In this article, we discuss 10 stocks to invest in now according to Anthony Bozza’s Lakewood Capital.
Anthony Bozza‘s Lakewood Capital Management is a hedge fund established in New York City. Mr. Bozza graduated from the University of Pennsylvania’s Wharton School with a BS summa cum laude in Economics. He honed his investment abilities at SAB Capital Management, Gleacher & Co., and KKR before starting his own investment management business. In 2007, Anthony Bozza founded Lakewood Capital Management, where he continues to serve as the managing partner of the fund. In addition to his prowess with long positions, Bozza is also known for being a savvy short seller.
Lakewood Capital Management invests using a long-term fundamental approach with a strong focus on capital preservation. It invests in a range of industries using a long/short strategy. The fund was 107.4% long and 44.9% short for net equity exposure of 62.5% as of June 30, 2020. At the end of the fourth quarter of 2021, Lakewood Capital Management’s 13F portfolio counted 65 long positions and carried a value of $2.36 billion, with 47.05% of that value concentrated in its top ten holdings. During the quarter, the fund initiated 14 new positions, boosted its stakes in 14 stocks, exited positions in 4 equities and lowered its position in 22 stocks.
Some of the top holdings in the hedge fund’s portfolio include Alibaba Group Holding Limited (NYSE:BABA), Visa Inc. (NYSE:V), and Comcast Corporation (NASDAQ:CMCSA).
Lakewood Capital sold 208,000 shares of Alibaba Group Holding Limited in the fourth quarter, reducing its remaining stake by about 33%. At the end of the quarter, the hedge fund still held more than 435,368 shares of Alibaba Group Holding Limited, worth about $51.72 million. On January 31, Mizuho analyst James Lee decreased his price target for Alibaba Group Holding Limited from $215 to $180 but maintained a ‘Buy’ rating. The expert predicted a problematic fourth quarter for the corporation.
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Visa Inc. is one of the latest acquisitions of Lakewood Capital, being added to the fund’s portfolio during Q4 2021. The hedge fund held shares worth over $52.16 million in the company, representing 2.21% of its 13F portfolio. On February 2, Erste Group’s Hans Engel upgraded Visa Inc. from ‘Hold’ to ‘Buy’. In a research note to investors, Engel anticipated that international travel would increase this year, resulting in higher transaction volumes for Visa.
Anthony Bozza is bullish on Comcast Corporation as well, boosting his stake in the company by 5% in the fourth quarter. On January 28, Cowen analyst Gregory Williams raised his price target on Comcast Corporation to $64 from $60 and reiterated an ‘Outperform’ rating on its shares.
Our Methodology
With this background in mind, let’s start our list of 10 stocks to invest in now according to Anthony Bozza’s Lakewood Capital. For this list, we considered Bozza’s 13F portfolio as of the end of Q4 2021. Overall hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
10 Stocks to Invest in Now According to Anthony Bozza’s Lakewood Capital
10. Group 1 Automotive, Inc. (NYSE:GPI)
Lakewood Capital Management Stake Value: $73,642,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 3.12%
Number of Hedge Fund Holders: 19
Group 1 Automotive, Inc. (NYSE:GPI) is in the business of selling automobiles. It also offers new and used vehicles and light trucks, as well as financing, service contracts, automotive maintenance and repair services, and vehicle components. Group 1 Automotive, Inc. declared a quarterly dividend of $0.36 per share on February 17, up 2.9% from the previous payment of $0.35.
Group 1 Automotive, Inc. was in 19 hedge funds’ portfolios at the end of the fourth quarter of 2021, over 25% lower than the all-time high of 26. At the end of Q3 2021, there were 24 hedge funds in our database with Group 1 Automotive, Inc. stakes. Eminence Capital is the leading shareholder of Group 1 Automotive, Inc. among the funds tracked by Insider Monkey, owning 506,861 shares of the company worth over $98.95 million.
Next on the list is Anthony Bozza’s Lakewood Capital, which owns 377,226 shares of Group 1 Automotive, Inc., worth over $73.64 million. In addition to Alibaba Group Holding Limited, Visa Inc., and Comcast Corporation, Group 1 Automotive, Inc. is a notable stock found in Anthony Bozza’s fourth quarter portfolio.
9. Brunswick Corporation (NYSE:BC)
Lakewood Capital Management Stake Value: $78,747,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 3.34%
Number of Hedge Fund Holders: 42
Brunswick Corporation (NYSE:BC) is a recreational marine product company that designs, manufactures, and markets marine engines, boats, as well as components and accessories for those products. Brunswick Corporation announced on February 14 that it has expanded its collaboration with Arkema, a specialty materials company, to build a 100% recyclable fiberglass boat.
