In this article, we will discuss 10 stocks to invest in: Adam Peterson’s Magnolia Capital fund portfolio based on Q2 holdings of the fund.
Magnolia Capital Fund is a Nebraska-based hedge fund formed by Adam Peterson in November 2012. Mr. Peterson is the only shareholder and owner of the hedge fund. The hedge fund typically invests in publicly listed common stocks and real estate funds to generate long-term financial appreciation. The hedge fund’s 13F portfolio is valued at approximately $804.48 million as of the end of the second quarter of 2021.
Some of the top stocks in the investment portfolio of Adam Peterson’s Magnolia Capital Fund in the second quarter of 2021 were Wells Fargo & Company (NYSE:WFC), Discovery, Inc. (NASDAQ:DISCK), and Black Stone Minerals, L.P. (NYSE:BSM), among others.
Based on the latest 13F holdings for the second quarter of 2021, Magnolia Capital Fund owns 3.44 million shares in Wells Fargo & Company. On September 1, Wells Fargo & Company chose the nCino Bank Operating System to accelerate digital technology in its commercial banking and corporate and investment banking divisions. Wells Fargo & Company currently has a market capitalization of $196.78 billion.
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With this background in mind, let’s start our list of 10 stocks to invest in: Adam Peterson’s Magnolia Capital fund portfolio. We picked these stocks from the Q2 portfolio of Peterson’s hedge fund.
Stocks to Invest In: Adam Peterson’s Magnolia Capital Fund Portfolio
10. NACCO Industries, Inc. (NYSE:NC)
Peterson’s Stake Value: $5,052,000
Percentage of Adam Peterson’s 13F Portfolio: 0.62%
Number of Hedge Fund Holders: 4
NACCO Industries, Inc. (NYSE:NC) is a mining and natural resources company that operates via its subsidiaries.
On August 18, NACCO Industries, Inc. declared a quarterly dividend of $0.1975 per share, in line with the previous. On August 4, NACCO Industries, Inc. posted earnings results for the second quarter of 2021. It reported earnings per share of $0.91, versus the earnings per share of $1.25 for the first quarter of 2021.
Adam Peterson’s Magnolia Capital Fund bought 194,014 shares in NACCO Industries, Inc., worth $5.05 million, representing 0.62% of their portfolio. At the end of the second quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $13.21 million in NACCO Industries, Inc., up from 2 the preceding quarter worth $7.88 million. Renaissance Technologies is a leading shareholder of NACCO Industries, Inc., with 274,217 shares worth $7.14 million.
9. Black Stone Minerals, L.P. (NYSE:BSM)
Peterson’s Stake Value: $6,706,000
Percentage of Adam Peterson’s 13F Portfolio: 0.83%
Number of Hedge Fund Holders: 6
Black Stone Minerals, L.P. is an oil and gas company located in Houston, Texas.
On September 3, Wells Fargo analyst Joseph McKay initiated coverage of Black Stone Minerals, L.P. to “Overweight” from “Equal Weight” raising his price target to $13, up from $11. On August 2, Black Stone Minerals, L.P. declared earnings for the second quarter of 2021. It posted earnings per share of $0.05, missing the estimates by $0.07.
Black Stone Minerals, L.P. is a new arrival on Adam Peterson’s portfolio, as his hedge fund bought 623,832 shares worth $6.71 million, representing close to 0.83% of their portfolio. In addition, hedge funds are loading up on Black Stone Minerals, L.P., as Insider Monkey’s data shows that 6 hedge funds held stakes in the company as of the end of the second quarter of 2021, up from 5 funds a quarter earlier.
8. Nicholas Financial, Inc. (NASDAQ:NICK)
Peterson’s Stake Value: $24,385,000
Percentage of Adam Peterson’s 13F Portfolio: 3.03%
Number of Hedge Fund Holders: 2
Nicholas Financial, Inc. (NASDAQ:NICK) is a Florida-based consumer and auto loan company. Nicholas Financial, Inc. delivered 60.57% return in the past 12 months.
On July 30, Nicholas Financial, Inc. announced earnings for the first quarter of 2021. It posted earnings per share of $0.22 versus earnings per share of $0.24 for the fourth quarter of 2020. Revenue over the period was $12.6 million, down -11.0% YoY.
Magnolia Capital Fund holds 2.18 million shares in Nicholas Financial, Inc. worth $24.39 million, thereby making it the company’s biggest stakeholder. This represents 3.03% of their portfolio. The latest data reveals that the hedge fund stake in Nicholas Financial, Inc. increased by 5% in the second quarter of 2021.
7. Discovery, Inc. (NASDAQ:DISCK)
Peterson’s Stake Value: $37,471,000
Percentage of Adam Peterson’s 13F Portfolio: 4.65%
Number of Hedge Fund Holders: 35
Discovery, Inc., located in New York City, is an American international factual television corporation. Discovery, Inc. shares have offered investors more than 23.31% in returns over the course of the past 12 months.
On August 3, Discovery, Inc. posted earnings for the second quarter of 2021. The company declared earnings per share of $1.01, beating the estimates by $0.50.
Discovery, Inc. is a new arrival on Adam Peterson’s portfolio, as his hedge fund bought about 1.29 million shares, worth over $37.47 million. This represents 4.65% of their portfolio. In addition, D E Shaw is a leading shareholder in Discovery, Inc., with 5.69 million shares worth more than $165.02 million.
Smead Capital Management, in its second quarter 2021 investor letter, mentioned Discovery, Inc.. Here is what the fund said:
“We were most negatively affected by Discovery’s (DISCK) stock backing off from their meme–stock fame of the first quarter. Their share price then weakened further by announcing a merger with Warner Media to aggregate the best of unscripted TV shows with the best of sports and scripted TV and movies.”
6. Alliance Resource Partners, L.P. (NASDAQ:ARLP)
Peterson’s Stake Value: $38,670,000
Percentage of Adam Peterson’s 13F Portfolio: 4.8%
Number of Hedge Fund Holders: 4
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a diversified steam coal producer and marketer in the United States. Alliance Resource Partners, L.P. currently has a $1.24 billion market capitalization and was able to deliver a 242.46% return in the past 12 months.
On August 6, Alliance Resource Partners, L.P. announced earnings for the second quarter of 2021. It reported earnings per share of $0.34, beating the estimates by $0.13. On July 26, Alliance Resource Partners, L.P. declared a quarterly dividend of $0.10 per share, in line with previous.
The hedge fund chaired by Adam Peterson holds 5.36 million shares in Alliance Resource Partners, L.P. worth $38.67 million, representing 4.8% of their portfolio. Alliance Resource Partners, L.P. saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions declined to 4 in the first quarter of 2021 compared to 7 positions in the previous quarter.
5. Dream Finders Homes, Inc. (NASDAQ:DFH)
Peterson’s Stake Value: $48,860,000
Percentage of Adam Peterson’s 13F Portfolio: 6.07%
Number of Hedge Fund Holders: 7
On September 15, Zelman initiated coverage of Dream Finders Homes, Inc. (NASDAQ:DFH) and upgraded the stock to “Hold” from “Sell.” On September 13, McGuyer Homebuilders and associated affiliates of Houston, Texas-based homebuilders agreed to sell their mortgage banking, homebuilding, and title insurance assets to Dream Finders Homes, Inc..
Magnolia Capital Fund holds 2 million shares in Dream Finders Homes, Inc., worth $48.86 million, representing 6.07% of their portfolio. Adam Peterson’s Magnolia Capital Fund is the company’s most significant stakeholder. Dream Finders Homes, Inc. saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions declined to 7 in the second quarter of 2021 compared to 10 positions in the previous quarter.
Argosy Investors, in its second-quarter 2021 investor letter mentioned Dream Finders Homes, Inc.. Here is what the fund said:
“So how are our largest holdings affected in a world of higher wage inflation? As a general rule, I will evaluate current and potential future holdings on their capital intensivity and their ability to raise prices. Dream Finders is now (a part of) our top 5 largest equity holdings. Dream Finders is a homebuilder and is likely to need to increase wages to continue their growth. Failure to do so could lead to slower growth and unhappy customers, while raising wages will likely reduce their gross margins. Hopefully they can price their houses to maintain EBIT margin dollars at levels they would have achieved with higher gross margins, but homebuilding is competitive so I’m not terribly optimistic. Additionally, if wage inflation leads to more general inflation, interest rates are a significant input into the home buyer’s ability to afford a house. If interest rates increase, even a little bit, from current levels, home buying and thus homebuilding activity would probably slow down, perhaps dramatically.”
