In this article, we discuss the top 5 stock picks of Brian Higgins’ King Street Capital. If you want our detailed analysis of these stocks, go directly to Brian Higgins’ King Street Capital Portfolio: Top 10 Stock Picks.
5. Radian Group Inc. (NYSE:RDN)
King Street Capital’s Stake Value: $57,368,000
Percentage of King Street Capital’s 13F Portfolio: 4.84%
Number of Hedge Fund Holders: 27
Radian Group Inc. (NYSE:RDN), a mortgage and real estate insurance company, is one of Brian Higgins’ top stock picks from the third quarter, with his firm owning 2.52 million shares in Radian Group Inc. (NYSE:RDN), worth $57.36 million. The stock accounts for 4.84% of King Street Capital’s Q3 portfolio.
Radian Group Inc. (NYSE:RDN), on November 2, posted Q3 earnings. EPS for the quarter came in at $0.67, missing analysts’ consensus estimates by -$0.04. The $325.76 million revenue was down 13.19% as compared to the prior-year quarter, missing estimated revenue by -$10.46 million.
BofA analyst Mihir Bhatia downgraded Radian Group Inc. (NYSE:RDN) on November 17 to Underperform from Buy with a $22.50 price target as part of a broader view on the mortgage insurance sector.
Richard Mashaal’s Rima Senvest Management is the leading Radian Group Inc. (NYSE:RDN) stakeholder as of Q3, with a $76.3 million position in the company. Overall, 27 hedge funds in the database of 867 elite funds tracked by Insider Monkey were bullish on Radian Group Inc. (NYSE:RDN), down from 30 funds in Q2.
4. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
King Street Capital’s Stake Value: $62,637,000
Percentage of King Street Capital’s 13F Portfolio: 5.28%
Number of Hedge Fund Holders: 22
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is one of the top 20 global cargo shipping companies, headquartered in Israel. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) posted on November 17 solid Q3 earnings. EPS in the quarter equaled $12.16, topping estimates by $2.83. The $3.14 billion revenue also outperformed estimated revenue by $374.27 million. The company announced that it would pay out almost 20% of the net quarterly income as dividends in December, which makes the dividend per common share amount to $2.50.
King Street Capital holds a $62.6 million position in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), as of the third quarter, which accounts for 5.28% of the firm’s total 13F securities.
Jim Simons’ Renaissance Technologies is the leading stakeholder in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), with 2.34 million shares valued at $118.8 million. Overall, 22 hedge funds monitored by the Q3 database of Insider Monkey were bullish on the stock, with a total stake value of $552.5 million.
Here is what Evermore Global Advisors has to say about ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) in its Q2 2021 investor letter:
“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.
There were several notable developments during the second quarter. Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 full year EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”
3. Booking Holdings Inc. (NASDAQ:BKNG)
King Street Capital’s Stake Value: $83,560,000
Percentage of King Street Capital’s 13F Portfolio: 7.05%
Number of Hedge Fund Holders: 96
Booking Holdings Inc. (NASDAQ:BKNG) is a travel company that owns and manages multiple travel fare aggregators and travel metasearch engines, including Booking.com, Kayak.com, and Cheapflights, among others. Higgins holds an $83.5 million stake in Booking Holdings Inc. (NASDAQ:BKNG), which accounts for 7.05% of his Q3 investments.
As of September this year, 96 hedge funds in the database of Insider Monkey were long Booking Holdings Inc. (NASDAQ:BKNG), down from 100 funds in the preceding quarter. The total stakes reported by the Q3 hedge funds amounted to $8.42 billion. Harris Associates is the leading stakeholder in the company, with 668,053 shares valued at $1.58 billion.
Booking Holdings Inc. (NASDAQ:BKNG) announced Q3 results on November 3. EPS in the period totaled $37.70, outperforming estimates by $4.67. Revenue for the quarter came in at $4.68 billion, up 77.12% year-over-year, exceeding estimated revenue by $385.44 million.
