In this article, we discuss the 10 top stock picks of Gavin Abrams’ Abrams Bison Investments.
Based out of Bethesda, Abrams Bison Investment is a hedge fund managed by Gavin Abrams with a portfolio value of about $884 million as of the end of the second quarter. Founded by Gavin Abrams in 1999, the hedge fund commenced operations in early 2000. Abrams has made a name for himself in the industry by employing value focused long-term investment strategy. This involves a careful selection of companies that are currently trading well below their actual value.
Gavin Abrams completed his BA in Economics from Harvard University in 1994. He then went to work as an analyst at ESL Investments before starting Abrams Bison Investments in early 2000. Abrams Bison Investments’s portfolio is diversified across 6 sectors. In 2022, Abrams Bison Investments hedge fund focused more on information and technology, finance, healthcare, and energy stocks.
The majority of the companies in the fund’s portfolio are large-cap stocks including some big names like HCA Healthcare, Inc. (NYSE:HCA) and Pioneer Natural Resources Company (NYSE:PXD).
Photo by Adam Nowakowski on Unsplash
Our Methodology
The companies listed below were picked from the investment portfolio of Abrams Bison Investments as of the end of the second quarter of 2022. These are the top 10 picks of the hedge fund.
Stock Picks of Gavin Abrams’ Abrams Bison Investments
10. SelectQuote, Inc. (NYSE:SLQT)
Stake Value in Abrams Bison Investments’s 13F Portfolio: $32.01 million
Percentage of Abrams Bison Investments portfolio: 3.62%
Number of Hedge Funds: 9
Headquartered in Kansas, SelectQuote, Inc. (NYSE:SLQT) sells a range of insurance products and healthcare services in the USA. The company operates through three segments: Senior, Life, and Auto & Home.
Latest data shows that Abrams Bison Investments owned 12.91 million shares in SelectQuote, Inc. (NYSE:SLQT) at the end of the second quarter of 2022 worth over $32.01 million, representing 3.62% of the portfolio, a 0.57% increase from the previous quarter.
With the newly amended credit agreement in August 2022 and increased earnings from other sectors of the business, SelectQuote, Inc. (NYSE:SLQT) is on a growth trajectory. Ben Hendrix, an analyst with RBC Capital, maintained a Sector Perform rating on SelectQuote, Inc. (NYSE:SLQT) in August 2022 and lowered the firm’s price target from $3 to $2.
At the end of the second quarter of 2022, 9 hedge funds in the database of Insider Monkey held stakes worth $87 million in SelectQuote, Inc. (NYSE:SLQT). Among the hedge funds being tracked by Insider Monkey, Kynam Capital Management is a leading shareholder in SelectQuote, Inc. (NYSE:SLQT), with 17.67 million shares worth more than $43.8 million.
Like HCA Healthcare, Inc. (NYSE:HCA), Pioneer Natural Resources Company (NYSE:PXD), and TD SYNNEX Corporation (NYSE:SNX), SelectQuote, Inc. (NYSE:SLQT) is one of the best stocks to buy according to Gavin Abrams’ Abrams Bison Investments
9. RenaissanceRe Holdings Ltd. (NYSE:RNR)
Stake Value in Abrams Bison Investments’s 13F Portfolio: $42.68 million
Percentage of Abrams Bison Investments portfolio: 4.82%
Number of Hedge Funds: 21
Founded in 1993, RenaissanceRe Holdings Ltd. (NYSE:RNR) operates in the insurance industry providing reinsurance and insurance products in the US.
In line with the company’s expansion strategy, the management is investing money in expanding the Casualty & Specialty division and investing capital in its highly profitable third-party management services. RenaissanceRe Holdings Ltd. (NYSE:RNR) currently has a market cap of $6.04 billion. In July 2022, the company announced its Q2 results reporting revenue of $1.86 billion, beating market estimates by $133.72 million. The normalized EPS reported was $5.51, beating the market estimates by $0.44 dollars.
In July 2022, Elyse Greenspan, an analyst at Wells Fargo, maintained an Overweight rating on the shares while lowering the firm’s price target from $185 to $169.
At the end of Q2 2022, 21 hedge funds in Insider Monkey’s database held stakes in RenaissanceRe Holdings Ltd. (NYSE:RNR). These stakes hold a consolidated value of roughly 475.39 million. Among these hedge funds, Polar Capital was the company’s largest shareholder, with shares worth over $131.74 million.