Brunswick Corporation paid a quarterly dividend of $0.365 per share on February 17, a 9% increase over the previous payout of $0.335. Brunswick Corporation was given a ‘Buy’ rating and $118 price target by Citi analyst James Hardiman on February 10. According to Hardiman’s assessment, Brunswick is the largest and most successful corporation in the maritime industry.
In the fourth quarter, hedge fund sentiment towards Brunswick Corporation increased, as Insider Monkey’s data shows that 42 elite hedge funds held stakes in Brunswick Corporation at the end of December, up from 39 funds a quarter earlier.
8. Citigroup Inc. (NYSE:C)
Lakewood Capital Management Stake Value: $85,180,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 3.61%
Number of Hedge Fund Holders: 97
Citigroup Inc. (NYSE:C) is a holding company that, through its primary subsidiary Citibank, provides consumer banking services such as credit cards, checking and savings accounts, mortgage loans, and small business services. On February 1, Exxon Mobil Corporation (NYSE:XOM) and Citigroup Inc.’s retail credit segment announced a multi-year credit card deal and a new version of ExxonMobil’s private label credit card.
Wells Fargo analyst Mike Mayo cut his price target on Citigroup Inc. to $80 from $85 on February 15 and maintained an ‘Overweight’ rating on the stock. Mayo lowered his EPS forecast for the company in 2022 to a new low, citing fewer buybacks, a jumbled worldwide framework, and other issues that Citigroup Inc.’s board of directors have ignored for far too long.
In the fourth quarter of 2021, 97 hedge funds in the database of Insider Monkey held stakes worth $6.60 billion in Citigroup Inc., up from 79 the preceding quarter, which were worth $5.59 billion.
Artisan Partners Limited Partnership highlighted a few stocks in its first-quarter 2021 investor letter, and Citigroup Inc. was one of them. Here is what the fund said:
“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
7. First American Financial Corporation (NYSE:FAF)
Lakewood Capital Management Stake Value: $93,454,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 3.96%
Number of Hedge Fund Holders: 30
First American Financial Corporation (NYSE:FAF) is a financial services firm based in the United States. Following the company’s Q4 results, Barclays analyst Mark DeVries boosted his price target on First American Financial Corporation to $92 from $87 and maintained an ‘Overweight’ rating on the stock.
In its fourth quarter earnings published on February 10, First American Financial Corporation revealed that EPS hit $2.33 during the period, beating estimates by $0.53. In addition, its $2.4 billion in revenue was up by 11.6% year-over-year and exceeded estimates by $350 million.
In the fourth quarter of 2021, 30 hedge funds had stakes in First American Financial Corporation, the total value of which was over $1.75 billion. Parag Vora’s HG Vora Capital Management is the biggest stakeholder of First American Financial Corporation among them with 10.30 million shares worth $805.77 million.
In its fourth quarter 2020 Investor Letter, Ensemble Capital Management, an investment management firm, mentioned First American Financial Corporation. Here is what the fund said:
“A notable detractor from our performance came from our investment in First American Financial Corporation. The stock of this title insurance company is our only holding that generated negative returns in 2020. With the company generating revenue from both existing and new home transactions, we think it will benefit greatly from our thesis that home activity has been depressed and will increase significantly in the years ahead. The stock rebounded from the pandemic driven sell off from March to July but has been relatively flat since then. It generated a return of just over 2% in the fourth quarter. While there are some valid concerns about an outstanding legal case related to a cybersecurity breach in 2019, the stock trades at just nine times its pre-pandemic 2019 reported earnings.”
6. Axalta Coating Systems Ltd. (NYSE:AXTA)
Lakewood Capital Management Stake Value: $94,763,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 4.02%
Number of Hedge Fund Holders: 37
Axalta Coating Systems Ltd. (NYSE:AXTA) is a company that makes, sells, and distributes coatings systems. Duffy Fischer, a Barclays analyst, initiated coverage of Axalta Coating Systems Ltd. with an ‘Overweight’ rating and $35 price target on February 17.
37 hedge funds held stakes in Axalta Coating Systems Ltd. at the end of the fourth quarter of 2021, worth $1.19 billion, compared to the same number of funds in the preceding quarter holding stakes worth $1.05 billion.
Anthony Bozza’s hedge fund was one of those shareholders, entering 2022 with 2.86 million shares of Axalta Coating Systems Ltd. in its portfolio worth around $94.76 million. Axalta Coating Systems Ltd. has featured in Bozza’s portfolio since the fourth quarter of 2020.
