In this article, we will be taking a look at the top 10 stock picks of Mika Toikka’s AlphaCrest Capital.
Established in 2013 by Mika Toikka, AlphaCrest Capital is headquartered in New York, with a $1.78 billion portfolio. There is very little public information available about Mika Toikka, but he had a successful career before establishing the hedge fund, and worked as Vice President of The Goldman Sachs Group, Inc. (NYSE:GS) before becoming the Managing Director of Credit Suisse. He then left this position to establish AlphaCrest Capital.
The hedge fund’s portfolio is dominated by the tech and services industries, and most of the top 10 stock picks of Mika Toikka’s AlphaCrest Capital are companies that you will definitely be familiar with. Some popular holdings of the fund include Pfizer Inc. (NYSE:PFE), one of the biggest pharmaceutical companies in the world. Pfizer Inc. (NYSE:PFE) was one of the pharmaceutical companies to come up with a successful vaccine for Covid-19. AlphaCrest Capital’s position in Pfizer Inc. (NYSE:PFE) is currently worth $11.147 million.
Meta Platforms, Inc. (NASDAQ:META) is also part of AlphaCrest’s Q1 portfolio, though AlphaCrest did decrease its Meta Platforms, Inc. (NASDAQ:META) stake by 46% in the latest quarter. In addition to that, Mika Toikka’s AlphaCrest Capital holds a significant position in Netflix, Inc. (NASDAQ:NFLX), the American streaming and original production giant.
Methodology
We used AlphaCrest Capital’s Q1 portfolio and picked the top 10 stocks for this analysis.
Top Stock Picks of Mika Toikka’s AlphaCrest Capital
10. The Bank of Nova Scotia (NYSE:BNS)
AlphaCrest Capital’s Stake Value: $11.517 million
Number of Hedge Fund Holders: 18
The Bank of Nova Scotia (NYSE:BNS) is a multinational Canadian bank, and the third biggest Canadian bank by both market capitalization and deposits. Even though The Bank of Nova Scotia (NYSE:BNS) was founded in Nova Scotia, it relocated its headquarters to Toronto in 1900. The Bank of Nova Scotia (NYSE:BNS) recently repurchased 13.9 million of its own shares.
Like Pfizer Inc. (NYSE:PFE), Meta Platforms, Inc. (NASDAQ:META), and Netflix, Inc. (NASDAQ:NFLX), The Bank of Nova Scotia (NYSE:BNS) is on the radar of elite investors.
9. QUALCOMM Incorporated (NASDAQ:QCOM)
AlphaCrest Capital’s Stake Value: $11.799 million
Number of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ:QCOM) is a wireless technology and innovation company, which aims to intelligently connect everyone in the world. QUALCOMM Incorporated (NASDAQ:QCOM) provides semiconductor components for cell phones, laptops, vehicles, and watches, among other devices. QUALCOMM Incorporated (NASDAQ:QCOM) recently announced the Qualcomm AI Stack, which aims to allow developers to use AI created for one interface such as cellphones and easily replicate it on another interface such as a laptop.
8. The Charles Schwab Corporation (NYSE:SCHW)
AlphaCrest Capital’s Stake Value: $12.250 million
Number of Hedge Fund Holders: 78
The Charles Schwab Corporation (NYSE:SCHW) is a major American financial services company, and one of the top 10 stock picks of Mika Toikka’s AlphaCrest Capital, making up 0.68% of the total portfolio. The hedge fund increased its hold on the company by 315% in Q1. Recently, The Charles Schwab Corporation (NYSE:SCHW) was made to pay $187 million in order to settle SEC charges due to Schwab Intelligent Portfolios charging hidden fees from 2015 to 2018.
The Charles Schwab Corporation (NYSE:SCHW) was mentioned by Baron Funds in its Q1 2022 investor letter. Here is what it said:
“Outperformance of the Fund’s investments in Communication Services, Financials, and Industrials and lower exposure to the lagging Consumer Discretionary sector added the most value. Within Financials, higher exposure to this outperforming sector and gains from online brokerage firm The Charles Schwab Corp (NYSE:SCHW) bolstered relative results. Schwab’s shares gained because of the positive impact higher interest rates will have on its future earnings.”
