Prescott Group Capital Management is a hedge fund located in Tulsa, Oklahoma. The firm was founded in 1992 and manages 13F holdings with a value of more than $468 million as of September 30th. Healthcare and service industries are the largest allocation of the fund. It mainly invests in small and mid-cap stocks. Phil Frohlich who founded this firm has an economics degree from University of Oklahoma, an MBA from University of Texas at Austin and a law degree from University of Tulsa. Prescott’s holdings are diversified across different sectors. In the article below, we describe the top 5 holdings of the fund all of which are small cap stocks with a market capitalization of less than $1 billion.
Hedge fund sentiment is an important metric for assessing long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze to determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (read more details here).
Air Transport Services Group Inc. (NASDAQ:ATSG) is the top holding of Prescott Group holding 4 million shares with a total value of $59 million, forming 12.6% of the total portfolio value as of September 30th. This is actually a top long-term holding in Prescott’s portfolio. It was the second largest holding during the fourth quarter of 2012 and has since been the top stock in Frohlich’s portfolio. The stock was trading at $4.25 at the end of 2012 and quadrupled in value as a #1 pick in this small hedge fund’s portfolio.
Air Transport Services Group provides airline operations, aircraft leases, aircraft maintenance and other support services primarily to the cargo transportation and package delivery industries. The stock has given a very good return of ~32% to shareholders over the period of last one year and has a total market value of $773 million. Air Transport Services Group (NASDAQ:ATSG) signed an agreement with Amazon Inc. (NASDAQ:AMZN) to operate an air cargo network. The agreements included leasing 20 Boeing 767s to Amazon, being the planes operated by ATSG’s airlines, ABX Air and Air Transport International. Out of the 6 analysts covering this stock 3 have rated it as a hold while 3 have rated it is a buy. As per our records, about 18 hedge funds held shares worth $257 million accounting for 35% of the company’s float as of September 30th.