In this piece, we will take a look at the top 10 stock picks of Jonathan Esfandi’s JNE Partners.
JNE Partners is a British hedge fund based out of London, United Kingdom. It is run by Mr. Jonathan Esfandi who has been at the helm of its affairs for two years. When compared to some of his other peers in the financial world, Mr. Esfandi keeps a relatively low profile, and little is known about him except for his time at his current and former firms. The executive has decades of experience in the financial world and prior to becoming the managing partner at JNE Partners, he was a partner at the firm MSD Partners.
MSD Partners was directly responsible for managing the assets of American consumer electronics billionaire Mr. Michael Dell and his family. JNE Partners is a spin-off of MSD Partners, and Mr. Esfandi has occupied the top position at the firm since it was formed in 2019. While it became independent during the previous decade, JNE Partners had previously operated as a subsidiary of MSD Partners, after it was formed in 2009. The executive joined his former firm in 2006 in order to create its office in London. Prior to joining, he had worked at the American private equity firm Lone Star Funds, at which his role required him to work with the debt of troubled European firms. He started the journey at Lone Star in 2003 and would go on to become a Vice President in the three years that he spent at the company. Debt research is his specialty since before joining Lone Star, Mr. Esfandi was a distressed debt researcher at the London-based credit specialist Guy Butler. He graduated from Manchester University with a Bachelor’s degree in European Studies and Modern Languages in 1998.
When compared to the multi-billion dollar hedge funds out there, JNE Partners has a relatively modest portfolio. This was valued at $177 million as the third quarter of last year came to an end, which marked for a 30% growth in value over the previous quarter and 55% growth over Q3 2020. The firm invests in only a handful of firms, which are spread across special purpose acquisition companies (SPACs), industrials, and technology. Its largest investments are in AMERCO (NASDAQ:UHAL), Comcast Corporation (NASDAQ:CMCSA), and Canadian Pacific Railway Limited (NYSE:CP).
Photo by Austin Distel on Unsplash
Our Methodology:
In order to sift out Mr. Esfandi’s favorite stocks, we took a look at JNE Partners’ 13F filings with the Securities and Exchange Commission (SEC) for the third quarter of last year. This enabled us to pick the top companies in the firm’s portfolio, after which we analyzed the top firms by studying their earnings reports, analyst coverage, large investors, investor letters, and overall hedge fund sentiment of 867 funds that are part of Insider Monkey’s Q3 2021 survey.
Top 10 stock picks of Jonathan Esfandi’s JNE Partners
10. Starz Acquisition LLC (NASDAQ:STRZA)
JNE Partners’ Stake Value: $5.3 million
Percentage of JNE Partners’ 13F Portfolio: 3%
Number of Hedge Fund Holders: N/A
Starz Acquisition LLC (NASDAQ:STZA) is a media firm that was acquired by the entertainment giant Lions Gate Entertainment Corp. (NYSE:LGF-A) in 2016, following which the company became a Lions Gate subsidiary. Prior to its acquisition, the company was owned by Liberty Media, who spun it off into a separate public company in 2011. Starz Acquisition LLC (NASDAQ:STZA)’s relationship with Lions Gate started in 2015 when its majority shareholder took a stake in the latter by swapping shares.
Mr. Esfandi’s investment firm had a stake of $5 million in Starz Acquisition LLC (NASDAQ:STZA) as Q3 2021 ended. This was through owning 202,000 shares and it represented 3% of its investment portfolio.
Just like Comcast Corporation (NASDAQ:CMCSA), AMERCO (NASDAQ:UHAL), and Canadian Pacific Railway Limited (NYSE:CP), Starz Acquisition LLC (NASDAQ:STZA) is in the list of Mr. Esfandi and his investment firm’s top stock picks for the third quarter of last year.
9. Waldencast Acquisition Corp. (NASDAQ:WALD)
JNE Partners’ Stake Value: $9.8 million
Percentage of JNE Partners’ 13F Portfolio: 5.52%
Number of Hedge Fund Holders: N/A
Waldencast Acquisition Corp. (NASDAQ:WALD) is s special purpose acquisition company (SPAC) that aims to acquire business operating in the cosmetics and beauty industry. The company intends to create a global beauty and wellness brand by leveraging the innovative opportunities offered by smaller companies in the industry. Waldencast Acquisition Corp. (NASDAQ:WALD) raised more than $1.2 billion in capital this year, and its investor presentation from November 2021 reveals that only its projections for revenue and earnings before interest, taxes, and depreciation (EBITDA) compound annual growth rates (CAGR) were above estimates for its peers. The company announced a $1.2 billion business combination with two beauty brands in November 2021.
JNE Partners’ stake in Waldencast Acquisition Corp. (NASDAQ:WALD) was worth $9.8 million as the third quarter of last year came to an end. This was through owning 1 million shares and it represented 5.52% of the investment firm’s portfolio.
