David Zorub’s Parsifal Capital Management’s Top 5 Stocks

3. OneMain Holdings, Inc. (NYSE:OMF)

Parsifal Capital Management’s Stake Value: $123,520,000

Percentage of Parsifal Capital Management’s 13F Portfolio: 10.08%

Number of Hedge Fund Holders: 41

OneMain Holdings, Inc. (NYSE:OMF) is a financial services holding company, with wholly earned subsidiaries that facilitate customers in the consumer finance and insurance sectors. OneMain Holdings, Inc. (NYSE:OMF) offers personal loans and insurance products to clients via its finance subsidiaries under the moniker of OneMain Financial. OneMain Holdings, Inc. (NYSE:OMF) is one of the top stocks in David Zorub’s Q2 portfolio. 

Parsifal Capital Management owns 2.06 million shares worth $123.52 million in OneMain Holdings, Inc. (NYSE:OMF), accounting for 10.08% of the firm’s 13F portfolio. 

On October 20, the Q3 EPS for OneMain Holdings, Inc. (NYSE:OMF) came in at $2.37, surpassing estimated EPS by $0.09. Similarly, revenue for the quarter also beat estimates by $0.26 million at $1.03 billion. 

James Fotheringham from BMO Capital, on October 22, kept a Market Perform rating on OneMain Holdings, Inc. (NYSE:OMF), lowering the price target from $65 to $60. He stated that Q3 earnings were slightly better than expected, and while there is a strong demand for installment loans, OneMain Holdings, Inc. (NYSE:OMF) is facing shrinking loan yields and higher operational costs. 

Here is what Miller Value Partners has to say about OneMain Holdings, Inc. (NYSE:OMF) in their Q4 2020 investor letter:

“OneMain Holdings (OMF) was the top contributor over the quarter, advancing 56.0% after reporting Q3 Earnings Per Share (EPS) of $2.19, well above consensus of $1.26 and the quarterly dividend, which was increased 36% to $0.45/share (3.5% annualized yield and 11.5% Trailing Twelve Month (TTM) yield). Net interest income of $836M beat estimates of $778M, implying a 24.3% asset yield and 18.7% net interest margin. Origination volumes increased 41% sequentially to $2.9Bn on continued strength in digital while end-of-period net receivables were flat at $17.8Bn. Credit quality remains excellent with net charge-offs of 5.2%, the lowest level since 3Q 2015. Management guided to year-end receivables of $18.1Bn, net charge-offs of 5.6% (from 5.8%-6.0%), and net leverage of 4.3x-4.5x.”