In this article, we will discuss the top 10 stock picks of Dan Kozlowski’s Plaisance Capital.
Plaisance Capital LLC was founded by Daniel R. Kozlowski in November 2008. Plaisance means pleasantness or park in French and also happens to be a public park in Chicago, where Plaisance Capital was founded.
Mr. Kozlowski started in the investment industry as an equity analyst for the Janus Contrarian Fund from 2000 to 2006, following his MBA from the University of Chicago Booth School of Business. He also holds the Chartered Financial Analyst (CFA) designation. During this period as an equity analyst at Janus Capital, he covered banking, insurance, media, retail, and specialty finance industries.
In 2006, Mr. Kozlowski became one of the founders and managers of the long-short fund at Janus Capital. The assets under management (AUM) of the firm grew exponentially from just $5 million in August 2006 to $1.3 billion in March 2008. After gaining experience in leading and managing a fund, Mr. Kozlowski decided to go his separate way and founded Plaisance Capital in Chicago, Illinois.
In 2011, Mr. Kozlowski was again approached by Janus Capital to return and manage the Janus Contrarian public mutual fund on his own. Early in his career, Mr. Kozlowski supported the fund as an equity analyst. Mr. Kozlowski returned but under the condition that he would be allowed to run his private partnership portfolio and retain it if he wished to leave Janus Capital down the line.
This turned out to be true in September 2017, when Mr. Kozlowski again decided to go his separate way following the merger of Janus Capital with Henderson in May 2017. He re-established Plaisance Capital with nearly two decades of experience under his belt and founded the Plaisance Midway Fund LP as a long-short institutional investor. He moved the base of operations of his business to Denver, Colorado.
Investment Philosophy
Plaisance Capital follows a Contrarian Value investment strategy. Under this philosophy, Plaisance Capital analyzes the true intrinsic value of organizations based on the classic discounted cash flow (DCF) model with a long-term time horizon and compares it against its price in the stock exchange. If the corporation is undervalued and inactive on the public equities market, then the investment firm is likely to go long on the stock. Meanwhile, if a stock is overvalued, then Plaisance Capital is likely to short the stock.
As of the second quarter of 2021, the assets under management (AUM) for Plaisance Capital stood at $200 million and Kozlowski’s portfolio comprised of notable companies like Skechers U.S.A., Inc. (NYSE:SKX), Marriott International, Inc. (NASDAQ:MAR) and United Therapeutics Corporation (NASDAQ:UTHR).
Photo by Nicholas Cappello on Unsplash
Our Methodology
For this article, we picked the top 10 stocks from the second quarter portfolio of Dan Kozlowski’s Plaisance Capital. These ten stocks represent 48% of Plaisance Capital’s portfolio as of Q2 2021.
Top 10 Stock Picks of Dan Kozlowski’s Plaisance Capital
10. Kirby Corporation (NYSE:KEX)
Plaisance Capital’s Stake Value: $3,173,000
Percentage of Plaisance Capital’s 13F Portfolio: 1.58%
Number of Hedge Fund Investors: 21
Kirby Corporation (NYSE:KEX) is the biggest tank barge operator in the US. The Houston, Texas-based company operates in the Mississippi River system. The company also operates a Distribution and Services segment, which provides after-sales service for engines, transmissions, and other related equipment used in power generation, oilfield services, and other industries. The stock has been a part of Plaisance Capital’s portfolio since Q1 2020. In the second quarter of 2021, Plaisance Capital had 52,321 shares in Kirby Corporation, worth $3.17 million.
The company reported its Q3 2021 results on October 28. Kirby Corporation’s revenue came in at $598.9 million and outperformed the consensus estimate of $575.5 million.
9. NCR Corporation (NYSE:NCR)
Plaisance Capital’s Stake Value: $3,220,000
Percentage of Plaisance Capital’s 13F Portfolio: 1.6%
Number of Hedge Fund Investors: 38
NCR Corporation (NYSE:NCR) is a leading technology provider of hardware, software, and services for banks, restaurants, and retailers through its POS software and multi-vendor ATM software. The Atlanta, Georgia-based company has 34,000 employees spread across 160 countries and provides its service in 141 countries.
The company reported its Q3 2021 earnings on October 26. EPS for the third quarter was 69 cents, which outperformed the consensus estimate of 64 cents. However, NCR Corporation recorded revenue of $1.9 billion for the third quarter, missing the analysts’ estimate by $94.5 million.