Like Alibaba Group Holding Limited, Visa Inc., and Comcast Corporation, Axalta Coating Systems Ltd. is an intriguing stock to invest in according to Anthony Bozza.
5. Cushman & Wakefield plc (NYSE:CWK)
Lakewood Capital Management Stake Value: $108,020,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 4.58%
Number of Hedge Fund Holders: 27
Cushman & Wakefield plc (NYSE:CWK) is a company that deals in commercial real estate. Cushman & Wakefield plc (NYSE:CWK) sold Park at Abernathy Square, a 484-unit apartment complex in Sandy Springs, Georgia, on February 3. The overall sale price was $132.6 million, or $274,000 per unit.
Morgan Stanley analyst Richard Hill raised his price target on Cushman & Wakefield plc (NYSE:CWK) to $23.75 from $21.75 on December 1, and kept an ‘Overweight’ rating on the stock. In addition, he boosted his adjusted EPS estimates for the company’s 2021, 2022, and 2023 fiscal years by about 21% on average due to the company’s strong Q3 profitability.
The hedge fund chaired by Anthony Bozza owns more than 4.86 million shares in the real estate company worth over $108.02 million as of December 31, representing 4.58% of its investment portfolio. In addition, the hedge fund increased its stake in Cushman & Wakefield plc (NYSE:CWK) by 33% in the fourth quarter of 2021. Overall, hedge funds are loading up on Cushman & Wakefield plc (NYSE:CWK), as 27 of the funds tracked by Insider Monkey held stakes in the company at the end of 2021, up from 24 funds a quarter earlier.
4. Dell Technologies Inc. (NYSE:DELL)
Lakewood Capital Management Stake Value: $116,531,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 4.94%
Number of Hedge Fund Holders: 62
Dell Technologies Inc. (NYSE:DELL) is a computer hardware, software, and services firm that makes servers, desktop PCs, and laptop computers. Toni Sacconaghi, a Bernstein analyst, raised his rating on Dell Technologies Inc. from ‘Market Perform’ to ‘Outperform’ with a $72 price target on January 11.
Lakewood Capital holds more than 2.07 million shares in Dell Technologies Inc. worth over $116.53 million, representing 4.94% of its portfolio. The hedge fund boosted its stake in Dell Technologies Inc. by 3% in the fourth quarter.
Dell Technologies Inc. is also getting the attention of other smart money, as 62 hedge funds tracked by Insider Monkey reported owning stakes in the company as of the end of the fourth quarter, up from 60 funds a quarter earlier. With approximately 9.48 million shares valued at $532.71 million, Elliott Management is the largest shareholder of Dell Technologies Inc. among those funds.
In its third quarter 2021 investor letter, Third Point Management mentioned Dell Technologies Inc.. Here is what the fund said:
“Michael Dell has created substantial value for shareholders since re-listing the company several years ago. Earlier this year, Dell Technologies announced that it would be spinning its $50 billion stake in VMWare, which we believe will unlock the underappreciated value of the Dell server and PC businesses. Dell’s best attribute has been strong free cash flow generation, which the company has used to de-lever and create significant latent value for equity holders. Looking ahead, we believe this core Dell business, which still trades at a discount to its hardware peer group, should instead command a premium multiple thanks to its leading market share, profitability, and impressive execution. There are few large cap companies which possess a nearly 10% FCF yield, 2.5% dividend yield and 1.5x leverage ratio; Dell is one of them.”
3. Alphabet Inc. (NASDAQ:GOOG)
Lakewood Capital Management Stake Value: $147,992,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 6.27%
Number of Hedge Fund Holders: 158 (GOOG), 209 (GOOGL)
Google’s parent firm, Alphabet Inc. (NASDAQ:GOOG), is a worldwide tech corporation based in the United States. As of the end of the fourth quarter of 2021, Lakewood Capital owned 51,084 Class A shares in Alphabet Inc. worth $147.99 million, representing 6.27% of the hedge fund’s investment portfolio.
On February 2, Stifel analyst Scott Devitt boosted his price target on Alphabet Inc. to $3,500 from $3,200 and maintained a ‘Buy’ rating on the shares after the company reported another solid quarter. Alphabet Inc. posted its fourth quarter financial results on February 1, reporting EPS of $30.69 that beat estimates by $3.39. In addition, revenue over the period rose by 32.4% year-over-year, reaching $75.32 billion and outperforming estimates by $3.51 billion.