Waldencast Acquisition Corp. (NASDAQ:WALD)’s largest investor after Mr. Esfandi’s firm is Paul Marshall and Ian Wace’s Marshall Wace LLP who owns 971,043 shares worth $9.5 million.
8. Elliott Opportunity II Corp. (NYSE:EOCW)
JNE Partners’ Stake Value: $11 million
Percentage of JNE Partners’ 13F Portfolio: 6.27%
Number of Hedge Fund Holders: N/A
Elliott Opportunity II Corp. (NYSE:EOCW) is another special purpose acquisition company (SPAC). It announced details of its initial public offering (IPO) in June last year, following which the blank check firm managed to raise $609 million in gross proceeds. Elliott Opportunity II Corp. (NYSE:EOCW) intends to combine with a services firm in the technology industry, with a large total addressable market (TAM), strong industry position, and suitable management.
Mr. Esfandi’s JNE Partners owned 1.1 million Elliott Opportunity II Corp. (NYSE:EOCW) shares that were worth $11 million and represented 6.27% of its portfolio in Q3 2021. Japanese investor Masayoshi Son’s SB Management is Elliott Opportunity II Corp. (NYSE:EOCW)’s biggest investor. It has a $48 million stake through owning 4.9 million shares.
7. NovaGold Resources Inc. (NYSE:NG)
JNE Partners’ Stake Value: $13.4 million
Percentage of JNE Partners’ 13F Portfolio: 7.58%
Number of Hedge Fund Holders: 16
NovaGold Resources Inc. (NYSE:NG) is a Canadian gold mining company that operates in the United States. Its primary ownership interests come in the form of a 50% stake in the Donlin Gold mining project in Alaska that covers an eye-popping area of 71,420 acres.
Mr. Esfandi’s hedge fund owned 1.9 million NovaGold Resources Inc. (NYSE:NG) shares during the third quarter of last year. These were worth $13.4 million and represented 7.58% of its portfolio. During the same time period, 16 of the 867 hedge funds part of Insider Monkey’s survey had also bought the mining company’s shares.
6. Orion Biotech Opportunities Corp. (NASDAQ:ORIA)
JNE Partners’ Stake Value: $14.8 million
Percentage of JNE Partners’ 13F Portfolio: 8.37%
Number of Hedge Fund Holders: N/A
Orion Biotech Opportunities Corp. (NASDAQ:ORIA) is a special purpose acquisition company (SPAC) that aims to target and acquire a biotechnology company. The biotechnology sector has been pushed to the forefront of the global spotlight in the wake of the ongoing pandemic which saw an unprecedented push towards vaccine development and research.
JNE Partners owned 1.5 million Orion Biotech Opportunities Corp. (NASDAQ:ORIA) shares worth $14.8 million and 8.37% of its portfolio during Q3 2021. The SPAC’s shares began trading on the NASDAQ exchange in May 2021 after Orion Biotech Opportunities Corp. (NASDAQ:ORIA)’s initial public offering (IPO) closed and netted the company $200 million in gross proceeds. The hedge fund’s stake dropped in Q3 slightly, since it stood at $15 million in the previous quarter.
Canadian Pacific Railway Limited (NYSE:CP), Comcast Corporation (NASDAQ:CMCSA), and AMERCO (NASDAQ:UHAL) are met by the biotechnology SPAC Orion Biotech Opportunities Corp. (NASDAQ:ORIA) in the top favorite stock picks of Jonathan Esfandi and JNE Partners.
5. MSD Acquisition Corp. (NASDAQ:MSDA)
JNE Partners’ Stake Value: $15 million
Percentage of JNE Partners’ 13F Portfolio: 8.46%
Number of Hedge Fund Holders: N/A
MSD Acquisition Corp. (NASDAQ:MSDA) is a special purpose acquisition company created by Gregg Lemkau and John Phelan in February 2021. As opposed to some other SPACs that generally have a specific industry or company in mind as a target, MSD Acquisition Corp. (NASDAQ:MSDA) plans to target ‘high-growth’ sectors such as the technology industry.
Mr. Esfandi’s investment firm owned 1.5 million MSD Acquisition Corp. (NASDAQ:MSDA) shares worth $15 million and comprised 8.46% of its portfolio during Q3 2021. The company’s IPO in March last year saw it raise $575 million in proceeds.
4. Alibaba Group Holding Limited (NYSE:BABA)
JNE Partners’ Stake Value: $16.6 million
Percentage of JNE Partners’ 13F Portfolio: 9.4%
Number of Hedge Fund Holders: 116
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese electronic commerce giant that has also propelled its founder, Mr. Jack Ma, to fame globally. The Chinese company has also diversified its presence to target high growth areas including machine learning and cloud computing.
Mr. Esfandi’s hedge fund held 112,700 Alibaba Group Holding Limited (NYSE:BABA) shares as Q3 2021 ended. This enabled it to hold a $16.6 million stake that made up 9.4% of its portfolio. During the same time period, 115 out of 867 hedge funds surveyed by Insider Monkey held a stake in the company.