Longleaf Partners Fund mentioned RenaissanceRe Holdings Ltd. (NYSE:RNR) in its Q4 2021 investor letter. Here is what the firm has to say:
RenaissanceRe (11%, 0.54%; 22%, 0.99%) the Bermuda-domiciled reinsurance company and a new position in 2021, was a top contributor in the fourth quarter. We know the reinsurance industry well, having invested in the sector for multiple decades, and we were thrilled to have the opportunity to invest in the business at a discount. RenRe has a reputation as a leading Catastrophe risk reinsurance underwriter – although the business mix has diversified over time into third party capital management, casualty and other property risk. RenRe traded below 10x earnings power and around 1x tangible book value in the third quarter as catastrophe headlines punished the entire industry, giving us the opportunity to invest. Management also took advantage of the temporary price discount by buying back 10% of outstanding shares, while the CEO, CFO and several other senior executives invested over $4 million buying shares personally. The share price appreciated in the fourth quarter as the company announced an excess capital buffer of $1 billion, even after third quarter catastrophe hits, and likely continued share repurchases. RenRe is a leader in insurance risk modeling and portfolio construction, and best in class data gathering and analytics are in the company DNA. In the face of significant volatility and disruption for the industry in the form of technology innovation, capital access innovation and climate change risks, RenRe’s competitive advantages in pricing risk and in putting together a sound global portfolio of risk should be well placed to add excess return.
8. Concentrix Corporation (NASDAQ:CNXC)
Stake Value in Abrams Bison Investments’s 13F Portfolio: $50.30 million
Percentage of Abrams Bison Investments portfolio: 5.68%
Number of Hedge Funds: 21
Concentrix Corporation (NASDAQ:CNXC), operating from California, provides technology-integrated customer experience (CX) solutions globally.
The company released its third-quarter results in September, missing estimates largely due to rising interest rates. In Q3 results, the company reported $1.58 billion in revenue and normalized EPS of $2.95.
In October, Barrington analyst Vincent Colicchio lowered the firm’s price target on Concentrix to $174 from $183 and kept an Outperform rating on the shares.
Overall, the company remained a popular stock among hedge funds. At the end of the second quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $141.36 million in Concentrix Corporation (NASDAQ:CNXC). As of September 16, Abrams Bison Investments owned 370.90 million shares in Concentrix Corporation (NASDAQ:CNXC). The hedge fund’s total stake in the company stood at $50.30 million, which accounted for 5.68% of its 13F portfolio.
7. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Stake Value in Abrams Bison Investments’s 13F Portfolio: $53.14 million
Percentage of Abrams Bison Investments portfolio: 6.0%
Number of Hedge Funds: 19
Headquartered in Haifa, Israel ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is a cargo company that provides container shipping and related services.
In Q2 2022, Abrams Bison Investments had stakes worth over $53.14 million in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM). The company represented 6% of the hedge fund’s 13F portfolio.
In August 2022, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) signed a 10-year agreement valued at more than $10 billion with Shell to deploy 10 liquefied natural gas-fueled vessels on its containers in Asia.
Due to rapid increases in freight rates, analysts are bullish on the stock. Patrick Creuset, an analyst at Goldman Sachs, kept a Neutral rating on the company shares and lowered the price target from $60 to $30.
When looking at the institutional investors followed by Insider Monkey at the end of Q2, Arrowstreet Capital holds the biggest position in Concentrix Corporation (NASDAQ:CNXC) with stakes worth $177.98 million. At the end of the second quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $478.77 million in Concentrix Corporation (NASDAQ:CNXC).
6. American Financial Group, Inc. (NYSE:AFG)
Stake Value in Abrams Bison Investments’s 13F Portfolio: $72.87 million
Percentage of Abrams Bison Investments portfolio: 8.23%
Number of Hedge Funds: 24
American Financial Group, Inc. (NYSE:AFG) is an insurance company based in the USA which provides specialty property and casualty insurance products. The company has had a strong dividend history spanning over 16 years. In Oct 2022, the company declared $0.63 dividend with a dividend yield of 1.93%.
At the end of the second quarter of 2022, 24 hedge funds in the database of Insider Monkey held stakes in American Financial Group, Inc. (NYSE: AFG). Abrams Bison Investments was the company’s largest shareholder.
Like HCA Healthcare, Inc. (NYSE:HCA), Pioneer Natural Resources Company (NYSE:PXD), and TD SYNNEX Corporation (NYSE:SNX), American Financial Group, Inc. (NYSE:AFG) is one of the best stocks to buy according to Gavin Abrams’ Abrams Bison Investments.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $84.15 million
Percentage of Abrams Bison Investments portfolio: 9.51%
Number of Hedge Funds: 67
Based in California, Applied Materials, Inc. (NASDAQ:AMAT) is a semiconductor equipment manufacturing company. Abrams Bison Investments increased stakes in the company by 32% in the second quarter of 2022. The hedge held 925,000 shares in Applied Materials, Inc. (NASDAQ:AMAT) worth $84.15 million at the end of Q2 2022.
4. The Progressive Corporation (NYSE:PGR)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $84.41 million
Percentage of Abrams Bison Investments portfolio: 9.54%
Number of Hedge Funds: 54
The Progressive Corporation (NYSE:PGR) is an Ohio-based insurance holding company that operates in three segments – Personal Lines, Commercial Lines, and Property. Riding on increased premiums, the company stock is rising. On 17 August 2022, there was a 3.1% hike in the company stock’s value. In the second fiscal quarter, The Progressive Corporation (NYSE:PGR) reported a normalized EPS of $0.79. The company’s revenue in the second quarter came in at $12.42 billion.
Raymond James analyst C. