In this article, we’ll examine Jed Nussdorf’s portfolio management strategy and approach to investing in stocks. We’ll also review 10 stocks to buy today according to Jed Nussdorf’s Soapstone Capital.
Jed Nussdorf of Soapstone Capital is a pure value investor who seeks to invest in undervalued stocks in industries with cyclical or structural tailwinds. Even during challenging periods for the market, his strategies have helped Soapstone Capital generate healthy returns. For instance, Soapstone Capital generated a net gain of almost 5% during the 2008 market meltdown.
After completing a joint engineering and business program at the University of Pennsylvania, Jed Nussdorf earned an MBA from the Wharton School in 2003. He spent the next two years at Robert Jaffe’s Force Capital, during which time that fund’s asset value surged from $100 million to above $1 billion. Jed Nussdorf founded Soapstone Capital in 2005 with seed capital from Joel Greenblatt’s Gotham Capital, whom he credits for providing key guidance on portfolio strategy and risk management.
As of the end of 2021, Jed Nussdorf’s Soapstone Capital managed more than $519 million in assets, while its 13F securities portfolio was worth around $217 million. The top 10 stocks to buy today according to Jed Nussdorf’s Soapstone Capital include Northrop Grumman Corporation (NYSE:NOC), Citizens Financial Group, Inc. (NYSE:CFG), Alphabet Inc. (NASDAQ:GOOG), Constellium SE (NYSE:CSTM) and Olin Corporation (NYSE:OLN).
Although Soapstone Capital’s stock portfolio is well-diversified, many of its top holdings belong to the building and construction sector. For instance, building materials provider Builders FirstSource, Inc. (NYSE:BLDR) was its largest stock holding while door manufacturers JELD-WEN Holding, Inc. (NYSE:JELD) and Masonite International Corporation (NYSE:DOOR) ranked third and fourth-largest on the list. Over the past couple of quarters, Soapstone Capital significantly increased its stakes in JELD-WEN Holding, Inc. (NYSE:JELD) and Masonite International Corporation (DOOR).
Photo by Kai Wenzel on Unsplash
Our Methodology
This analysis is conducted using Soapstone Capital’s 13F portfolio as of December 31, 2021 according to its latest 13F filing with the SEC. The following is a list of 10 stocks to buy today according to Jed Nussdorf’s Soapstone Capital.
10 Stocks to Buy Today According to Jed Nussdorf’s Soapstone Capital
10. Northrop Grumman Corporation (NYSE:NOC)
Soapstone Capital’s Stake Value: $9.16 million
Percentage of Soapstone Capital’s Portfolio: 4.21%
Number of Hedge Fund Holders: 33
Jed Nussdorf’s Soapstone Capital has been holding a stake in Northrop Grumman Corporation (NYSE:NOC) over the past five quarters. The firm’s stock selection remained successful in the case of Northrop Grumman Corporation (NYSE:NOC) as shares of the aerospace and defense company have rallied by 52% over the last 12 months. Despite substantial share price gains, the company still looks attractively priced based on its price-to-earnings ratio of 10x, compared to the industry average of 20x earnings.
Unlike Jed Nussdorf’s strategy of raising a stake in stocks like JELD-WEN Holding, Inc. (NYSE:JELD) and Masonite International Corporation (NYSE:DOOR) during the past couple of quarters, he took the same route as he did with Builders FirstSource, Inc. (NYSE:BLDR) by offloading some of his stake in Northrop Grumman Corporation (NYSE:NOC) to capitalize on its share price run. As of the end of 2021, his hedge fund held $9.16 million worth of shares in Northrop Grumman Corporation (NYSE:NOC).
Of the 924 hedge funds tracked by Insider Monkey that filed 13Fs for the December 31 reporting period, 33 were bullish about Northrop Grumman Corporation (NYSE:NOC) at the end of December, up from 29 positions in the previous quarter. Donald Yacktman’s Yacktman Asset Management and D E Shaw were among the leading stakeholders in the company.
9. Citizens Financial Group, Inc. (NYSE:CFG)
Soapstone Capital’s Stake Value: $9.4 million
Percentage of Soapstone Capital’s Portfolio: 4.34%
Number of Hedge Fund Holders: 36
Jed Nussdorf’s hedge fund first initiated a position in Citizens Financial Group, Inc. (NYSE:CFG) during the second quarter of 2020 when its stock price plummeted due to pandemic-related pressure. The move was well-timed, as over the past 18 months, shares of Citizens Financial Group, Inc. (NYSE:CFG) have surged sharply. Soapstone Capital dumped 60% of its stake in the company during the December quarter of 2021 to capitalize on that recent share price appreciation. As of the end of 2021, Soapstone Capital held a $9.4 million stake in Citizens Financial Group, Inc. (NYSE:CFG).
