In this article, we discuss the top 10 stock picks of Cannell Capital.
In 1992, J. Carlo Cannell established Cannell Capital. Previously, he worked for Dakin Securities, an investment firm in San Francisco, California. Cannell attended New College in Oxford after graduating from Princeton and studied commerce at Templeton College. He has over 19 years of expertise in analyzing technology firms and 16 years of experience investing in small-caps. Cannell, a third-generation investment manager, serves as the managing member of the Wyoming-based Cannell Capital.
Cannell claims that his observations of the natural forces at work in the markets and, to some extent, the rest of the world affect how he approaches investment. He investigates the patterns and movements rather than making predictions about which businesses will prosper to gain a thorough grasp of what is occurring right now, where the market is going, and what goods or services may become increasingly popular in the near future.
Cannell prefers to invest in small-cap businesses. He stated:
“Everyone likes to buy stuff that’s exciting. I’m into boring. And if you look at the companies that have generated the best returns – I went over business’ over 60 years of data. What are the real titans? Apple computers is the only profitable and exciting company. You know what the profitable companies are? Resin companies. Insurance. If you run an insurance company well, it’s a great business. I developed this crazy infatuation with mini-storage business’. They’re good business’! You put ‘em in Henderson Nevada, if people don’t pay, you just cut the lock… buy boring, good cash flow generative business’.”
Cannell Capital is an employee-owned investor in the public equities markets. The hedge fund invests in several sectors, including information technology, energy, industrials, consumer discretionary, finance, healthcare, communications, and real estate. In the first quarter of 2022, the 13F portfolio of the hedge fund reported that it had $661.56 million invested at the end of March in 64 stocks. Some of the most significant stocks in Cannell Capital’s portfolio included Yandex NV (NASDAQ:YNDX) and Pinterest, Inc. (NYSE:PINS).
J. Carlo Cannell of Cannell Capital
Cannell Capital added Yandex NV (NASDAQ:YNDX) to its portfolio in the first quarter by buying 341,104 shares. Another stock added in the first quarter to the portfolio was Pinterest, Inc. (NYSE:PINS), where Cannell Capital purchased 605,815 shares. On July 5, Barclays analyst Ross Sandler maintained an Equal Weight rating on Pinterest, Inc. (NYSE:PINS) while lowering his price objective to $20 from $24. Given the reduction in investment and conversions throughout the internet infrastructure in Q2, a growing trend from new rivals such as TikTok and Apple, and the obvious harsh comparisons, the analyst predicted a perfect storm.
Our Methodology
We have selected the top 10 stock picks of Cannell Capital for our list below. The stocks have been selected from Cannell Capital’s first-quarter portfolio.
Top Stock Picks of Cannell Capital
10. Arlo Technologies, Inc. (NYSE:ARLO)
Cannell Capital’s Stake Value: $24,355,000
Percentage of Cannell Capital’s Portfolio: 3.68%
Number of Hedge Fund Holders: 25
Arlo Technologies, Inc. (NYSE:ARLO) provides a cloud-based platform across Asia Pacific, Europe, the Middle East, and the Americas, together with its subsidiaries. As of January 2022, Arlo Technologies, Inc. (NYSE:ARLO) claimed that it had supplied 21.6 million devices, had 5.82 million registered accounts, and 877,000 paying accounts.
In Q1 2022, Cannell Capital held 2.75 million shares of Arlo Technologies, Inc. (NYSE:ARLO), worth $24.36 million, representing 3.68% of the total 13F securities. The hedge fund increased its stake in Arlo Technologies, Inc. (NYSE:ARLO) by 12% in the first quarter. In addition, Cannell Capital is the biggest stakeholder of the company.
According to Insider Monkey’s Q1 data, 25 hedge funds were bullish on Arlo Technologies, Inc. (NYSE:ARLO), compared to 19 funds in the prior quarter. The total stakes owned in Q1 2022 amounted to $81.92 million.
Just like Yandex NV (NASDAQ:YNDX) and Pinterest, Inc. (NYSE:PINS), Arlo Technologies, Inc. (NYSE:ARLO) is one of the stocks on the radar of Cannell Capital.