7. Intuit Inc. (NASDAQ:INTU)
AlphaCrest Capital’s Stake Value: $12.356 million
Number of Hedge Fund Holders: 82
Intuit Inc. (NASDAQ:INTU) is an American company which specializes in financial software. Recently, Carnegie Capital Asset Management LLC reduced its holdings in Intuit Inc. (NASDAQ:INTU) by 11.9%. On the other hand, it became part of one of the top 10 stock picks of Mika Toikka’s AlphaCrest Capital after the hedge fund increased its stake in Intuit Inc. (NASDAQ:INTU) by 224%.
In its Q1 2022 invest letter, Baron Funds mentioned Intuit Inc. (NASDAQ:INTU). Here is what it said:
“At the company-specific level, with 59% of our holdings posting double-digit declines during the quarter, we had no chance to hold up against the Index that was down less than 5%. The good news is that for the most part, this drawdown did not result in a permanent loss of capital and in many cases, we believe fundamentals have remained robust or improved even though stock prices declined. One example is Intuit (NASDAQ:INTU), the leading provider of accounting software, and our second largest detractor in the quarter. The stock lost 25% of its value (or over $45 billion) due to a miss in quarterly revenues, which was driven by a slower start to the tax season, leading the company to miss consensus estimates for consumer revenues by about $190 million. The slower start to the tax season is of course insignificant to the intrinsic value of the business, as everyone knows there are only two certainties in life and one of them is – TAXES! And so, naturally, Intuit reaffirmed its annual projections. Moreover, results in other segments were ahead of expectations. CEO Sasan Goodarzi explained the outperformance during its quarterly conference call by saying:
‘We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, an acceleration to online and omni-channel capabilities, and digital money offerings. This, combined with the team’s excellence and execution is contributing to the strength of our performance.’
More specifically, Intuit is gaining market share in tax filings (“we are on track to gain share overall again this season”), continues expanding its QuickBooks online offering, which was up 35% year-over-year, and is seeing strong synergies from its Credit Karma acquisition, driven by Intuit’s Lightbox technology, which allows better personalization of offerings to customers (for example, it “doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma”). The bottom line is that our estimates of Intuit’s intrinsic value were up while the stock price was down and therefore our future expected return has increased.”
6. The Bank of New York Mellon Corporation (NYSE:BK)
AlphaCrest Capital’s Stake Value: $13.205 million
Number of Hedge Fund Holders: 54
The Bank of New York Mellon Corporation (NYSE:BK) was formed through the merger of the Mellon Financial Corporation and The Bank of New York in 2007. In Q1 2022, 54 hedge funds were bullish on the stock, with combined stakes of $4.5 billion, up from 49 funds in the earlier quarter, holding stakes in the company valued at $5.17 billion.
In addition to Pfizer Inc. (NYSE:PFE), Meta Platforms, Inc. (NASDAQ:META), and Netflix, Inc. (NASDAQ:NFLX), The Bank of New York Mellon Corporation (NYSE:BK) is one of the top stocks in the portfolio of Mika Toikka’s AlphaCrest Capital.
Ariel Investments published its Q4 2021 letter, where The Bank of New York Mellon Corporation (NYSE:BK) was mentioned. Here is what it said:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
5. Morgan Stanley (NYSE:MS)
AlphaCrest Capital’s Stake Value: $13.224 million
Number of Hedge Fund Holders: 61
Morgan Stanley (NYSE:MS) is one of those companies which needs no introduction, as the name is synonymous with prestige banking. Currently, Morgan Stanley (NYSE:MS) has been in the news regarding its attempt to purchase American Financial Systems.