Citizens Financial Group, Inc. (NYSE:CFG) is a good stock to hold for the long-term given its solid dividend, with a yield currently hovering around 2.8%, as well as its prospects for steady share price gains. Citizens Financial Group, Inc. (NYSE:CFG) has modified its business model and diversified its revenue base since its spinoff from the Royal Bank of Scotland in 2015. It’s projected that future revenue growth will be driven by the company’s strategy of creating a strong digital consumer business. In the fourth quarter of 2021, Citizens Financial Group, Inc. (NYSE:CFG) posted adjusted revenue of $1.72 billion.
Citizens Financial Group, Inc. (NYSE:CFG) was in 36 hedge funds’ portfolios at the end of December 2021. Hosking Partners and Factorial Partners were among the leading stakeholders in the company.
8. Alphabet Inc. (NASDAQ:GOOG)
Soapstone Capital’s Stake Value: $11.2 million
Percentage of Soapstone Capital’s Portfolio: 5.16%
Number of Hedge Fund Holders: 158
Soapstone Capital has owned a stake in Alphabet Inc. (NASDAQ:GOOG)’s Class A shares (GOOGL) since the final quarter of 2018, and it ranks 8th on the list of 10 stocks to buy today. Alphabet Inc. (NASDAQ:GOOG) shares have soared by 29% during the last 12 months, enlarging their five-year gains to 223%. According to the data tracked by Insider Monkey, GOOG was in 158 hedge funds’ portfolios as of December 31, 2021, while GOOGL was found in 209 such portfolios.
In its fourth quarter investor letter, Artisan Partners, a high value-added investment management firm, mentioned a few stocks, including Alphabet Inc. (NASDAQ:GOOG). Here is what Artisan Partners stated:
“Overall top contributors (includes) Alphabet. Advertising is recovering, and Alphabet is a key beneficiary through its search business and online video business YouTube. We continue to see large profit pools for Alphabet in the early stages of monetization, along with the migration of advertising dollars away from traditional mediums, like TV, to online search and video. These factors give us confidence Alphabet continues to have a long runway to grow revenue and profits. In addition, Alphabet’s cost controls are improving, which is driving more revenue growth to the bottom line. Finally, management has begun to aggressively return capital to shareholders, which we think is another lever that is increasing per share value of the business. We view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bulletproof balance sheet and an average asking price. It’s a name we’ve owned since 2012, and we believe Alphabet will continue to be a strong compounder of value in the future.”
7. Constellium SE (NYSE:CSTM)
Soapstone Capital’s Stake Value: $13.4 million
Percentage of Soapstone Capital’s Portfolio: 6.17%
Number of Hedge Fund Holders: 30
Jed Nussdorf looks bullish on the future fundamentals of Constellium SE (NYSE:CSTM). His strategy of creating a position in Constellium SE (NYSE:CSTM) during the first quarter of 2021 appears to be working. Over the past 12 months, the share price of Constellium SE (NYSE:CSTM) has appreciated by almost 26%.
Despite the recent share price run, Constellium SE (NYSE:CSTM) looks attractive based on a price-to-earnings ratio of 9x, compared to the industry average of 16x. Additionally, Constellium SE (NYSE:CSTM) is seeing growth in its financial numbers due to improved demand and higher aluminum prices. In the fourth quarter of 2021, the company generated $1.9 billion in revenue, up 37% compared to the year-ago period.
As of December 2021, Constellium SE (NYSE:CSTM) was in 30 hedge funds’ portfolios, according to the data tracked by Insider Monkey. Marshall Wace LLP and Nut Tree Capital were among the leading stakeholders in the company.
6. Olin Corporation (NYSE:OLN)
Soapstone Capital’s Stake Value: $14.3 million
Percentage of Soapstone Capital’s Portfolio: 6.61%
Number of Hedge Fund Holders: 48
Olin Corporation (NYSE:OLN), an American manufacturer of ammunition, chlorine, and sodium hydroxide, is among the long-running stock holdings of Jed Nussdorf’s Soapstone Capital. After years of depressed performance, the share price of Olin Corporation (NYSE:OLN) has surged by around 50% over the last 12 months.
Unlike companies such as Builders FirstSource, Inc. (NYSE:BLDR), JELD-WEN Holding, Inc. (NYSE:JELD) and Masonite International Corporation (NYSE:DOOR), who prefer to reinvest profits back into their businesses, Olin Corporation (NYSE:OLN) returns a portion of its profit to shareholders in the form of dividends. The company’s stock yields 1.68% as of March 7.
Elite funds’ interest in Olin Corporation (NYSE:OLN) has risen for four straight quarters according to data tracked by Insider Monkey. As of December 2021, 48 hedge funds were bullish about Olin Corporation (NYSE:OLN).