Tigress Financial analyst Ivan Feinseth on November 23 reiterated a Strong Buy rating on Booking Holdings Inc. (NASDAQ:BKNG) and a target price of $3,150. The price target represents a potential return of over 35% from current levels.
Here is what L1 Capital has to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q3 2021 investor letter:
“We reinvested the proceeds from our successful investment in Thermo Fisher in Booking Holdings (Booking). Booking was an investment in the Fund at Inception and was featured in our inaugural June 2019 Quarterly Report. The company owns the world’s largest online travel agent (OTA), Booking.com. To say the past 2.5 years has been volatile for Booking is a major understatement. Booking’s management has had to address the COVID-19-driven collapse in demand for travel accommodation, as well as to manage volatile demand as the world gradually recovers, interrupted by second and third waves of COVID-19 as variants arise.
Throughout these volatile market conditions, Booking’s management has executed against a consistent strategy, investing in its platform and network of accommodation providers, and expanded its associated services while improving efficiencies. We believe Booking will come out of the COVID-19 environment a stronger business, with less competition and consumers more predisposed to booking their travel accommodation online. Travel is recovering strongly as vaccination rates increase and COVID-19 related restrictions are lifted, and we expect Booking’s earnings and cash flow to also recover strongly over the coming years.”
2. Valaris Limited (NYSE:VAL)
King Street Capital’s Stake Value: $85,282,000
Percentage of King Street Capital’s 13F Portfolio: 7.19%
Number of Hedge Fund Holders: 26
Valaris Limited (NYSE:VAL), the largest offshore drilling and well drilling company in the world, is one of the top stocks in Brian Higgins’ Q3 portfolio, with his firm owning an $85.2 million stake in the company, which accounts for 7.19% of the total investments at King Street Capital.
Valaris Limited (NYSE:VAL) posted on November 2 its Q3 results. EPS in the period totaled -$0.63, beating estimates by $0.08. Revenue for the quarter equaled $326.70 million, missing estimates by -$7.75 million.
As of the third quarter of 2021, 26 hedge funds were reported owning stakes in Valaris Limited (NYSE:VAL), worth over $1 billion. This is compared to 29 funds in the preceding quarter, with a total stake value of $875.4 million.
1. T-Mobile US, Inc. (NASDAQ:TMUS)
King Street Capital’s Stake Value: $99,273,000
Percentage of King Street Capital’s 13F Portfolio: 8.37%
Number of Hedge Fund Holders: 89
T-Mobile US, Inc. (NASDAQ:TMUS) is the largest holding in Brian Higgins’ Q3 portfolio, representing 8.37% of his total 13F securities. Higgins, via King Street Capital, holds 777,030 shares in T-Mobile US, Inc. (NASDAQ:TMUS), valued at $99.2 million. T-Mobile US, Inc. (NASDAQ:TMUS) is the second largest wireless network operator in the United States.
On November 2, the Q3 EPS for T-Mobile US, Inc. (NASDAQ:TMUS) amounted to $1.31, beating estimates by $0.82. Revenue for the quarter totaled $19.62 billion, missing estimates by -$593.78 million. After the Q3 earnings, Morgan Stanley analyst Simon Flannery on November 4 raised the price target on T-Mobile US, Inc. (NASDAQ:TMUS) to $152 from $148 and kept an Overweight rating on the shares.
As of Q3 2021, 89 hedge funds monitored by Insider Monkey reported owning stakes worth $6.92 billion in T-Mobile US, Inc. (NASDAQ:TMUS), with Andreas Halvorsen’s Viking Global being the leading stakeholder in the company, holding a $1.3 billion stake.
Here is what ClearBridge Investments has to say about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q1 2021 investor letter:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included communication services, where T-Mobile trailed after generating robust returns earlier in the recovery.”
You can also take a look at Top 10 Stock Picks of Joe Huber’s Huber Capital Management and 10 Stocks to Sell According to Billionaire James Dinan.