In its Q3 2021 investor letter, Artisan Partners discussed Morgan Stanley (NYSE:MS). Here is what it said:
“Morgan Stanley, a leading global financial services company, came into the portfolio in late 2020 as a result of its purchase of E*TRADE. The acquisition is a great fit for Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked the business by adding less volatile fee streams to complement its leading positions in cyclical businesses such as advisory, equities and FICC (fixed income, currencies and commodities). We believe the company will prove its resiliency and value over the long term.”
4. The Home Depot, Inc. (NYSE:HD)
AlphaCrest Capital’s Stake Value: $14.293 million
Number of Hedge Fund Holders: 75
Another household name among the top stock picks of Mika Toikka’s AlphaCrest Capital is The Home Depot, Inc. (NYSE:HD). The largest home improvement retailer in the United States, The Home Depot, Inc. (NYSE:HD) has close to half a million employees and more than 2,300 stores.
Distillate Capital Partners LLC mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what it said:
“Taking advantage of valuation opportunities created by performance differences, the U.S. FSV strategy increased its weight in consumer discretionary by around 2.5%. Home Depot (NYSE:HD) was the largest position that was added to after falling by 27% in price in Q1.”
3. CVS Health Corporation (NYSE:CVS)
AlphaCrest Capital’s Stake Value: $15.852 million
Number of Hedge Fund Holders: 72
CVS Health Corporation (NYSE:CVS) is one of the biggest healthcare companies in the United States, with 2021 sales of more than $292.1 billion, and it one of the top stock picks of Mika Toikka’s AlphaCrest Capital. Even during the pandemic, CVS Health Corporation (NYSE:CVS) continued to grow its business.
CVS Health Corporation (NYSE:CVS) was mentioned in Madison Fund’s Q4 2021 investor letter. Here is what it said:
“This quarter we are highlighting CVS Health (CVS) as a relative yield example in the Health Care sector. CVS is a vertically integrated health care focused company with leading pharmacy, pharmacy benefits manager (PBM) and managed care businesses. It has more than 10,000 retail pharmacies, along with strong franchises that were acquired in recent years including Caremark, which is the largest PBM in the US that processes over 2 billion adjusted claims annually, and Aetna with 24 million health insurance members. We believe its retail pharmacy network, along with its size and scope in the PBM and managed care businesses provide sustainable competitive advantages.
Our thesis on CVS is that its vertically integrated business model will successfully reduce health care costs for its clients while also accelerating long-term earnings growth. CVS management believes that when retail customers use both CVS pharmacy benefits and medical insurance, their medical costs decline 3-6% over a three-year period by reducing hospitalizations and emergency room visits. This cost savings should help retain and grow clients while lowering health care costs.”
2. Verizon Communications Inc. (NYSE:VZ)
AlphaCrest Capital’s Stake Value: $17.246 million
Number of Hedge Fund Holders: 69
The largest wireless carrier in the United States, Verizon Communications Inc. (NYSE:VZ), generated a revenue of $133.6 billion in 2021. The company is one of the leading 5G providers in the world.
ClearBridge Investments published its Q4 2021 investor letter, which mentioned Verizon Communications Inc. (NYSE:VZ). Here is what it said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
1. Lowe’s Companies, Inc. (NYSE:LOW)
AlphaCrest Capital’s Stake Value: $18.686 million
Number of Hedge Fund Holders: 65
Lowe’s Companies, Inc. (NYSE:LOW) is a major home improvement retail company. Lowe’s Companies, Inc. (NYSE:LOW) currently has more than 2,000 locations across the United States and Canada.
Perishing Square Capital Management published its Q4 2021 investor letter where Lowe’s Companies, Inc. (NYSE:LOW) was mentioned. Here is what it said:
“Lowe’s is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing marketPositioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.Lowe’s continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
You can also take a look at Jim Cramer Recommends These 10 Stocks For Recession and 10 Best Tech Stocks to Buy According to Billionaire Ken Griffin.
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Disclosure. None. Top 10 Stock Picks of Mika Toikka’s AlphaCrest Capital is originally published on Insider Monkey.
