Top 10 Stock Picks of Himanshu Shah’s Shah Capital

In this piece, we will take a look at the top ten stock picks of Himanshu Shah’s Shah Capital.

Shah Capital is a hedge fund based out of Raleigh, North Carolina, the United States. The fund is run by Himanshu Shah, a pharmaceutical executive who is also the fund’s president and chief investment officer.

Mr. Shah set up Shah Capital in 2005, and like some other hedge fund executives out there not only does he have significant experience in the financial world, but also corporate experience as the executive has served on the board of directors of several healthcare companies.

His hedge fund markets itself as focusing primarily on long-term and medium-term investments by taking a look at hardcore data and research to sift out which firms to invest in. This is in contrast to a short-only strategy, which sees a hedge fund identify firms (or even currencies as evidenced by the recent rout in the British Pound) that will see their prices drop, and then proceed to sell the stocks only to buy them back at a lower price to close out the position and make a profit.

Shah currently sits on the board of directors of Renesola Limited and Vitamin Shoppe Limited. The executive is also a graduate of the University of Akron in Akron, Ohio, and Gujrat University, India. He attended Akron for his Masters in Business Administration and Gujrat University for his bachelor’s degree.

As of the second quarter of this year, Shah Capital had a portfolio that was worth $385 million, making it one of the smaller hedge funds in the industry. The bulk of these funds are tied in the top ten firms in the portfolio, and out of these, some well known names are New Oriental Education & Technology Group Inc. (NYSE:EDU), ReneSola Ltd (NYSE:SOL), and Antero Resources Corporation (NYSE:AR).

Our Methodology

We took a look at Shah Capital’s filings with U.S. regulators to pick out which firms were on its radar as of this year’s June quarter. The firms were then analyzed briefly through factors such as analyst ratings, financial performance, and hedge fund sentiment courtesy of Insider Monkey’s Q2 2022 survey of 895 funds.

Top 10 Stock Picks of Himanshu Shah’s Shah Capital

10. Antero Midstream Corporation (NYSE:AM)

Shah Capital’s Stake Value: $19 million

Percentage of Shah Capital’s 13F Portfolio: 4.94%

Number of Hedge Fund Holders: 19

Antero Midstream Corporation (NYSE:AM) is a water and midstream energy management firm that is headquartered in Denver, Colorado, the United States. The company has network pipelines, compressor stations, water storage, and water pumping facilities in the U.S.

Mr. Shah’s hedge fund held a $19 million stake in Antero Midstream Corporation as part of its second quarter of  2022 investment portfolio. This came in the form of 2 million shares and it represented 4.94% of the firm’s investment portfolio. For the same time period, 19 out of the 895 hedge funds polled by Insider Monkey for their investments had also held a stake in the company.

The bulk, or 85%, of Antero Midstream Corporation’s midstream assets in the U.S. focus on natural gas, and its only customer has significant cash reserves as well, leaving little room for doubt about the company’s ability to sell its product. Barclays reduced the company’s share price target to $9 from $10 in July 2022, sharing that it is relatively well insulated when compared to other energy firms.

Antero Midstream Corporation’s largest investor in our database is Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management which owns 4.8 million shares that are worth $43 million.

New Oriental Education & Technology Group Inc., ReneSola Ltd, and Antero Resources Corporation are met by Antero Midstream Corporation in the list of Shah Capital’s top stock picks.

9. Valaris Limited (NYSE:VAL)

Shah Capital’s Stake Value: $22 million

Percentage of Shah Capital’s 13F Portfolio: 5.73%

Number of Hedge Fund Holders: 40

Valaris Limited (NYSE:VAL) is an oil and gas contract drilling services provider. The firm provides services to several entities such as governments and independent oil and gas companies.  It has its own drilling rig fleet and is headquartered in Hamilton, Bermuda.

Valaris Limited has more than $500 million in backlogged contracts, and it reactivated a new drillship earlier this month which is already in an 18 month contract with a Brazilian company. It also has a four year contract worth $159 million with Shell which is expected to come online in April next year.

Shah Capital owned a $22 million stake in Valaris Limited during this year’s June quarter, which came through 523,353 shares and represented 5.73% of its investment portfolio. Insider Monkey’s Q2 2022 survey of 895 hedge funds indicated that40 had held a stake in the company.

Out of these, Alec Litowitz and Ross Laser’s Magnetar Capital is Valaris Limited’s largest investor. It owns 22,576 shares that are worth $953 million.

8. Turquoise Hill Resources Ltd. (NYSE:TRQ)

Shah Capital’s Stake Value: $24 million

Percentage of Shah Capital’s 13F Portfolio: 6.25%

Number of Hedge Fund Holders: 22

Turquoise Hill Resources Ltd. (NYSE:TRQ) is a mining company that is headquartered in Montreal, Canada. The firm mines for several different kinds of metals such as copper, gold, and silver, and its main mining site is located in Mongolia.

As part of its second quarter of 2022 portfolio, Shah Capital’s stake in Turquoise Hill Resources Ltd. was worth $24 million. It represented 6.25% of the firm’s portfolio and came through the hedge fund holding 901,427 shares of the company. Insider Monkey took a look at 895 hedge fund holdings for this year’s June quarter to discover that 22 had invested in Turquoise Hill Resources Ltd..

Turquoise Hill Resources Ltd. is currently under the process of having a minority stake sold to a larger company. The deal is worth $1.1 billion and it also stands to provide the company with some much needed working capital financing. However, Pentwater Capital, one of Turquoise Hill Resources Ltd.’s largest investors, believes that the deal significantly undervalues the firm’s shares, especially when free cash flow estimates for the next couple of years are taken into account.

Turquoise Hill Resources Ltd.’s largest investor is Matthew Halbower’s Pentwater Capital Management which owns 19 million shares that are worth $521 million.

7. China Yuchai International Limited (NYSE:CYD)

Shah Capital’s Stake Value: $33 million

Percentage of Shah Capital’s 13F Portfolio: 8.7%

Number of Hedge Fund Holders: 6

China Yuchai International Limited (NYSE:CYD) is a Singaporean engine manufacturer that sells its products primarily to Chinese companies. The firm manufactures a wide variety of diesel and natural gas engines such as those for trucks, buses, and industrial applications.

China Yuchai International Limited won a large order for 100 heavy duty truck engines from a Chinese company in September 2022. The firm has not been performing that well of late, as uncertainty in the Chinese economy caused its revenue to drop 63% annually during the first half of this year.

Mr. Shah’s hedge fund owned 3.8 million China Yuchai International Limited shares by the end of this year’s first quarter, which let it hold a $33 million stake in the company. For the same time period, six out of the 895 hedge funds polled by Insider Monkey had invested in the company.

China Yuchai International Limited’s largest investor after Shah Capital is Jim Simons’s Renaissance Technologies which holds a $3.7 million stake that comes via 425,893 shares.

6. VEON Ltd. (NASDAQ:VEON)

Shah Capital’s Stake Value: $34 million

Percentage of Shah Capital’s 13F Portfolio: 8.87%

Number of Hedge Fund Holders: 10

VEON Ltd. (NASDAQ:VEON) is a Dutch telecommunications services provider that is headquartered in Amsterdam, Netherlands. The company provides a host of services such as short messages, mobile finance, fixed and wireless broadband, and caller identification.

Shah Capital owned 74 million VEON Ltd. shares as part of its Q2 2022 portfolio. These let it hold a $34 million stake in the company which represented 8.87% of its investment portfolio. During the same time period, ten out of the 895 hedge funds polled by Insider Monkey had invested in the firm.

VEON Ltd.’s shares have taken a beating on the stock market this year, with the fallout from the Russian invasion of Ukraine battering the share price by a massive 78% year to date. Its net debt is 12 times its market capitalization, and any peaceful resolution of the Ukraine crisis stands to be a major upward catalyst for the share price.

VEON Ltd.’s largest investor after Mr. Shah’s hedge fund is David Iben’s Kopernik Global Investors which owns 16 million shares that are worth $7.3 million.

Alongside ReneSola Ltd, New Oriental Education & Technology Group Inc., and Antero Resources Corporation, VEON Ltd. is a top Himanshu Shah stock pick.

5. Genworth Financial, Inc. (NYSE:GNW)

Shah Capital’s Stake Value: $41 million

Percentage of Shah Capital’s 13F Portfolio: 10.59%

Number of Hedge Fund Holders: 22

Genworth Financial, Inc. (NYSE:GNW) is an American insurance provider that is headquartered in Richmond, Virginia. The firm provides its services in the U.S. and globally, and it offers mortgage, life, and other insurance products.

Genworth Financial, Inc. has a fortress of a balance sheet that sees it own two independent insurance companies that are cumulatively worth $79 billion. One of these, Enact is slated to earn $600 million this year and pay $200 million in dividends. The company’s latest quarter saw it bring in $1.88 billion in revenue, missing analyst estimates of $1.94 billion.

Shah Capital owned a $41 million stake in Genworth Financial, Inc. by the end of this year’s second quarter, which came through 11 million shares and represented 10.59% of its portfolio. Insider Monkey’s 895 hedge fund survey for the same time period saw 22 investors in the company.

