In this article, we will discuss 10 stocks to buy now according to Steve Pei’s Gratia Capital.
Steven Pei is the founder and Chief Investment Officer of Gratia Capital. He completed his high school education at Monte Vista High School in California. After that, Pei received his bachelor’s degree in International Studies and Business from the University of Pennsylvania in the year 2000.
Steven Pei started his career as an analyst at McKinsey & Company in 2000, where he worked for more than two years before becoming a Senior Associate at DFI Holdings in Hong Kong. In 2004, he became an Associate at Bain Capital, a private equity group, and later became Vice President of Canyon Capital Advisors in 2006. Pei worked for Canyon Capital for more than 5 years before launching his fund, Gratia Capital, with a seed deal of $25 million from Q Investments in 2012.
ATI Physical Therapy, Inc. (NYSE:ATIP), Party City Holdco Inc. (NYSE:PRTY), and Inspired Entertainment, Inc. (NASDAQ:INSE) are the most significant names in Gratia Capital’s portfolio.
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Our Methodology
With this context in mind, here is our list of 10 stocks to buy now according to Steve Pei’s Gratia Capital. These were picked from Gratia Capital’s investment portfolio for the third quarter of 2021.
10 Stocks to Buy Now According to Steve Pei’s Gratia Capital
10. Medallion Financial Corp. (NASDAQ:MFIN)
Gratia Capital’s Stake Value: $3.02 million
Percentage of Gratia Capital’s 13F Portfolio: 2.51
Number of Hedge Fund Holders: 7
Medallion Financial Corp. (NASDAQ:MFIN) is a New York-based firm that offers financial services like offering loans, debt, mezzanine financing, and equity investment to consumers and companies in different industries. The company has its subsidiaries namely Medallion Funding LLC, Medallion Capital, Inc., and Freshstart Venture Capital Corp.
As per Insider Monkey’s database of 867 hedge funds, 7 funds held stakes in Medallion Financial Corp. worth $7.05 million in the third quarter of 2021, up from 6 funds holding stakes in the company worth $7.75 million in the previous quarter.
According to the third quarter filings, Gratia Capital owned 385,238 shares in Medallion Financial Corp. worth $3.02 million in the third quarter.
Medallion Financial Corp., along with ATI Physical Therapy, Inc., Party City Holdco Inc., and Inspired Entertainment, Inc., are some notable names in the portfolio of Gratia Capital.
9. Party City Holdco Inc. (NYSE:PRTY)
Gratia Capital’s Stake Value: $3.3 million
Percentage of Gratia Capital’s 13F Portfolio: 2.72%
Number of Hedge Fund Holders: 17
Party City Holdco Inc. is a manufacturer, designer, and seller of different party supplies throughout the U.S., Canada, and Puerto Rico. The company has two divisions, retail and wholesale.
Among the hedge funds being tracked by Insider Monkey, New York-based firm, CAS Investment Partners is a leading shareholder in Party City Holdco Inc. with 15.986 million shares worth $113.5 million.
According to the third quarter filings, Party City Holdco Inc. is a new addition to Gratia Capital’s portfolio. The fund owned 460,195 shares of the company worth $3.3 million at the end of the third quarter of 2021.
8. Danaos Corporation (NYSE:DAC)
Gratia Capital’s Stake Value: $3.37 million
Percentage of Gratia Capital’s 13F Portfolio: 2.8%
Number of Hedge Fund Holders: 16
Danaos Corporation (NYSE:DAC) is a transportation company that offers container ships across Australia, Europe, the United States, and Asia. The company has a fleet of more than 50 container ships and is based in Greece.
On November 10, Citi analyst Christian Wetherbee maintained a Neutral rating on Danaos Corporation stock and raised the price target from $80 to $90.
According to the database of Insider Monkey that tracks 867 hedge funds, 16 funds had stakes in Danaos Corporation worth $159.04 million in the third quarter, down from 18 funds having stakes in the firm worth $163.3 million in the preceding quarter. Gratia Capital also decreased its activity in the company by 81% in the third quarter.