On October 27, Daniel Perlin at RBC Capital reduced the target price from $59 to $54 while maintaining an Outperform rating on NCR Corporation stock.
8. Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH)
Plaisance Capital’s Stake Value: $3,285,000
Percentage of Plaisance Capital’s 13F Portfolio: 1.63%
Number of Hedge Fund Investors: 43
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is a Miami, Florida-based cruise company founded in 1966. The company is the third biggest cruise company in the world and has been hampered by the pandemic. Plaisance Capital held 111,700 shares in Norwegian Cruise Line Holdings Ltd. at the end of the second quarter of 2021, worth $3.28 million.
Out of the 873 funds being tracked by Insider Monkey, 43 hedge funds have a cumulative stake of $606.6 million in Norwegian Cruise Line Holdings Ltd..
Brown Capital Management shared its stance on Norwegian Cruise Line Holdings Ltd. in its Q4 2020 investor letter. Here’s what the fund said:
“Norwegian Cruise Line Holdings (NCLH) is a diversified operator of leading global cruise lines spanning market segments from contemporary to luxury under the Norwegian Cruise Line, Oceanic Cruises and Regent Seven Seas Cruises brands. These brands operate a combined 28 ships. Norwegian was eliminated from the portfolio, as we no longer believe it meets our definition of an Exceptional Growth Company, as discussed in our first quarter letter. There are still many unknowns as to when we will see a fully normalized operating environment with a high degree of confidence.”
7. Under Armour, Inc. (NYSE:UAA)
Plaisance Capital’s Stake Value: $3,387,000
Percentage of Plaisance Capital’s 13F Portfolio: 1.68%
Number of Hedge Fund Investors: 51
Under Armour, Inc. (NYSE:UAA) is a Baltimore, Maryland-based sports equipment corporation that sells casual and sports apparel and footwear. The stock has been a part of Plaisance Capital’s portfolio since Q1 2021.
The stock price rose more than 16% on November 2 after the company reported robust earnings for Q3 2021. Under Armour Inc’s revenue for Q3 was $1.55 billion, reflecting an increase of 8.4% YoY and outperforming the analysts’ estimate of $1.47 billion.
On November 3, Jonathan Komp at Baird maintained a Neutral rating on Under Armour, Inc. and raised the price target from $27 to $32, citing improved brand performance.
6. United Airlines Holdings, Inc. (NASDAQ:UAL)
Plaisance Capital’s Stake Value: $3,583,000
Percentage of Plaisance Capital’s 13F Portfolio: 1.78%
Number of Hedge Fund Investors: 39
United Airlines Holdings, Inc. (NASDAQ:UAL) secures the sixth position on our list of the top 10 stock picks of Dan Kozlowski’s Plaisance Capital. The airline industry also came to a halt following the COVID-19 pandemic and is still struggling to recover. In September, the US air transportation employment was reported to be more than 12% lower than its pre-pandemic peak. In the second quarter, Plaisance Capital held 68,514 shares in United Airlines Holdings, Inc., worth $3.58 million.
Helane Becker at Cowen increased the target price to $78 from $72 and reiterated an Outperform rating on the stock on October 21. The analyst anticipates United Airlines Holdings, Inc. to add leisure-focused destinations to its route to counter the impact of the slowdown in business-focused destinations.
5. Carnival Corporation & plc (NYSE:CCL)
Plaisance Capital’s Stake Value: $3,611,000
Percentage of Plaisance Capital’s 13F Portfolio: 1.79%
Number of Hedge Fund Investors: 31
Carnival Corporation & plc (NYSE:CCL) is one of the two shipping cruise stocks in Dan Kozlowski’s Plaisance Capital’s portfolio, the second being Norwegian Cruise Line Holdings Ltd.. Both these positions were initiated in Q2 2021. Carnival Corporation & plc (NYSE:CCL) has ten cruise brands under its umbrella that cover various regions and cater to different segments of the cruising industry with a fleet of over 100 vessels. The Miami, Florida-based company was founded in 1972. In the second quarter, Plaisance Capital owned 137,000 shares in Carnival Corporation & plc (NYSE:CCL), worth $3.61 million.
Investment management firm ClearBridge Investments mentioned Carnival Corporation & plc (NYSE:CCL) in its Q1 2021 investor letter. Here’s what the fund said:
“Several of our better performers in the first quarter were purchased while their business models were under stress from COVID restrictions or the macro environment the pandemic created. What gave us confidence in purchasing Carnival was the actions the company took to extend out their balance sheets until travel resumed. Both should benefit as a broader vaccination rollout prompts cruise lines to resume operations and consumers to start traveling again and are positioned to deliver better margins and gain pricing power as the economy normalizes due to the cost controls implemented during the downturn.”