4. Frontier Communications Parent, Inc. (NASDAQ:FYBR)
Peterson’s Stake Value: $95,855,000
Percentage of Adam Peterson’s 13F Portfolio: 11.91%
Number of Hedge Fund Holders: 43
On September 23, Raymond James analyst Frank Louthan initiated coverage of Frontier Communications Parent, Inc. (NASDAQ:FYBR) with an “Outperform” rating and gave his price target of $34. On August 5, Frontier Communications Parent, Inc. posted earnings results for the second quarter of 2021. The earnings per share was $24.30, beating market predictions by $23.92.
Magnolia Capital Fund added Frontier Communications Parent, Inc. to its portfolio in the second quarter of 2021 by buying 3.63 million shares. In addition, hedge funds are loading up on Frontier Communications Parent, Inc., as Insider Monkey’s data shows that 43 hedge funds held stakes in the company in the second quarter of 2021.
3. Nelnet, Inc. (NYSE:NNI)
Peterson’s Stake Value: $136,469,000
Percentage of Adam Peterson’s 13F Portfolio: 16.96%
Number of Hedge Fund Holders: 14
On August 30, Nelnet, Inc. (NYSE:NNI) declared a quarterly dividend of $0.22 per share, in line with the previous. On August 4, Nelnet, Inc. posted earnings for the second quarter of 2021. It announced earnings per share of $2.20, surpassing the estimates by $0.56. Revenue for the second quarter was $340.44 million, up 7.7% year over year, beating the analysts’ expectations by $52.44 million.
Adam Peterson’s Magnolia Capital Fund holds about 1.81 million shares of Nelnet, Inc., worth $136.47 million. Nelnet occupies 16.96% of Magnolia Capital Fund’s total portfolio. In addition, hedge funds are loading up on Nelnet, Inc., as Insider Monkey’s data shows that 14 hedge funds held a stake in the company in the second quarter of 2021, compared to 11 funds in the previous quarter.
2. Wells Fargo & Company (NYSE:WFC)
Peterson’s Stake Value: $155,646,000
Percentage of Adam Peterson’s 13F Portfolio: 19.34%
Number of Hedge Fund Holders: 94
On September 1, Deutsche Bank analyst Matt O’Connor initiated coverage of Wells Fargo & Company raising his price target to $55 from $48 and maintained a “Buy” rating on the shares.
The hedge fund managed by Adam Peterson owns 3.44 million shares in Wells Fargo & Company worth over $155.65 million, representing 19.34% of their portfolio. Martin Taylor’s Crake Asset Management is the most significant shareholder of Wells Fargo & Company with 1.14 million shares worth $51.59 billion.
L1 Capital, in its second-quarter 2021 investor letter mentioned Wells Fargo & Company. Here is what the fund said:
“Wells Fargo (Long +16%) was the strongest contributor to portfolio performance over the quarter. Wells Fargo shares rallied given a better outlook for bad debts driven by improving employment and house price trends. The company had been very undervalued due to excessive fears around likely bad debts due to the pandemic, the continued regulatory “asset cap” (a punishment that was put in place in 2017 for numerous compliance failures) and an inability to commence buybacks. The share price has subsequently recovered strongly in recent months as the company has progressed its turnaround program under the leadership of the well-regarded CEO, Charles Scharf (former CEO of Visa and BNY Mellon). Wells Fargo is now closer to getting the asset cap lifted and has announced a huge cost out program (US$8b+) as well as an $18b buyback program to be completed over the next 12 months. Wells Fargo shares have rallied more than 50% since we initiated the position in late 2020. Given the strong rally, we elected to exit our position and rotate into stocks with larger valuation upside.”
1. Boston Omaha Corporation (NASDAQ:BOMN)
Peterson’s Stake Value: $255,369,000
Percentage of Adam Peterson’s 13F Portfolio: 31.74%
Number of Hedge Fund Holders: 3
On August 13, Boston Omaha Corporation (NASDAQ:BOMN) posted earnings for the second quarter of 2021. It reported earnings per share of $0.29, compared to $3.09 for the first quarter of 2021. Revenue over the period was $14.18 million, up 23.4% YoY, beating the estimates by $6.67 million.
Adam Peterson’s Magnolia Capital Fund currently holds 8.05 million shares of Boston Omaha Corporation, which amounts to $255.37 million. Magnolia Capital Fund is the company’s most significant stakeholder. The company occupies 31.74% of Magnolia Capital Fund’s total portfolio. There were 3 hedge funds in our database that held stakes in Boston Omaha Corporation in the second quarter of 2021, compared to 2 funds in the previous quarter.
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This article is originally published at Insider Monkey.
