In this article, we will take a look at the top 10 stock picks of Ben Gordon’s Blue Grotto Capital.
Ben Gordon is the Founder and Managing Partner of Blue Grotto Capital. He graduated Magna Cum Laude from Ohio University and is a CFA. Ben joined GMT Capital Corp. in 2005 as an analyst but was promoted to portfolio manager in 2008. He managed over $2 billion at GMT. He founded Blue Grotto Capital in 2018.
The investment philosophy of Blue Gordon Capital is based on the identification of unrecognized situations to generate alpha on the long side. On the short side, the company seeks to invest in unsustainable business models. Bayesian updating is used to remove bias and build positions methodically.
Blue Grotto Capital has over $454 million worth of assets under management, out of which $377.5 million are invested in 13F securities as reported at the end of September quarter of 2021.
The top 10 holdings account for 69.51% of the 13F securities. Other than these top 10 holdings, Blue Grotto Capital has significant stakes in Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB), and Sea Limited (NYSE:SE).
Alphabet Inc. provides services like Google Services, Google Cloud, and YouTube.
Meta Platforms, Inc., formerly Facebook, Inc., is based in California and provides communication services through its portfolio of connectivity applications, including Messenger and WhatsApp.
Sea Limited provides digital financial services, digital entertainment, and e-commerce solutions in Southeast Asia, South America, and internationally.
Our Methodology
This list of top 10 stock picks has been compiled after analyzing the third quarter holdings of Ben Gordon’s Blue Grotto Capital. The number of hedge funds having stakes in each company is also mentioned derived from the directory of Insider Monkey tracking 873 hedge funds in Q2 2021.
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Top 10 Stock Picks of Ben Gordon’s Blue Grotto Capital
10. Zynga Inc. (NASDAQ:ZNGA)
Blue Grotto Capital’s Stake Value: $19.75 million
Percent of 13F Portfolio: 5.23%
Number of Hedge Fund Holders: 49
Zynga Inc. (NASDAQ:ZNGA) operates in the IT sector by providing social games services. It develops and operates games on iOS, Android, and social media platforms like Facebook. With 2.623 million shares valued at $19.75 million, Zynga Inc. is one of the top picks of Ben Gordon’s Blue Grotto Capital.
The hedge fund sentiment is positive for the stock as the number of hedge funds having stakes in Zynga Inc. has increased to 49 in the June quarter as compared to 47 hedge funds in the previous quarter.
Zynga Inc. posted an EPS of $0.12 at the end of the third quarter, beating the market consensus by $0.05. On November 08, 2021, Barclays lowered its price target on the shares to $10 from $12 and kept an “Overweight” Rating.
9. Microchip Technology Incorporated (NASDAQ:MCHP)
Blue Grotto Capital’s Stake Value: $20.56 million
Percent of 13F Portfolio: 5.44%
Number of Hedge Fund Holders: 50
Based in Arizona, Microchip Technology Incorporated (NASDAQ:MCHP) works in the IT sector and designs and manufactures semiconductor products. According to Insider Monkey’s data of 873 hedge funds, 50 hedge funds have stakes in Microchip Technology Incorporated valued at $1.12 billion in the second quarter of 2021. This number has increased from 42 in the previous quarter.
For the second quarter, Microchip Technology Incorporated announced the EPS to be $1.07, beating the market consensus by $0.01. Blue Grotto held 133,926 shares in Microchip Technology Incorporated, valued at $20.56 million in the third quarter of 2021.
8. Yandex N.V. (NASDAQ:YNDX)
Blue Grotto Capital’s Stake Value: $20.77 million
Percent of 13F Portfolio: 5.5%
Number of Hedge Fund Holders: 31
Yandex N.V. (NASDAQ:YNDX) is based in the Netherlands and operates as a holding company. Its subsidiaries provide search engine technology and other online services. At the end of the second quarter of 2021, Blue Grotto held 260,680 shares in Yandex N.V., valued at $20.77 million, making it 5.5% of the 13F portfolio.
Yandex N.V. was in the portfolio of 31 hedge funds at the end of the second quarter of 2021, up from 29 in first quarter of 2021.
In the third quarter, Yandex N.V. reported an EPS of $0.05, beating the market estimates by $0.02. On October 28, 2021, Citi raised its price target on Yandex N.V. to $90 from $82 and kept a “Buy” rating on the shares.
7. Installed Building Products Inc (NYSE:IBP)
Blue Grotto Capital’s Stake Value: $22.63 million
Percent of 13F Portfolio: 5.99%
Number of Hedge Fund Holders: 12
Installed Building Products Inc (NYSE:IBP) is an Ohio-based construction company that manufactures and installs insulation materials and complementary building products in the buildings.
In the second quarter of 2021, Insider Monkey tracked that 12 hedge funds have stakes in Installed Building Products Inc valued at $55.39 million. Blue Grotto owns 211,187 shares in Installed Building Products Inc, valued at $22.63 million.
RBC Capital, on November 05, 2021, set its price target on Installed Building Products Inc to $132 with a “Sector Perform” rating on the shares. Installed Building Products Inc announced an EPS of $1.49 at the end of the third quarter of 2021.
6. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)
Blue Grotto Capital’s Stake Value: $23.9 million
Percent of 13F Portfolio: 6.33%
Number of Hedge Fund Holders: 49
In the third quarter of 2021, Blue Grotto Capital added 344,292 shares of SS&C Technologies Holdings, Inc., valued at $23.9 million to its 13F portfolio. SS&C Technologies Holdings, Inc. develops and provides software products and services to healthcare industries and financial services. The company reported an EPS of $1.32 in the September quarter, beating the market consensus by $0.12.
49 hedge funds out of 873 have stakes in SS&C Technologies Holdings, Inc., worth $2.56 billion, as tracked by Insider Monkey in the second quarter of 2021.
In addition to SS&C Technologies Holdings, Inc., Blue Grotto Capital has significant stakes in other companies in the digital realm like Alphabet Inc., Meta Platforms, Inc., and Sea Limited.
5. News Corp (NASDAQ:NWS)
Blue Grotto Capital’s Stake Value: $24.73 million
Percent of 13F Portfolio: 6.54%
Number of Hedge Fund Holders: 19
News Corp (NASDAQ:NWS) is a New York-based media company that is engaged in the creation of media, news, information services, and book publishing business.
News Corp is in the portfolio of 19 hedge funds with stakes worth $178 million, as tracked by Insider Monkey in the second quarter of 2021.
In the third quarter earnings report, News Corp reported an EPS of $0.23, beating the market consensus by $0.08.
Ben Gordon’s Blue Grotto Capital owned 1.05 million shares valued at $24.725 million in News Corp as of the end of the third quarter of 2021. In the third quarter of 2021, Blue Capital increased its stakes in the company by 70% from the previous quarter.
4. Viad Corp. (NYSE:VVI)
Blue Grotto Capital’s Stake Value: $26.07 million
Percent of 13F Portfolio: 6.9%
Number of Hedge Fund Holders:14
Viad Corp. (NYSE:VVI) provides experiential services in the travel and recreation industry through marketing and event management operations. Viad Corp. has operations in the US, Canada, the UK, Continental Europe, and the UAE.
In the September quarter of 2021, Blue Grotto Capital held 574,188 shares in Viad Corp., valued at $26.07 million.
According to Insider Monkey’s database tracking 873 hedge funds in the second quarter of 2021, 14 hedge funds had stakes in Viad Corp., valued at $123 million.
In the third quarter, Viad Corp. reported an EPS of $0.58 and missed the market estimates by -$0.65. B. Riley initiated its coverage on Viad Corp. with a “Buy” rating and price target of $56.
3. Mitek Systems, Inc. (NASDAQ:MITK)
Blue Grotto Capital’s Stake Value: $30.77 million
Percent of 13F Portfolio: 8.15%
Number of Hedge Fund Holders: 17
Accounting for 8.15% of the 13F portfolio of Blue Grotto Capital with 1.66 million shares worth $30.77 million in Q3 2021, Mitek Systems, Inc. (NASDAQ:MITK) develops and sells image capturing and digital identification solutions in the US and abroad.
According to the Insider Monkey database, 17 hedge funds have stakes in Mitek Systems, Inc., worth $109 million, as of the second quarter of 2021.
Mitek Systems, Inc. reported an EPS of $0.22, beating the market estimates by $0.03.
On November 15, 2021, H.C. Wainwright kept a “Buy” rating on Mitek Systems, Inc. and kept its price target of $27 on the shares.
2. Perficient, Inc. (NASDAQ:PRFT)
Blue Grotto Capital’s Stake Value: $36.54 million
Percent of 13F Portfolio: 9.67%
Number of Hedge Fund Holders: 18
Perficient, Inc. (NASDAQ:PRFT) is a consulting company that provides IT, management consulting and digital experience solutions.
With 315,833 shares, Perficient, Inc. accounts for 9.67% of the portfolio of Blue Grotto Capital as of the third quarter of 2021. Insider monkey tracked 18 hedge funds having stakes in Perficient, Inc., valued at $108 million, in the June quarter of 2021.
Perficient, Inc. reported an EPS of $0.48 in the third quarter of 2021, missing the market consensus by -$0.03. On October 29, 2021, Barrington kept an “Outperform” rating on Perficient, Inc. and raised its price target to $150 from $116.
1. Spectrum Brands Holdings, Inc. (NYSE:SPB)
Blue Grotto Capital’s Stake Value: $36.7 million
Percent of 13F Portfolio: 9.72%
Number of Hedge Fund Holders: 35
Spectrum Brands Holdings, Inc. (NYSE:SPB) ranks first on our list of top 10 stock picks of Ben Gordon’s Blue Grotto Capital. The company provides branded consumer products like hardware and home improvement, pet care, garden products. It has its operations worldwide.
Spectrum Brands Holdings, Inc. reported an EPS of $1.11 in the third quarter, beating the market consensus by $0.31. On November 17, 2021, RBC Capital raised its price target to $124 from $100 and kept an “Outperform” rating on the shares.
Spectrum Brands Holdings, Inc. is in the portfolio of 32 hedge funds as of Q2 2021, as tracked by Insider Monkey. These hedge funds have invested $578 million in the company.
Blue Grotto Capital held 383,603 shares in Spectrum Brands Holdings, Inc., valued at $36.7 million, and accounting for 9.72% of the 13F portfolio as of the end of Q3 of 2021.
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This article is originally published at Insider Monkey.