Alibaba Group Holding Limited (NYSE:BABA)’s largest investor is Ken Fisher’s Fisher Asset Management who owns 14 million shares worth $2 billion according to Insider Monkey’s research.
Artisan Partners mentioned Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2021 investor letter, stating that:
“We also find Alibaba’s valuation compelling despite the prospect of increased regulation. The share price declined 35% during the quarter. Alibaba is China’s largest e-commerce business and is one of the highest return businesses in the world. The company’s core ecommerce operation dominates China’s retail industry. That business continues growing at a low-teens rate and operates with an incredible 62% profit margin. The company also operates several promising new businesses which have been a drag on the bottom line, though the company overall remains highly profitable and cash flow generative. The market cap today is about $440 billion. The company has large investments in cloud, financial services and other businesses worth an estimated $100 billion, leaving the core operations valued at $340 billion. Core operations over the last 12 months generated about $27 billion of after-tax profits, resulting in a trailing P/E of 12.5X. Alibaba certainly faces increased competition and a marginal increase in regulation. As a result, we expect modest growth in earnings over the next few years. However, a company with Alibaba’s operating and financial strength should trade at a premium, rather than a significantly discounted valuation.”
3. Canadian National Railway Company (NYSE:CNI)
JNE Partners’ Stake Value: $19.9 million
Percentage of JNE Partners’ 13F Portfolio: 11.23%
Number of Hedge Fund Holders: 38
Canadian National Railway Company (NYSE:CNI) is, as the name suggests, a railway company based in Montreal, Canada. It provides freight forwarding, transportation, and logistics services to customers in the United States and Canada.
As the third quarter of last year came to an end, JNE Partners owned 306,300 Canadian National Railway Company (NYSE:CNI) shares which were worth $19.9 million and represented 11.23% of its portfolio. During the same time period, out of 867 hedge funds polled by Insider Monkey, 38 had owned the company’s shares.
Canadian National Railway Company (NYSE:CNI) largest shareholder is Chris Hohn’s TCI Fund Management who owns 55.8 million shares for a whopping $3.6 billion stake.
2. Comcast Corporation (NASDAQ:CMCSA)
JNE Partners’ Stake Value: $31.4 million
Percentage of JNE Partners’ 13F Portfolio: 17.72%
Number of Hedge Fund Holders: 78
Comcast Corporation (NASDAQ:CMCSA) is global media and technology company that provides and operates cable entertainment, internet, security and automation, wireless phone services, and television channels. It is headquartered in Philadelphia, Pennsylvania, United States.
Mr. Esfandi’s JNE Partners held 561,902 Comcast Corporation (NASDAQ:CMCSA) shares during Q3 2021, which were worth $31.4 million and represented 17.72% of its portfolio. During the same time period, 78 hedge funds out of the 867 part of Insider Monkey’s research owned the company’s shares.
Jean-Marie Eveillard’s First Eagle Investment Management is Comcast Corporation (NASDAQ:CMCSA)’s largest investor via owning 29 million shares that are worth $1.6 billion.
ClearBridge Investments mentioned Comcast Corporation (NASDAQ:CMCSA) in its Q2 2021 investor letter. It outlined that:
“We funded the shift primarily with trims in Comcast following big gains in this name. Comcast is a long-term holding that has been and remains a core holding. During the quarter, however, we took gains and resized the positions to reflect their current risk-reward post strong increases in the stocks.
Comcast, like Blackstone, has been a meaningful long-term holding whose stock performance has at times lagged its robust fundamental performance. Over the last nine months the stock price caught up some with the fundamentals and looked like it had more room to run. Our thesis on the name evolved, however, following the May 17 announcement that competitor Discovery was merging its operations with Time Warner. This deal positions the new company as a credible competitor to Netflix, Amazon Prime, Hulu and Disney, and results in Comcast being left without the proverbial dance partner in the evolving pay TV/DTC landscape. While we continue to believe Comcast’s cable systems business is well-positioned and that NBCUniversal remains valuable, the competitive dynamic for NBCUniversal has stiffened. Our reduced position size reflects both our continued enthusiasm for many parts of the franchise and emerging concerns given the evolving pay TV/DTC landscape.”
1. AMERCO (NASDAQ:UHAL)
JNE Partners’ Stake Value: $32.8 million
Percentage of JNE Partners’ 13F Portfolio: 18.5%
Number of Hedge Fund Holders: 25
AMERCO (NASDAQ:UHAL) is a storage and logistics provider that serves corporate and non-corporate customers in the United States and Canada. The company also operates an online marketplace that allows movers to connect with customers.
JNE Partners owned 50,826 AMERCO (NASDAQ:UHAL) shares at the end of the third quarter of last year. These were worth $32.8 million and represented 18.5% of its portfolio. A Q3 2021 Insider Monkey survey of 867 hedge funds revealed that 25 owned a stake in the company.
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Disclosure: None. Top 10 stock picks of Jonathan Esfandi’s JNE Partners is originally published on Insider Monkey.
