Skylands Capital is a Milwaukee-based investment management firm run by Charles Paquelet. The firm focuses on U.S.-traded long and short equities, using a strategy that focuses on meeting with management teams as a central part of assessing a company’s potential. Taking into account their findings in the field, in addition to their assessments of its fundamentals and valuation, the firm decides on long and short candidates.
As of September 30, the fund held a public equity portfolio valued at more than $638 million. While quite diversified, its holdings had a slight focus on technology (20% of the portfolio’s value), consumer discretionary (17%), and transportation (16%) stocks. In this article, we’ll take a look at the firm’s top tech picks and analyze why the hedge fund sees them as attractive investment options.
At Insider Monkey, we track more than 750 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details).
Rogers Corporation (NYSE:ROG)
– Shares Held by Skylands Capital (as of September 30): 99,180
– Value of Skylands Capital’s Stake (as of September 30): $6.05 million
Let’s start with Rogers Corporation (NYSE:ROG), in which Skylands increased its position by 13% during the third quarter, as the stock experienced plenty of volatility. Also long the company was Richard S. Meisenberg’s ACK Asset Management, which disclosed ownership of 280,000 shares of the company as of June 30. The fourth quarter has not been great for Rogers Corporation (NYSE:ROG) so far, with the stock down by almost 5%. About a month ago, Needham initiated coverage on the company’s shares with a Buy rating and $70 price target. Rogers Corporation posted second quarter EPS of $0.88, $0.05 above the Street’s consensus, on revenue of $157.49 million, which fell $4.77 million short of expectations.
ON Semiconductor Corp (NASDAQ:ON)
– Shares Held by Skylands Capital (as of September 30): 524,200
– Value of Skylands Capital’s Stake (as of September 30): $6.45 million
After a 22% reduction in the firm’s position, Skylands’ ON Semiconductor Corp (NASDAQ:ON) stake still accounted for more than 1% of the value of Skylands’ public equity portfolio. However, the reduction in the firm’s position should not be interpreted as a bearish sign, taking into account that the stock gained almost 42% over the third quarter. Thus, the sale of a portion of its holding could be interpreted as profit taking. Since the quarter ended, however, shares have tumbled by 3.6%, as an increasing number of investors took profits as well. On Tuesday, the company announced the launch of a “highly integrated single chip power bank solution for the development of next generation Li-Ion powered products,” which prompted shares to post 1.39% gains for the day.
Ken Fisher’s Fisher Asset Management was another shareholder of ON Semiconductor Corp (NASDAQ:ON) holding 125,902 shares on September 30.
We’ll run through Skylands Capital’s three favorite tech stocks on the next page.