Tower Corporation (NYSE:AMT) is a real estate investment trust with its main office in Boston, Massachusetts. It is a global owner and operator of wireless and broadcast communications infrastructure. It is expected that American Tower Corporation, which has over 43,000 towers in key locations across the United States, would profit significantly from 5G, the Internet of Things (IoT), and next-gen TV technologies.
On July 29, Deutsche Bank analyst Matthew Niknam reiterated a ‘Hold’ rating on American Tower Corporation and boosted his price objective from $270 to $285. During Q2 2022, Brasada Capital Management sold 1,826 American Tower Corporation shares, taking its total stake to nearly $13.82 million. The company is the fund’s fifth-largest holding and accounted for 3.1% of Brasada Capital Management’s portfolio.
Among the hedge funds tracked by Insider Monkey, 52 funds were bullish on American Tower Corporation at the end of Q2 2022. Charles Akre’s Akre Capital Management is the leading stakeholder of the company, with approximately 6.97 million shares worth $1.78 billion.
Here is what ClearBridge Investments had to say about American Tower Corporation in its Q2 2022 investor letter:
“The top contributor was our sole real estate holding American Tower, the leading independent wireless tower operator with roughly 221,000 properties globally, including about 43,000 in the U.S., 76,000 in India and 23,000 in Brazil. The company’s business model is to lease space on its towers to predominantly wireless carriers on a long-term basis, generally ranging 5–10 years in duration, with built-in price escalators. This approach results in a stable and predictable cash flow business with high incremental margins — attractive qualities especially in volatile markets like the second quarters.”
4. Danaher Corporation (NYSE:DHR)
Brasada Capital Management’s Stake Value: $15,044,000
Percentage of Brasada Capital Management’s 13F Portfolio: 3.37%
Number of Hedge Fund Holders: 82
Danaher Corporation (NYSE:DHR), founded in 1969 and based in Washington, manufactures, designs, and markets professional, industrial, medical, and commercial products and services. Brasada Capital Management reduced its stake in Danaher Corporation by 5% in Q2 2022, holding about 59,341 shares worth $15.04 million, representing 3.37% of the total securities.
On August 24, Credit Suisse analyst Dan Leonard commenced coverage of Danaher Corporation, rating the stock as ‘Outperform’ with a price target of $340. The analyst concluded that after the epidemic, the firm had become stronger.
Ken Fisher’s Fisher Asset Management is a prominent shareholder of Danaher Corporation as of Q2 2022, with 3.84 million shares worth $973.27 million. Another notable stakeholder of Danaher Corporation is Dan Loeb’s Third Point, with 2.30 million shares of the company. Overall, 82 hedge funds in the database of Insider Monkey owned positions in Danaher Corporation at the end of June, with a collective stake value of $4.84 billion.
In its Q2 2022 investor letter, Weitz Investment Management mentioned Danaher Corporation. Here is what the fund said:
“Consistent with that approach, portfolio activity among our long holdings tilted toward purchases. We added to almost half our holdings by varying degrees, and we were pleased to initiate new positions in Danaher. Danaher is a provider of instruments and diagnostic tools to medical, life science, and other desirable end-markets worldwide. The business generate significant free cash flow, possess strong competitive positions, and have excellent management teams with demonstrated acquisition records.”
3. Waste Connections, Inc. (NYSE:WCN)
Brasada Capital Management’s Stake Value: $16,078,000
Percentage of Brasada Capital Management’s 13F Portfolio: 3.6%
Number of Hedge Fund Holders: 34
Waste Connections, Inc. (NYSE:WCN) provides comprehensive solid waste management services. Among the hedge funds tracked by Insider Monkey, 34 funds were bullish on Waste Connections, Inc. at the end of June 2022, compared to 35 funds in the earlier quarter.
On August 9, Deutsche Bank analyst Kyle White maintained a ‘Buy’ rating on Waste Connections, Inc. and increased his price objective to $154 from $145. White believed that the company outperformed forecasts in the second quarter thanks to continued solid pricing and upped its full-year outlook as anticipated.
Durable Capital Partners, with approximately 1.93 million shares worth $239.21 million, is the largest shareholder of Waste Connections, Inc.. Brasada Capital Management reduced its position in Waste Connections, Inc. by selling 3,585 shares in Q2 2022. This made its stake in Waste Connections, Inc. equal 129,706 shares worth $16.08 million.
2. Microsoft Corporation (NASDAQ:MSFT)
Brasada Capital Management’s Stake Value: $17,310,000
Percentage of Brasada Capital Management’s 13F Portfolio: 3.88%
Number of Hedge Fund Holders: 258
Brasada Capital Management reduced its position in Microsoft Corporation (NASDAQ:MSFT) by 5% or 3,253 shares. The hedge fund’s total holding of 67,400 shares was worth more than $17.31 million as of June 30. This represented 3.88% of its portfolio. According to our database, the number of long hedge fund positions in Microsoft Corporation decreased to 258 at the end of the second quarter, compared to 259 in the previous quarter. Fisher Asset Management is Microsoft Corporation’s largest shareholder, with shares worth $7.37 billion.
John DiFucci of Guggenheim initiated coverage of Microsoft Corporation on August 11, assigning the stock a ‘Neutral’ rating and a $292 price target.
Here is what Carillon Tower Advisers said about Microsoft Corporation in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
1. Alphabet Inc. (NASDAQ:GOOG)
Brasada Capital Management’s Stake Value: $18,430,000
Percentage of Brasada Capital Management’s 13F Portfolio: 4.13%
Number of Hedge Fund Holders: 153
Brasada Capital Management has been bullish on Alphabet Inc. (NASDAQ:GOOG) since the fourth quarter of 2017. Alphabet Inc. tops the list of stocks to buy according to Mark McMeans’ Brasada Capital Management. The stock accounted for about 4.13% of Brasada Capital Management’s portfolio, and the hedge fund owned an $18.43 million stake in the firm.
On August 23, Casa Systems, Inc. (NASDAQ:CASA) and Alphabet Inc. announced a strategic technology and distribution agreement to enhance and distinguish their respective integrated cloud-native software and service offerings.
On August 3, Tigress Financial analyst Ivan Feinseth raised his price target on Alphabet Inc. from $183 to $186 while maintaining a ‘Strong Buy’ rating. He did this by pointing to the company’s Q2 earnings as proof of the strength of its core businesses in Cloud and Search.
Alphabet Inc. (NASDAQ:GOOG.A) was in 153 hedge fund portfolios at the end of the second quarter of 2022, while there were 160 hedge funds in our database with Alphabet Inc. positions at the end of the previous quarter.
Here is what Horos Asset Management specifically said about Alphabet Inc. in its second quarter 2022 investor letter:
“As we pointed out in the previous quarterly letter, high inflation and, more specifically, the consequent interest rate hikes by the vast majority of central banks, led to companies with high growth and future cash flow generation expectations being the most severely hit in this year’s market downturn. This category also includes technology companies with high quality businesses, but which traded at demanding valuations. This is the case of Alphabet Inc., a company in which we are investing again two and a half years after our exit….(Click here to read the full text).”
You can also take a peek at 10 Stocks to Buy According to Cheyne Capital and 10 Stocks to Buy According to John Hurley’s Cavalry Asset Management.
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Stocks To Buy According to Francis Chou’s Chou Associates Management
- 10 Stocks To Buy According to William Von Mueffling’s Cantillon Capital Management
- Top 7 Best Stocks To Buy According to Stephen Feinberg’s Cerberus Capital Management
originally published on Insider Monkey.
