In this article, we discuss the top 10 stock picks of Gordon Malin’s Mountain Road Advisors based on Q2 holdings of the fund.
After graduating from Bates College, Gordon Malin worked as a portfolio manager at Point 72, Visium Asset Management, and Citadel. He founded Mountain Road Advisors in June 2018 and was the portfolio manager until January 2021. Currently, he is the founder and COO of Elpha Secure.
The 13F public stock portfolio of Mountain Road Advisors, an investment fund, was valued at $511.76 million in the second quarter of 2021.
Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc. (NASDAQ:AMZN) are some of the most notable stock picks of Mountain Road as of the second quarter of 2021.
Mountain Road Advisors owns 188,274 shares in Microsoft Corporation (NASDAQ:MSFT) after raising its stake in the company by 2% in the second quarter of 2021. Credit Suisse analyst Stephen Ju is quite optimistic about the tech giant Microsoft Corporation. On October 27, he raised his price target on Microsoft to $340 from $320 and maintained an “Outperform” rating on the shares after quarterly results.
Mountain Road Advisors is also bullish on Alphabet Inc. (NASDAQ:GOOG), according to the hedge fund’s disclosed holdings data as of the end of the second quarter of 2021. The fund increased its holding in the Alphabet stock by 3% in the second quarter, ending the period with 18,345 shares.
With this background in mind, let’s start our list of top 10 stock picks of Gordon Malin’s Mountain Road Advisors. We used Malin’s 13F portfolio for Q2 2021 for this analysis.
Why do we care about hedge fund activity? 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.
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Top Stock Picks of Gordon Malin’s Mountain Road Advisors
10. Apple Inc. (NASDAQ:AAPL)
Mountain Road Advisors Stake Value: $19,227,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 3.75%
Number of Hedge Fund Holders: 138
Mountain Road Advisors holds 140,382 shares of the company worth $19.23 million as of the second quarter of 2021.
On October 29, Oppenheimer analyst Martin Yang raised his price target on Apple to $170 from $165 and reiterated an “Outperform” rating on the shares.
ClearBridge Investments, in its first-quarter 2021 investor letter, mentioned Apple Inc. (NASDAQ:AAPL). Here is what the fund said:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
9. UnitedHealth Group Incorporated (NYSE:UNH)
Mountain Road Advisors Stake Value: $30,988,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 6.05%
Number of Hedge Fund Holders: 105
UnitedHealth Group Incorporated (NYSE:UNH) is a health insurance business located in Minneapolis that offers health benefit plans and services. The company’s third-quarter EPS came in at $4.52, beating the estimates by $0.10. Revenue increased by 11% to $72.3 billion, with Optum and UnitedHealthcare seeing strong and diverse growth.
On October 25, Wells Fargo analyst Stephen Baxter raised his price target on UnitedHealth to $520 from $478 and maintained an “Overweight” rating on the shares.
UnitedHealth Group Incorporated is the latest addition to Mountain Road Advisors portfolio, as the hedge fund bought 77,386 shares of the company, worth $30.99 million. The company is also getting the attention of the smart money, as 105 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the second quarter, up from 89 funds a quarter earlier.
Just like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc. (NASDAQ:AMZN), UnitedHealth Group Incorporated (NYSE:UNH) is one of the notable stocks in Gordon Malin’s Mountain Road Advisors’ 13F portfolio in Q2.
In its third-quarter 2021 investor letter, Wedgewood Partners mentioned UnitedHealth Group Incorporated (NYSE:UNH). Here is what the fund said:
“UnitedHealth Group detracted from performance due to investor concerns about Medicare premiums as well as post-COVID medical cost trends. Medicare enrollment should continue to grow at double-digits at UnitedHealthcare. Meanwhile the Company’s Optum segment should be able to help bend the cost curve if indeed post-COVID volumes pick up to above pre-COVID levels. In any case, we do not think the long-term normalized trend of medical care in the U.S. has changed substantially and would look to add to our new position on any continuing short-term concerns.”
8. Amazon.com, Inc. (NASDAQ:AMZN)
Mountain Road Advisors Stake Value: $33,714,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 6.58%
Number of Hedge Fund Holders: 271
There were 271 hedge funds in our database that held stakes in the company at the end of the second quarter, compared to 243 funds in the preceding quarter. Fisher Asset Management is Amazon’s most significant stakeholder, with 1.93 million shares worth $6.34 billion.
On October 29, RBC Capital analyst Brad Erickson lowered his price target on Amazon.com to $4,000 from $4,150 but kept an “Outperform” rating on the shares.
Polen Capital, an investment management firm, in its third-quarter 2021 investor letter, mentioned Amazon.com, Inc. (AMZN). Here is what the fund said:
“Amazon has also lagged as its revenue growth is slowing on the very difficult comparisons from last year when this behemoth was growing revenue by over 40%. We still expect exceptional long-term growth and significant margin expansion as the fastest growing (and now large) segments of Amazon are also generating the highest margins.”
7. T-Mobile US, Inc. (NASDAQ:TMUS)
Mountain Road Advisors Stake Value: $34,217,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 6.68%
Number of Hedge Fund Holders: 100
T-Mobile US, Inc. (NASDAQ:TMUS), a provider of mobile communications services, is ranked seventh on the list of top 10 stock picks of Gordon Malin’s Mountain Road Advisors. The hedge fund holds 236,254 shares in the company worth $34.22 million, representing 6.68% of their portfolio.
On October 18, Deutsche Bank analyst Bryan Kraft lowered T-Mobile’s price target to $185 from $195 but maintained a “Buy” recommendation on the stock.
T-Mobile US, Inc. is also getting the attention of the smart money, as 100 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the second quarter, up from 98 funds a quarter earlier.
Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc. (NASDAQ:AMZN) are some of the stocks to buy according to Gordon Malin’s Mountain Road Advisors, along with T-Mobile US, Inc. (NASDAQ:TMUS).
6. Kansas City Southern (NYSE:KSU)
Mountain Road Advisors Stake Value: $37,533,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 7.33%
Number of Hedge Fund Holders: 61
Kansas City Southern (NYSE:KSU), a transportation company, is placed sixth on the list of top 10 stock picks of Gordon Malin’s Mountain Road Advisors. The Surface Transportation Board gave the nod to the railroad control application filed by Kansas City Southern and Canadian Pacific Railway Limited (NYSE:CP) to create Canadian Pacific Kansas City, the only single-line railroad connecting the United States, Mexico, and Canada.
Mountain Road Advisors owns 132,453 shares of Kansas City Southern, worth over $37.53 million.
Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) are some of the notable stocks in Gordon Malin’s Mountain Road Advisors’ 13F portfolio in Q2, just like Kansas City Southern (NYSE:KSU).
Miller/Howard Investments, an investment management firm, in its first-quarter 2021 investor letter, mentioned Kansas City Southern (NYSE:KSU). Here is what the fund said:
“Canadian Pacific Railway (CP) agreed to acquire Kansas City Southern (KSU) in the largest rail deal in over a decade. The merger will create the first rail network connecting Canada, the US, and Mexico, and it should benefit from the passage of the USMCA Trade Agreement. We initiated a position in KSU in Q4 as we expected it to benefit from growing North American trade and viewed it as a consolidation candidate.”
5. Prudential Financial, Inc. (NYSE:PRU)
Mountain Road Advisors Stake Value: $38,487,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 7.52%
Number of Hedge Fund Holders: 28
Prudential Financial, Inc. declared a quarterly dividend of $1.15 per share, in line with the previous. After the company disclosed its decision to sell 17% of its in-force variable annuity block business, Barclays analyst Tracy Benguigui boosted her price objective on Prudential to $110 from $102 and maintained an “Equal Weight” rating on the stock on September 16.
Prudential Financial, Inc. ranks fifth on the list of top 10 stock picks of Gordon Malin’s Mountain Road Advisors. The hedge fund holds more than 375,595 shares in the company worth over $38.49 million, representing 7.52% of their portfolio. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the most significant shareholder of the company, with a $231.09 million stake.
4. Meta Platforms, Inc. (NASDAQ:FB)
Mountain Road Advisors Stake Value: $38,774,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 7.57%
Number of Hedge Fund Holders: 266
Facebook was also in the limelight after changing its name to Meta Platforms, Inc. (NASDAQ:FB). The company reported EPS of $3.22 vs the average expectation of $3.19 for the third quarter. Sales for the quarter totaled $29.01 billion, compared to a consensus estimate of $29.58 billion.
On October 26, Truist analyst Youssef Squali lowered his price target on Meta Platforms, Inc. to $400 from $425 but kept a “Buy” rating on the shares post its third-quarter results. According to the analyst, the company’s size demonstrates durability in the face of industry issues. In addition, the continued headwinds from Apple’s (AAPL) iOS updates, making ad targeting and measurement more difficult, are likely to be temporary rather than structural.
Mountain Road Advisors raised its position in Meta Platforms, Inc. by 4% to 111,513 shares in the second quarter, accounting for 7.57% of the overall portfolio.
In its third-quarter 2021 investor letter, Polen Capital mentioned Meta Platforms, Inc. (NASDAQ:FB). Here is what the fund said:
“Facebook’s stock was pressured on concerns about regulation in the quarter. We are constantly monitoring the potential regulatory risks to Facebook (and all of our holdings). At this point, we see very little chance that regulation changes Facebook’s business model in a meaningful and adverse way. Regarding the recent data shared by a former Facebook employee and the company itself on some of the unfortunate negative consequences of social media, we recognize these types of issues will inevitably linger in different forms and fashions well into the future. We have been focused on the ability of
Facebook to identify and mitigate these negative consequences while amplifying the value users typically cite for its apps across a long list of use cases. We continuously monitor the vibrance of the user base on Facebook’s apps to confirm that value.”