7. Mistras Group, Inc. (NYSE:MG)
Gratia Capital’s Stake Value: $4.08 million
Percentage of Gratia Capital’s 13F Portfolio: 3.4%
Number of Hedge Fund Holders: 13
Mistras Group, Inc. (NYSE:MG) is a New Jersey-based firm that provides asset protection solutions based on cutting-edge technology all over the globe. Its customers are from industries like oil and gas, aerospace, engineering institutions, public infrastructure, transportation, etc. The company offers further offers services like data management, field inspections, maintenance, consultations, products, and more.
Among the hedge funds tracked by Insider Monkey, Thomas E. Lynch’s Mill Road Capital Management has the most significant stake in Mistras Group, Inc. with 1.17 million shares worth $11.9 million, representing 3.92% of the fund’s portfolio.
As per the third quarter filings of the year, Gratia Capital owned 401,594 shares in Mistras Group, Inc. worth $4.08 million, representing 3.4% of the portfolio.
6. Inspired Entertainment, Inc. (NASDAQ:INSE)
Gratia Capital’s Stake Value: $4.28 million
Percentage of Gratia Capital’s 13F Portfolio: 3.57
Number of Hedge Fund Holders: 17
Inspired Entertainment, Inc. is a New York-based game provider company that offers mobile games, sports, and server-based gaming systems. The customers of the firm are regulated lottery, betting, and gaming operators.
On November 16, Inspired Entertainment, Inc. announced signing a multi-market contract with Novibet to introduce its superior interactive Virtual Sports content.
Among the hedge funds being tracked by Insider Monkey, the New York-based firm, HG Vora Capital Management is the biggest stake holder in Inspired Entertainment, Inc. with 2.7 million shares worth $31.5 million, representing 1.19% of the portfolio.
At the end of the third quarter, 17 hedge funds held stakes in Inspired Entertainment, Inc. worth $123.66 million, down from 23 funds having stakes in the firm worth $121.13 million in the previous quarter.
Inspired Entertainment, Inc. is one of the top picks of Gratia Capital along with ATI Physical Therapy, Inc. and Party City Holdco Inc..
5. ATI Physical Therapy, Inc. (NYSE:ATIP)
Gratia Capital’s Stake Value: $4.96 million
Percentage of Gratia Capital’s 13F Portfolio: 4.14%
Number of Hedge Fund Holders: 25
ATI Physical Therapy, Inc. is an Illinois-based physical therapy provider in North America. The firm’s rehabilitation services are recognized nationally and it has around 860 locations in the U.S. On November 18, the company announced that it has taken over Excel-R-ation Physical Therapy which strengthens its position in Michigan.
CJS Securities analyst Larry Solow downgraded the rating from Outperform to Market Perform on ATI Physical Therapy, Inc. stock with a $6 price target.
As per the database of Insider Monkey that tracks 867 hedge funds, 25 funds held stakes in ATI Physical Therapy, Inc. worth $71.58 million in the third quarter.
1 Main Capital mentioned ATI Physical Therapy, Inc. in its third-quarter investor letter. Here is what the firm said:
“During the period, we also sold our opportunistic ATIP position soon after our Q2 letter went out, when the company’s results and outlook were significantly lower than expected, without a clear explanation for how the issues would be resolved.
Specifically, it sounds like the company cut into muscle when it took costs out during COVID, alienating its therapist base. In turn, many therapists are departing for other opportunities, leaving ATIP understaffed and unable to keep up with demand. When trying to replace these staff members, ATIP in many cases has had to offer above-market wages due to its poor reputation, meaning that its future revenues will come at lower margins than in the past.
A deteriorating margin would be a problem even for an unleveraged company. Unfortunately, ATIP also has a debt problem it must deal with since EBITDA is so much lower than it was prior to COVID. The most frustrating part of these developments is that the company appears to have purposely delayed disclosing them to investors until immediately after its de-SPAC was completed.
While I am frustrated by the way this investment played out, I can’t change what happens, only what I do about it. So, we exited our entire position at $1.16 per warrant. Today, they trade for less than $0.50 each.”