9. Select Energy Services, Inc. (NYSE:WTTR)
Cannell Capital’s Stake Value: $25,271,000
Percentage of Cannell Capital’s Portfolio: 3.81%
Number of Hedge Fund Holders: 21
Select Energy Services, Inc. (NYSE:WTTR), a provider of oilfield services, specializes in water management and chemical services to the onshore oil and gas company in the United States. Shares of Select Energy Services, Inc. (NYSE:WTTR) rallied 7.86% in the last 12 months as of July 6, resulting in a $690.57 million market capitalization.
At the end of March, a total of 21 hedge funds tracked by Insider Monkey held long positions in Select Energy Services, Inc. (NYSE:WTTR). By comparison, 11 hedge funds held shares in Select Energy Services, Inc. (NYSE:WTTR) a quarter ago.
Cannell Capital reported owning shares worth $25.27 million in Select Energy Services, Inc. (NYSE:WTTR) at the end of March, making it the company’s most significant stakeholder. Brightlight Capital followed it with a $19.70 million position.
8. Taboola.com Ltd. (NASDAQ:TBLA)
Cannell Capital’s Stake Value: $25,709,000
Percentage of Cannell Capital’s Portfolio: 3.88%
Number of Hedge Fund Holders: 23
Taboola.com Ltd. (NASDAQ:TBLA) operates an artificial intelligence-based algorithmic engine platform in Israel, France, the United Kingdom, Germany, the United States, and other countries with the help of its subsidiaries. Fund managers reduced their Taboola.com Ltd. (NASDAQ:TBLA) holdings in the first quarter. Insider Monkey’s data shows that 23 elite hedge funds were bullish on Taboola.com Ltd. (NASDAQ:TBLA) in Q1 2022, down from 25 funds a quarter earlier.
On May 16, Cowen analyst John Blackledge maintained an Outperform rating on Taboola.com Ltd. (NASDAQ:TBLA), while trimming his price target to $9 from $13. The analyst claimed that Taboola.com Ltd. (NASDAQ:TBLA)’s Q1 results were inconsistent and that their Q2 prediction was too low, mainly due to macroeconomic concerns and the situation in Ukraine.
Cannell Capital added Taboola.com Ltd. (NASDAQ:TBLA) to its portfolio during the second quarter of 2021, when the hedge fund bought 1.23 million shares worth about $12.68 million. Since then, the hedge fund has been purchasing additional shares in Taboola.com Ltd. (NASDAQ:TBLA) every quarter. As a result, Cannell Capital, with approximately 4.98 million shares worth $25.71 million, is the largest shareholder of Taboola.com Ltd. (NASDAQ:TBLA) as of Q1 2022.
7. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH)
Cannell Capital’s Stake Value: $27,687,000
Percentage of Cannell Capital’s Portfolio: 4.18%
Number of Hedge Fund Holders: 19
Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) and its subsidiaries are outdoor sports equipment retailers in the United States. On April 27, 2022, Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) had 125 operating stores. According to Insider Monkey’s database, Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) was found in the public stock portfolios of 19 hedge funds at the end of March 2022, compared to 28 funds in the earlier quarter.
Craig-Hallum analyst Ryan Sigdahl reiterated a Buy rating on Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) on June 1 and slashed his price objective to $15 from $20. Even though the company’s performance was slightly below sell-side consensus, it offered positive updates on its new initiatives, outperformed expectations in the first quarter, and provided better-than-expected Q2 guidance.
J. Carlo Cannell’s Cannell Capital was the most significant stakeholder of Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) as of March this year, increasing its stake in the company by 62% in Q1, holding 2.59 million shares worth almost $27.69 million.