Out of these, Lawrence Kam’s Sonic Capital is Genworth Financial, Inc.’s second largest investor. It owns 3.3 million shares that are worth $11.7 million.

4. Antero Resources Corporation (NYSE:AR)

Shah Capital’s Stake Value: $41 million

Percentage of Shah Capital’s 13F Portfolio: 10.72%

Number of Hedge Fund Holders: 64

Antero Resources Corporation is an independent natural gas and oil company that is headquartered in Denver, Colorado, the United States. The company has access to hundreds of thousands of acres of drilling sites and millions of cubic feet of proven reserves.

Mr. Shah’s hedge fund held 1.3 million Antero Resources Corporation shares during this year’s June quarter which let it hold a $41 million stake in the company. Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 64 had also bought Antero Resources Corporation’s shares.

Antero Resources Corporation’s future is uncertain since the recent slowdown in China and the natural gas market has led to reduced growth estimates for the firm’s revenue. Despite this, the fact that the company rode the tide on high natural gas prices this year has resulted in its stock price appreciating by a massive 73% year to date. However, over the course of the past month, the shares are down by 27%.

Antero Resources Corporation’s largest investor is Zach Schreiber’s Point State Capital which owns 4.2 million shares that are worth $129 million.

3. Vanguard Scottsdale Funds

Shah Capital’s Stake Value: $47 million

Percentage of Shah Capital’s 13F Portfolio: 12.21%

Number of Hedge Fund Holders: N/A

Vanguard Scottsdale Funds is an exchange traded fund which is fund registered in Delaware, the United States of America. Vanguard Scottsdale Funds consists of a wide variety of sub funds such as bonds, treasuries, corporate bonds, long term treasury indexes, and mortgage backed securities.

Shah Capital held 800,587 Vanguard Scottsdale Funds shares as part of its Q2 2022 investment portfolio, allowing it to hold a $47 million stake. This stake represented 12.21% of the hedge fund’s investment portfolio.

2. ReneSola Ltd (NYSE:SOL)

Shah Capital’s Stake Value: $51 million

Percentage of Shah Capital’s 13F Portfolio: 15.7%

Number of Hedge Fund Holders: 4

ReneSola Ltd is an American company that sells its products and services all over the globe. These include developing solar power projects, solar gardens, and procurement of solar modules. ReneSola Ltd is headquartered in Stamford, Connecticut, the United States.

ReneSola Ltd is currently facing headwinds from a slowdown in China, with the company announcing in June this year that its self operated solar facilities in China would drop down to a high end estimate of 70 megawatts of electricity production. Northland set an $8 share price target for the company in September 2022, as it stated that the firm is expected to benefit heavily from the growing focus on solar energy in Europe and the United States.

Mr. Shah’s hedge fund owned 12 million ReneSola Ltd shares as part of its June quarter of 2022 investments. These let it hold a $51 million stake which represented 15.7% of the investment portfolio. During Q2 2022, four out of the 895 hedge funds polled by Insider Monkey had also invested in ReneSola Ltd.

ReneSola Ltd’s largest investor in our database after Shah Capital is Paul Marshall and Ian Wace’s Marshall Wace LLP which owns 810,555 shares that are worth $3.8 million.

1. New Oriental Education & Technology Group Inc. (NYSE:EDU)

Shah Capital’s Stake Value: $61 million

Percentage of Shah Capital’s 13F Portfolio: 15.84%

Number of Hedge Fund Holders: 22

New Oriental Education & Technology Group Inc. is a Chinese private educational services firm which is based in Beijing, the People’s Republic of China. It provides test preparation services for a variety of exams held in China and in the U.S.

By the end of this year’s second quarter, Shah Capital had held a $61 million stake in New Oriental Education & Technology Group Inc.. This came through the hedge fund owning 3 million shares of the company and it represented 15.84% of its investment portfolio. During the same time period, 22 of the 895 hedge funds surveyed by Insider Monk had invested in the company.

Management and investors of New Oriental Education & Technology Group Inc. were dealt with a shock last year when the Chinese government announced a crackdown on private tuition services. Despite this, the company’s shares have rallied by 16% on the market year to date. However, management proved to be agile, as it quickly suspended those programs that would become the target of stringent regulations, and instead chose to focus on services that would generate revenue instead. New Oriental Education & Technology Group Inc. also has $1 billion in cash and $1.2 billion in short term investments.

New Oriental Education & Technology Group Inc.’s largest investor in our database is Seth Klarman’s Baupost Group which owns 8 million shares that are worth $162 million.

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This article is originally published at Insider Monkey.