5 Stocks to Invest In According to Adam Peterson’s Magnolia Capital Fund

In this article, we will discuss 5 stocks to invest in: Adam Peterson’s Magnolia Capital Fund portfolio. If you want to read our detailed analysis of Peterson’s history, investment philosophy, and hedge fund performance, go directly to the 10 Stocks to Invest In: Adam Peterson’s Magnolia Capital Fund Portfolio.

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. (NASDAQ:DFH). 

Magnolia Capital Fund holds 2 million shares in Dream Finders Homes, Inc. (NASDAQ:DFH), 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. (NASDAQ:DFH) 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. (NASDAQ:DFH). 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.”