3. NXP Semiconductors N.V. (NASDAQ:NXPI)
Mountain Road Advisors Stake Value: $42,094,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 8.22%
Number of Hedge Fund Holders: 52
NXP Semiconductors N.V. (NASDAQ:NXPI) manufactures high-performance mixed-signal semiconductors in automobiles, mobile payments, and other applications. To allow Electronic Design Automation on the cloud, NXP Semiconductors N.V. has chosen Amazon Web Services (AWS), a subsidiary of Amazon.com, Inc. (NASDAQ:AMZN).
Stacy Rasgon, a Bernstein analyst, downgraded NXP Semiconductors from “Outperform” to “Market Perform” on October 29, with a price target of $230, down from $245. The analyst is becoming increasingly concerned about the stock’s value and the automotive end market.
Mountain Road Advisors started building its position in NXP Semiconductors in the fourth quarter of 2018 and currently holds over 204,618 shares in the company, valued at $42.09 million. The company represents 8.22% of the hedge fund’s 13F portfolio. Out of the hedge funds being tracked by Insider Monkey, Adage Capital Management is a leading shareholder in NXP Semiconductors, with 392,208 shares worth more than $80.69 million.
ClearBridge Investments, in its first-quarter 2021 investor letter, mentioned NXP Semiconductors N.V. (NASDAQ:NXPI). Here is what the fund said:
“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns and one-off production delays as well as demand resilience in areas like autos and smartphones. Two recent additions, specialty semiconductor maker NXP Semiconductors and semiconductor capital equipment firm ASML also delivered strong performance in the first quarter. NXP rose as auto production ramped up and electric vehicle sales continued to expand. ASML, which operates in a virtual monopoly for high-end chipmaking equipment, began to exert pricing power as it works through an order backlog that has stretched to over a year. Both are Dutch-based companies and out-of-benchmark names that provide access to different growth profiles than are available in the U.S. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurt wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”
2. Alphabet Inc. (NASDAQ:GOOG)
Mountain Road Advisors Stake Value: $45,978,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 8.98%
Number of Hedge Fund Holders: 190
Alphabet Inc. plans to invest $1 billion in Africa over the next five years. The funds will be used to help Africa’s digital revolution, which will cover anything from greater internet access to startup investment. Alphabet was in 190 hedge funds’ portfolios at the end of the second quarter of 2021, up from 185 hedge funds in our database at the end of the previous quarter.
Alger, an investment management firm, in its third-quarter 2021 investor letter, mentioned Alphabet Inc. (NASDAQ:GOOG). Here is what Alger has to say about the company:
“Alphabet Inc. was among the top contributors to performance during the third quarter. Alphabet is a leading internet search provider and is a beneficiary in the share shift of advertising dollars from traditional mediums like television, radio and newspapers to digital platforms. The company is a leader in implementing Al, autonomous vehicles and cloud computing it and owns the highly trafficked YouTube property. Alphabet contributed to performance due to a strong quarterly report highlighted by revenue growth that beat consensus expectations across segments. The company’s core search revenues have increased 10% over the past two years, with cloud computing increasing 8%. Results from YouTube also exceeded expectations. When discussing quarterly results, Alphabet management said retail, entertainment and travel were end markets that were particularly strong. The fixed cost structure of Alphabet’s search service resulted in profitability resulting from the increase in revenues being better than expected.”
1. Microsoft Corporation (NASDAQ:MSFT)
Mountain Road Advisors Stake Value: $51,003,000
Percentage of Mountain Road Advisors’ 13F Portfolio: 9.96%
Number of Hedge Fund Holders: 238
In the second quarter, Mountain Road Advisors increased its stake in Microsoft Corporation (NASDAQ:MSFT) by 2%, and the hedge fund’s 9.96% stake in the company is now worth about $51 million. Microsoft ranks first on the list of top 10 stock picks of Gordon Malin’s Mountain Road Advisors.
Alger, in its third-quarter 2021 investor letter, mentioned Microsoft Corporation (NASDAQ:MSFT). Here is what the fund said:
“Microsoft Corporation was among the top contributors to performance during the third quarter. Microsoft is a Positive Dynamic Change beneficiary of corporate America’s transformative digitization. Microsoft’s enterprise cloud product, Azure, is rapidly growing and accruing market share. Microsoft reported that Azure grew 51% in the second quarter. This high unit volume growth is a primary driver of the company’s higher share price, but the company’s strong operating execution has enabled margin expansion that has also helped to increase forward earnings estimates. We believe Microsoft’s subscription-based software offerings and cloud computing services have a durable growth profile because they enhance customers’ growth initiatives and help them to diminish costs. Additionally, investors appreciate Microsoft’s strong free cash flow generation and its return of cash to shareholders in the form of dividends and share repurchases.”
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Disclosure: None. Top 10 Stock Picks of Gordon Malin’s Mountain Road Advisors is originally published on Insider Monkey.
