Top 10 Stock Picks of Anton Schutz’s Mendon Capital

In this article, we reviewed Anton Schutz’s investment philosophy and portfolio management strategies. We also examined the top 10 stock picks of Anton Schutz’s Mendon Capital. You can skip our comprehensive list and detailed analysis and jump directly to the Top 5 Stock Picks of Anton Schutz’s Mendon Capital.

Mendon Capital Advisors, the New York-based hedge fund founded by Anton Schutz, uses a long/short event-driven equity strategy with a focus primarily on US financial services stocks. Schutz is looking for opportunities to acquire stakes in small-cap financial service companies that are likely to be a target of mergers and acquisitions. Mendon Capital’s strategy of focusing on small names is backed by Anton Schutz’s banking background, which gives him a better grasp of the franchises, as well as a better understanding of who is likely to buy them. Before setting up Mendon in 1996, he spent 10 years at Chase Manhattan Bank. 

As financial stocks are making long strides in a post-pandemic environment, Schutz’s strategy of betting big on financial services companies in 2021 yielded massive returns for his hedge funds. Year to date, all of the top 10 stock picks of Anton Schutz’s Mendon Capital have outperformed the broader market index. As of September, the top 10 stock picks represented 43% of Mendon’s $293 million worth of 13F portfolio. 

The top 10 stocks owned by Mendon Capital include PacWest Bancorp (NASDAQ:PACW), FB Financial Corporation (NYSE:FBK), Origin Bancorp, Inc. (NASDAQ:OBNK), First BanCorp. (NYSE:FBP) and Byline Bancorp, Inc. (NYSE:BY).

Moreover, a significant contribution to the overall performance of Mendon Capital was made by the two largest stock holdings, Live Oak Bancshares, Inc. (NASDAQ:LOB) and Veritex Holdings, Inc. (NASDAQ:VBTX).  

Live Oak Bancshares, Inc. (NASDAQ:LOB), the largest stock holding of Mendon Capital, has posted close to 100% share price gain so far in 2021. The firm held $22 million worth of position in Live Oak Bancshares, Inc. (NASDAQ:LOB) as of September, accounting for 7.58% of the overall portfolio.

Meanwhile, shares of Veritex Holdings, Inc. (NASDAQ:VBTX) have soared 70% since the beginning of this year. Live Oak Bancshares, Inc. (NASDAQ:LOB) was added to Mendon’s portfolio at the end of 2017, while Veritex Holdings, Inc. (NASDAQ:VBTX) was added in the second quarter of 2016. 

Our Methodology

For this article, we made use of Mendon Capital’s 13F portfolio as of September.

Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

With this context in mind, let’s now discuss the top 10 stock picks of Anton Schutz’s Mendon Capital.

Top 10 Stock Picks of Anton Schutz’s Mendon Capital

10. PacWest Bancorp (NASDAQ:PACW)

Mendon Capital’s Stake Value: $7.9 million

 

Percentage of Mendon Capital’s 13F Portfolio: 2.7%

 

Number of Hedge Fund Holders: 29

Anton Schutz’s strategy of initiating a position in PacWest Bancorp (NASDAQ:PACW) moved in the right direction as shares of the banking holding company grew 94% year to date. In addition to share price gains, PacWest Bancorp (NASDAQ:PACW) offers cash returns to investors in the form of dividends. The dividend yield of PacWest Bancorp (NASDAQ:PACW) is currently over 2%. PacWest Bancorp (NASDAQ:PACW) is a small-cap with a market cap of $5.5 billion. 

Ken Fisher’s Fisher Asset Management and Anton Schutz’s Mendon Capital were leading stakeholders in the company as of September. Of the 873 hedge funds tracked by Insider Monkey, 29 were bullish about PacWest Bancorp (NASDAQ:PACW). 