4. Enterprise Products Partners L.P. (NYSE:EPD)
Plaisance Capital’s Stake Value: $5,690,000 million
Percentage of Plaisance Capital’s 13F Portfolio: 2.83%
Number of Hedge Fund Investors: 28
Enterprise Products Partners L.P. (NYSE:EPD) is a Houston, Texas-based midstream oil and gas transportation company.
For the third quarter of 2021, Enterprise Products Partners L.P. was able to surpass the revenue estimates by a significant margin of $2.33 billion as the business started to return to pre-COVID levels. The company also reported an EPS of $0.54 for the third quarter, beating the analysts’ estimate by $0.03.
Out of the 873 elite funds being tracked by Insider Monkey, 28 hedge funds held a stake worth $246 million in Enterprise Products Partners L.P. at the end of Q2 2021, up from 26 positions in the preceding quarter.
ClearBridge Investments shared its stance on Enterprise Products Partners L.P. in its Q1 2021 investor letter:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
3. Skechers U.S.A., Inc. (NYSE:SKX)
Plaisance Capital’s Stake Value: $6,354,000
Percentage of Plaisance Capital’s 13F Portfolio: 3.16%
Number of Hedge Fund Investors: 35
Skechers U.S.A., Inc., founded in 1992, is the third-largest athletic footwear company in the United States. Based out of Manhattan Beach, California, the company has over 4,000 stores across the world. Plaisance Capital held 127,520 shares in Skechers U.S.A., Inc. in Q2 2021. The market value of the shares was close to $6.35 million.
On November 2, John Staszak at Argus lowered the rating on Skechers U.S.A., Inc. from Buy to Hold on the back of supply chain issues. He further added that the stock would become a buy if its stock price fell below the $35 level due to non-fundamental reasons. Skechers has been a part of Plaisance Capital’s portfolio for the past seven quarters.
2. Noodles & Company (NASDAQ:NDLS)
Plaisance Capital’s Stake Value: $8,571,000
Percentage of Plaisance Capital’s 13F Portfolio: 4.26%
Number of Hedge Fund Investors: 18
Noodles & Company is a fast-casual restaurant founded in 1995 offering made-to-order noodle and pasta dishes along with salads, soups, sides, and desserts from over 400 locations across the US. The chain is considered one of the healthiest offerings in the fast-casual dining industry.
18 hedge funds out of the 873 being tracked by Insider Monkey have held a stake in Noodles & Company since the first quarter of 2021.
1. Pure Cycle Corporation (NASDAQ:PCYO)
Plaisance Capital’s Stake Value: $54,572,000
Percentage of Plaisance Capital’s 13F Portfolio: 27.18%
Number of Hedge Fund Investors: 10
Pure Cycle Corporation (NASDAQ:PCYO) is a diversified innovative organization involved in land and water development along with oil and gas mineral interest across the state of Colorado. The US housing sector is undergoing a boom as millennials are looking for starter homes and Colorado happens to be one of the key states in this regard. The company is currently leading the master planning of the Sky Ranch community, where it is offering commercial, residential, light industrial lots and retail spaces along the I-70 corridor in Colorado.
Dan Kozlowski’s Plaisance Capital has a stake of $54.57 million in the company.
Maran Capital Management mentioned Pure Cycle Corporation in its Q2 2021 investor letter. Here’s what the investment management firm said:
“Pure Cycle owns approximately 5,000 single-family housing lot equivalents and a water utility backed by meaningful water rights in the Denver metro area.
I attended Pure Cycle’s investor day last week. It was great to see the progress the company has made at its Sky Ranch community (see photo below). I continue to believe that PCYO has $10+ per share of real estate value and $10+ per share of water value, and that each are being actively monetized (the land at $100k+/lot, and the water via $30k+ tap fees, each of which are appreciating rapidly). I believe the market is still missing a number of critical components of the PCYO story, including:
- A respected nonprofit intends to spend $50mm to build a charter school in PCYO’s community, which should dramatically increase the value of PCYO’s remaining lots;
- value uplift as PCYO starts to develop commercial acreage;
- optionality on additional water sales to the energy industry;
- numerous off-balance-sheet hidden assets, including the rights to a large reservoir; and
- additional capital-allocation-driven upside, including value-accretive land purchases.”
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This article is originally published at Insider Monkey.