5. Leidos Holdings, Inc. (NYSE:LDOS)
Soapstone Capital’s Stake Value: $14.46 million
Percentage of Soapstone Capital’s Portfolio: 6.64%
Number of Hedge Fund Holders: 28
Jed Nussdorf’s Soapstone Capital lifted its stake in Reston, Virginia-based Leidos Holdings, Inc. (NYSE:LDOS) by 41% during the December quarter to 162,500 shares, with the position accounting for 6.64% of the fund’s 13F portfolio value. Soapstone Capital first initiated a position in the American defense company during the December quarter of 2020 and has further increased its stake in the company over each of the past four quarters.
The number of bullish long hedge fund positions in Leidos Holdings, Inc. (NYSE:LDOS) also increased substantially during the fourth quarter. It was in 28 hedge funds’ portfolios at the end of the period compared to just 14 positions in the previous quarter. Israel Englander’s Millennium Management was the leading stakeholder in the company among those 28 funds.
4. Masonite International Corporation (NYSE:DOOR)
Soapstone Capital’s Stake Value: $18.12 million
Percentage of Soapstone Capital’s Portfolio: 8.33%
Number of Hedge Fund Holders: 20
Jed Nussdorf of Soapstone Capital has been lifting his stake in Masonite International Corporation (NYSE:DOOR) over each of the past two quarters. In the December quarter, the fund increased its position in the company by 35% to 153,655 shares, representing 8.83% of the value of its 13F portfolio. Shares of the door manufacturer have plunged by more than 20% over the last six months amid broader market trends.
As of December 2021, 20 hedge funds were bullish about the company. Praesidium Investment Management Company and Sunriver Management were among the leading stakeholders in Masonite International Corporation.
3. JELD-WEN Holding, Inc. (NYSE:JELD)
Soapstone Capital’s Stake Value: $19.3 million
Percentage of Soapstone Capital’s Portfolio: 8.87%
Number of Hedge Fund Holders: 23
Jed Nussdorf’s hedge fund first initiated a position in JELD-WEN Holding, Inc. (NYSE:JELD) in the third quarter of 2020 and further lifted its stake in the company over each of the past three quarters. As of December 2021, it was ranked third on the list of 10 stocks to buy today according to Jed Nussdorf’s Soapstone Capital.
Shares of the door manufacturing company have been under pressure over the past few quarters due to broader market trends. The company itself looks strong in terms of its financial growth momentum, as its fourth quarter net revenue increased by 11.8% compared to the year-ago period.
JELD-WEN Holding was in 23 hedge funds’ portfolios as of December 2021 according to data tracked by Insider Monkey.
2. Equitable Holdings, Inc. (NYSE:EQH)
Soapstone Capital’s Stake Value: $31 million
Percentage of Soapstone Capital’s Portfolio: 14.32%
Number of Hedge Fund Holders: 45
Soapstone Capital has held a position in Equitable Holdings, Inc. (NYSE:EQH) since the first quarter of 2021. The company’s strategy of offering dividends to shareholders also makes it a good stock to hold for the long term. EQH shares currently yield 2.35% as of March 7.
The diversified financial services company generated a strong capital return of $1.9 billion in 2021 and authorized a new share repurchase program of $1.2 billion. In 2021, its non-GAAP EPS increased by 32% from the previous year. Moreover, its stock is trading at around only 6.55x forward earnings compared to the industry average of 11x.
Equitable Holdings, Inc. (NYSE:EQH) was in 45 hedge funds’ portfolios as of December 31, 2021.
1. Builders FirstSource, Inc. (NYSE:BLDR)
Soapstone Capital’s Stake Value: $38 million
Percentage of Soapstone Capital’s Portfolio: 17.73%
Number of Hedge Fund Holders: 59
Builders FirstSource, Inc. (NYSE:BLDR) has been a member of Soapstone Capital’s portfolio since the end of 2017. In the fourth quarter of 2021, Jed Nussdorf’s hedge fund slashed its stake in the company by half to capitalize on its recent share price gains. Despite that, Builders FirstSource was the largest stock holding in Soapstone Capital’s portfolio. Shares of Builders FirstSource are up by 71% over the last 12 months.
The number of bullish hedge fund bets on Builders FirstSource increased to 59 by the end of the fourth quarter of 2021, up from 53 at the end of the previous quarter.
You can also take a look at the 10 Dividend Stocks to Buy According to Matthew Barrett’s Glendon Capital Management and Best Undervalued Stocks According to Hedge Funds
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Disclosure: None. 10 Stocks to Buy Today According to Jed Nussdorf’s Soapstone Capital is originally published on Insider Monkey.