9. FB Financial Corporation (NYSE:FBK)

Mendon Capital’s Stake Value: $8.4million

 

Percentage of Mendon Capital’s 13F Portfolio: 2.89%

 

Number of Hedge Fund Holders: 13

FB Financial Corporation (NYSE:FBK) is the long-running stock holding of Mendon Capital Advisors and it has also topped the broader market index in 2021, with gains of 36% compared to S&P 500 growth of 24%. The dividend yield of close to 1% also makes FB Financial Corporation (NYSE:FBK) a good stock to hold for the long term. In addition, increasing profitability is likely to support its cash returns and share price momentum in the days ahead. FB Financial Corporation (NYSE:FBK) generated a net income of $0.94 per share in the September quarter compared to a net loss of $0.14 per diluted share in the year-ago quarter.

Like PacWest Bancorp (NASDAQ:PACW), Live Oak Bancshares, Inc. (NASDAQ:LOB), and Veritex Holdings, Inc. (NASDAQ:VBTX), FB Financial Corporation (NYSE:FBK) is a small-cap banking company. The number of long hedge funds’ positions stood at 13 in FB Financial Corporation (NYSE:FBK) as of June. 

8. Origin Bancorp, Inc. (NASDAQ:OBNK)

Mendon Capital’s Stake Value: $9.7 million

 

Percentage of Mendon Capital’s 13F Portfolio: 3.31%

 

Number of Hedge Fund Holders: 12

Origin Bancorp, Inc. (NASDAQ:OBNK) is among the top stock picks of Anton Schutz’s Mendon Capital as shares of the company are up around 65% since the beginning of this year. Origin Bancorp, Inc. (NASDAQ:OBNK) also offers a dividend yield above 1%, which looks safe considering a payout ratio of 11% based on income. On the financial side, Origin Bancorp, Inc. (NASDAQ:OBNK) posted 9% annualized growth on loans while deposits grew 2.2% to $6.16 billion as of the end of September.

Winton Capital Management and Royce & Associates were among the leading stakeholders in the company. Origin Bancorp, Inc. (NASDAQ:OBNK) was 12 hedge funds’ portfolios as of June.    

7. First BanCorp. (NYSE:FBP)

Mendon Capital’s Stake Value: $10.3 million

 

Percentage of Mendon Capital’s 13F Portfolio: 3.51%

 

Number of Hedge Fund Holders: 25

Mendon Capital sold out 24% of its position in First BanCorp. (NYSE:FBP) during the September quarter. Despite that, First BanCorp. (NYSE:FBP) is ranked at the seventh spot on the list of the top 10 stock picks of Anton Schutz’s Mendon Capital. The share price of First BanCorp. (NYSE:FBP) surged more than 50% so far this year. Moreover, First BanCorp. (NYSE:FBP) has recently raised its quarterly dividend by 43% to $0.10 per share, yielding around 2.80%. 

Like Mendon Capital Advisors, Royce & Associates and Navellier & Associates were among the leading shareholders in First BanCorp. (NYSE:FBP) as of September. Of the 873 hedge funds tracked by Insider Monkey, 25 were bullish about the company. 

6. Byline Bancorp, Inc. (NYSE:BY)

Mendon Capital’s Stake Value: $11 million

 

Percentage of Mendon Capital’s 13F Portfolio: 3.76%

 

Number of Hedge Fund Holders: 12

Byline Bancorp, Inc. (NYSE:BY), a banking products and services provider to businesses and consumers, also contributed significantly to the overall performance of Anton Schutz’s Mendon Capital in 2021. Shares of Byline Bancorp, Inc. (NYSE:BY) are up 77% year to date, thanks to improving market trends and strengthening financial numbers. Byline Bancorp, Inc. (NYSE:BY) posted a net income of $25.3 million, or $0.66 per diluted share for the third quarter. 

The number of long hedge fund positions has also been increasing in the small-cap banking company. Byline Bancorp, Inc. (NYSE:BY) was in 12 portfolios as of June compared to 7 positions in the prior quarter.

Like PacWest Bancorp (NASDAQ:PACW), FB Financial Corporation (NYSE:FBK), Origin Bancorp, Inc. (NASDAQ:OBNK), First BanCorp. (NYSE:FBP), Live Oak Bancshares, Inc. (NASDAQ:LOB), and Veritex Holdings, Inc. (NASDAQ:VBTX), Byline Bancorp, Inc. (NYSE:BY) is also the dividend-paying company.