Here is what Merion Road Capital Management had to say about Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) in its Q1 2022 investor letter:
“During the quarter I added to Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH). SPWH is an outdoor sporting goods retailer with about half of their revenue coming from hunting & shooting products (guns, ammo). I initiated our position back in December following their failed merger with Great Outdoors on the grounds of anti‐trust concerns. It appeared that the stock was being sold off indiscriminately by merger arbitrageurs and valuation seemed attractive, particularly after adjusting for the receipt of a $55mm termination payment and unwind of excess inventory.….” (Click here to see the full text)
6. Viad Corp (NYSE:VVI)
Cannell Capital’s Stake Value: $27,709,000
Percentage of Cannell Capital’s Portfolio: 4.18%
Number of Hedge Fund Holders: 13
Viad Corp (NYSE:VVI) is a supplier of integrated leisure travel, live events, and advertising in the US, Canada, the UK, continental Europe, the United Arab Emirates, and Iceland. Oppenheimer analyst Tyler Batory commenced coverage of Viad Corp (NYSE:VVI) on June 13, assigning an Outperform rating and a $42 price target. He believed that the unmet demand for leisure travel, together with the inauguration of many new attractions and a new hotel, may fuel the expansion of the tourism industry.
Cannell Capital’s investments in Viad Corp (NYSE:VVI) have fluctuated during the previous quarters, which may have contributed to the dramatic reversal of fortune. The hedge fund initiated a stake in Viad Corp (NYSE:VVI) in Q4 2018. However, it sold all the company shares in the second quarter of 2019. Again, it purchased 303,603 shares of the company in Q1 2020. In Q1 2022, the hedge fund owned 777,467 shares of Viad Corp (NYSE:VVI) worth over $27.71 million, representing 4.18% of its portfolio.
Viad Corp (NYSE:VVI) has recently experienced an increase in hedge fund interest. Viad Corp (NYSE:VVI) was in 13 hedge funds portfolios at the end of the first quarter of 2022, compared to 12 hedge funds in our database with Viad Corp (NYSE:VVI) at the end of Q4 2021.
In addition to Yandex NV (NASDAQ:YNDX) and Pinterest, Inc. (NYSE:PINS), Viad Corp (NYSE:VVI) is a notable stock in Cannell Capital’s Q1 portfolio.
5. Build-A-Bear Workshop, Inc. (NYSE:BBW)
Cannell Capital’s Stake Value: $30,532,000
Percentage of Cannell Capital’s Portfolio: 4.61%
Number of Hedge Fund Holders: 19
Build-A-Bear Workshop, Inc. (NYSE:BBW) is a multi-channel retailer of stuffed toys and related items. As of January 29, 2022, Build-A-Bear Workshop, Inc. (NYSE:BBW) has 346 stores in operation, including 305 in the US and Canada, 41 in the UK and Ireland, and 72 franchised locations throughout other countries.
Build-A-Bear Workshop, Inc. (NYSE:BBW) was Cannell Capital’s fifth-largest holding at the end of Q1 2022, after increasing its position by 30%. The hedge fund first acquired Build-A-Bear Workshop, Inc. (NYSE:BBW) shares in the fourth quarter of 2012, paying an average price of $3.82 per share. Cannell Capital was the leading shareholder of Build-A-Bear Workshop, Inc. (NYSE:BBW), with 1.67 million shares worth over $30.53 million.
The number of hedge funds tracked by Insider Monkey having stakes in Build-A-Bear Workshop, Inc. (NYSE:BBW) grew to 19 in Q1 from 13 in the preceding quarter. As a result, the hedge funds’ collective net ownership increased by more than $13.77 million to $66.18 million.
4. The ODP Corporation (NASDAQ:ODP)
Cannell Capital’s Stake Value: $31,340,000
Percentage of Cannell Capital’s Portfolio: 4.73%
Number of Hedge Fund Holders: 24
The ODP Corporation (NASDAQ:ODP) provides business services, products, and digital workplace technology solutions for small, medium, and large organizations. The corporation runs 1,400 retail locations, e-commerce platforms, and a business-to-business sales team.
Hedge fund sentiment around The ODP Corporation (NASDAQ:ODP) waned in Q1 2022, with 24 long hedge fund positions. In contrast, 28 funds had a positive stance on the stock in the previous quarter. HG Vora Capital Management held the largest stake in The ODP Corporation (NASDAQ:ODP), with a position worth $229.15 million at the end of March. Greenlight Capital followed it with a $64.40 million position.
Regulatory filings revealed that Cannell Capital owned 683,827 shares of The ODP Corporation (NASDAQ:ODP) at the end of the first quarter of 2022, valued at $31.34 million, representing 4.73% of the portfolio. The ODP Corporation (NASDAQ:ODP) has been in Cannell Capital’s portfolio since the second quarter of 2021.