Tenere Capital, managed by Daniel Benel, is one of Alphabet Inc.’s many stakeholders as of December 31, holding 3,674 Class A shares of the company worth $10.64 million. Overall, 158 funds were long Alphabet’s Class C shares as of the end of 2021, up from 156 funds in the third quarter of 2021, while 209 were long the company’s Class A shares, up from 195 a quarter earlier.
Polen Capital, in its fourth-quarter 2021 investor letter discussed its stance on Alphabet Inc.. Here is what the fund said:
“For the full year, the top performers included Alphabet. Alphabet’s business continues to compound at what we believe to be a healthy rate. The company reported a 40% increase in third-quarter revenues year over year and likely earned approximately $70 billion in incremental revenue in 2021.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Lakewood Capital Management Stake Value: $152,889,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 6.48%
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is a social networking service and website that was founded in 2004 at Harvard University. Out of the hedge funds being tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management is a leading shareholder of Meta Platforms, Inc. with over 9.58 million shares worth more than $3.22 billion.
Meta Platforms, Inc. was downgraded to ‘Hold’ from ‘Buy’ by China Renaissance analyst Ella Ji on February 4, who also lowered the firm’s price target on the stock to $280, down from $415. The analyst predicted a slower growth rate because of competition from TikTok and updates to iOS privacy.
Meta Platforms, Inc. has featured in Lakewood Capital’s portfolio since the second quarter of 2018. In the fourth quarter of 2021, the hedge fund holds 454,553 shares of Meta Platforms, Inc., amounting to more than $152.90 million in value and representing 6.48% of the fund’s portfolio assets.
Canterbury Tollgate mentioned Meta Platforms, Inc. in its third quarter 2021 investor letter. Here is what the fund said:
“To say traditional media is anti-Facebook would not be an overstatement. An already intense and multi-year critique of (or attack on) Facebook has ratcheted up in recent weeks. Facebook’s research efforts have been reported on, if often derided, for nearly a decade. Going back to 2014, Slate.com called their research practices “unethical” when FB tried to study the impact social posts had on users. Now those efforts have been turned against them for the kill shot.
My job is to observe, assess, and allocate. Not to commentate on all the whims and wishes of media narrative. However, in the case of Facebook I cannot avoid going into some detail re: the onslaught against them, which I find to be most unwarranted and insincere.…” (Click here to see the full text).
1. Cigna Corporation (NYSE:CI)
Lakewood Capital Management Stake Value: $157,654,000
Percentage of Lakewood Capital Management’s 13F Portfolio: 6.68%
Number of Hedge Fund Holders: 53
Cigna Corporation (NYSE:CI) is a multinational health services company which operates across multiple segments, including Evernorth, U.S. Medical, International Markets, and Group Disability. At the end of the fourth quarter of 2021, 53 hedge funds tracked by the database of Insider Monkey held stakes worth $1.93 billion in Cigna Corporation, down from 58 stakes in the preceding quarter that were worth $2.30 billion.
On February 3, Cigna Corporation published its results for the fourth quarter, announcing earnings per share of $4.77, beating estimates by $0.06. In addition, the $45.69 billion in revenue for the period was up 9.6% year-over-year, exceeding estimates by $1.71 billion. Cigna Corporation also announced a quarterly dividend of $1.12 per share, up 12% from the previous payout of $1.00.
On February 7, RBC Capital analyst Ben Hendrix downgraded Cigna Corporation from ‘Outperform’ to ‘Sector Perform’, lowering the price target on the company to $235, down from $304. In a research note, the analyst claimed that the stock dropped following the Q4 results due to projections for increased medical spending pressure in 2022.
Artisan Partners Limited Partnership highlighted a few stocks in its fourth quarter 2020 investor letter, and Cigna Corporation was one of them. Here is what the fund said:
“New purchases include Cigna. Cigna is a leading managed care company which operates through the following major segments: health services, integrated medical, international markets and group disability. It’s one of the few managed care organizations in the United States with the scale and size to compete effectively. Cigna has recently focused on deleveraging its balance sheet and further diversifying its business, after completing the Express Scripts acquisition in late 2018. Additionally, the company has partnered with Amazon, which will offer two new pharmacy options—including a self-pay offering. Cigna will administer the self-pay option through its health services division Evernorth. The partnership should be one of many strong earnings drivers for Cigna, which we believe is currently trading at an attractive valuation.”
Check out some other compelling stock picks from the world’s top hedge fund managers in 10 Stocks to Buy Now According to Wayne Yu’s BCK Capital and Top 10 Stocks to Buy According to John Orrico’s Water Island Capital.
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This article is originally published at Insider Monkey.