4. Global Ship Lease, Inc. (NYSE:GSL)
Gratia Capital’s Stake Value: $5.26 million
Percentage of Gratia Capital’s 13F Portfolio: 4.39%
Number of Hedge Fund Holders: 14
Global Ship Lease, Inc. (NYSE:GSL) is a London-based company that is the owner of different sized containerships and rents them out for a long-term period under a fixed rate to companies that ship containers.
On November 22, the board of directors of Global Ship Lease, Inc. made an announcement regarding increasing the quarterly dividend by 50% to 37.5c per share to be paid to the common shareholders.
Among the hedge funds tracked by Insider Monkey, Texas-based investment advisory firm Nokomis Capital has the biggest stake in Global Ship Lease, Inc. with 892,460 shares worth $21.16 million, representing 10% of the portfolio.
On November 11, B. Riley analyst Liam Burke maintained a Buy rating on Global Ship Lease, Inc. stock and raised the price target from $28 to $33, noting the increased cash flow in the first three quarters of 2021 owing to the operations of the company.
3. TPG RE Finance Trust, Inc. (NYSE:TRTX)
Gratia Capital’s Stake Value: $6.44 million
Percentage of Gratia Capital’s 13F Portfolio: 5.37%
Number of Hedge Fund Holders: 12
TPG RE Finance Trust, Inc. (NYSE:TRTX) is a New York-based real estate finance company that creates, acquires, and handles commercial mortgage loans and many other real estate debt instruments.
According to the third quarter filings, Gratia Capital owned 520,600 shares in TPG RE Finance Trust, Inc. worth $6.44 million. The fund decreased its activity in the company by 20% in the third quarter.
According to the database of Insider Monkey that tracks 867 hedge funds, 12 funds held stakes in TPG RE Finance Trust, Inc. worth $27.91 million at the end of the third quarter.
2. New York Mortgage Trust, Inc. (NASDAQ:NYMT)
Gratia Capital’s Stake Value: $9.3 million
Percentage of Gratia Capital’s 13F Portfolio: 7.76%
Number of Hedge Fund Holders: 15
New York Mortgage Trust, Inc. (NASDAQ:NYMT) is a real estate investment trust that is focused on real estate-related assets via investment, acquirement, management, and financing. The trust deals mostly in real estate mortgages for single-family and multi-family assets.
Among the hedge funds tracked by Insider Monkey, New York-based hedge fund, Two Sigma Advisors LP is the leading shareholder in New York Mortgage Trust, Inc. with 2,766,800 shares worth $11.78 million, representing 0.03% of the portfolio.
As per the third quarter filings, Gratia Capital owned 2.18 million shares in New York Mortgage Trust, Inc. worth $9.3 million, representing 7.76% of the portfolio. The fund also increased its activity in the company by 179% in the third quarter of 2021.
1. Navios Maritime Partners L.P. (NYSE:NMM)
Gratia Capital’s Stake Value: $10.79 million
Percentage of Gratia Capital’s 13F Portfolio: 9%
Number of Hedge Fund Holders: 9
Navios Maritime Partners L.P. (NYSE:NMM) is a Monaco-based company that offers sea-borne transportation services for bulk dry cargo. The company is publicly listed as a master limited partnership and has a fleet of impressive dry bulk and container vessels. On October 15, the firm announced the completion of its acquisition of Navios Maritime Acquisition Corporation. Due to the acquisition, the company’s fleet now includes 54 dry bulk vessels, 43 containerships, and 45 tanker vessels.
Navios Maritime Partners L.P. is the most significant investment in Gratia Capital’s portfolio. In the third quarter of the year, the fund owned 333,656 shares in Navios Maritime Partners L.P. worth $10.79 million, making up 9% of the portfolio.
You can also take a peek at 15 Pharmaceutical Stocks to Buy According to Peter Kolchinsky’s RA Capital and Top Tech Stock Picks of Amir Mokari’s Emerson Point Capital.
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This article is originally published at Insider Monkey.