3. Heritage-Crystal Clean, Inc (NASDAQ:HCCI)
Cannell Capital’s Stake Value: $33,246,000
Percentage of Cannell Capital’s Portfolio: 5.02%
Number of Hedge Fund Holders: 15
Heritage-Crystal Clean, Inc (NASDAQ:HCCI) provides used oil collection, hazardous and non-hazardous waste disposal, and parts cleaning services to small and mid-sized clients in the industrial and auto maintenance sectors in the US and Canada through its subsidiary, Heritage-Crystal Clean, LLC.
On May 16, Barrington analyst Kevin Steinke increased his price objective on Heritage-Crystal Clean, Inc (NASDAQ:HCCI) to $40 from $39 and reiterated an Outperform rating on the stock. According to the analyst, Q1 results were above expectations, and the business also upped its predictions.
In Q1 2022, investors were enthusiastic about Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), and 15 hedge funds owned positions worth $105.18 million in the company, compared to 14 funds with stakes valued at nearly $105.45 million a quarter earlier.
Insider monkey data shows that Cannell Capital owned 1.12 million shares of Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) at the end of Q1 2022, worth more than $33.25 million, representing 5.02% of the portfolio. Cannell Capital is Heritage-Crystal Clean, Inc. (NASDAQ:HCCI)’s most significant stakeholder.
2. Franchise Group, Inc. (NASDAQ:FRG)
Cannell Capital’s Stake Value: $33,507,000
Percentage of Cannell Capital’s Portfolio: 5.06%
Number of Hedge Fund Holders: 21
Franchise Group, Inc. (NASDAQ:FRG) owns and runs companies open to franchise opportunities. Its six operational sectors are Vitamin Shoppe, Pet Supplies Plus, Badcock, American Freight, Buddy’s, and Sylvan. Securities filings show that Cannell Capital owned 808,762 shares of Franchise Group, Inc. (NASDAQ:FRG) at the end of March 2022, worth $33.51 million, representing 5.06% of the portfolio. In addition, the hedge fund boosted its stake in the company by 32%.
On July 5, Baird analyst Mark Altschwager reiterated an Outperform rating on the shares of Franchise Group, Inc. (NASDAQ:FRG) while lowering her price objective to $42 from $53. The expert noted that negotiations between Kohl’s Corporation (NYSE:KSS) and the winning bidder, Franchise Group, Inc. (NASDAQ:FRG), fell apart. He also decreased his projections and price goal due to the buyout being off the table and a worsening retail environment.
21 of the 912 hedge funds had positions in Franchise Group, Inc. (NASDAQ:FRG) as of the first quarter of 2022, worth $180 million, compared to the same number of funds in the preceding quarter holding stakes in Franchise Group, Inc. (NASDAQ:FRG) worth $215.60 million.
1. North American Construction Group Ltd. (NYSE:NOA)
Cannell Capital’s Stake Value: $37,397,000
Percentage of Cannell Capital’s Portfolio: 5.65%
Number of Hedge Fund Holders: 10
North American Construction Group Ltd. (NYSE:NOA) provides heavy construction, mining, and equipment maintenance services in Australia, the US, and Canada. The business ran a fleet of heavy equipment consisting of 632 units as of December 31, 2021. North American Construction Group Ltd. (NYSE:NOA) is the biggest holding in Cannell Capital’s portfolio.
At the end of March, a total of 10 hedge funds tracked by Insider Monkey held long positions in North American Construction Group Ltd. (NYSE:NOA), an increase of 2 hedge funds from the fourth quarter of 2021. In addition, in April, North American Construction Group Ltd. (NYSE:NOA) announced a quarterly dividend of C$0.08 per share. The company has paid dividends every year since 2014.
According to Insider Monkey’s hedge fund database, Cannell Capital held the most prominent position in North American Construction Group Ltd. (NYSE:NOA). Cannell Capital had a $37.40 million stake in the company. Holding an $11.16 million position in North American Construction Group Ltd. (NYSE:NOA), Renaissance Technologies is the second largest shareholder.
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Disclosure: None. Top 10 Stock Picks of Cannell Capital is originally published on Insider Monkey.
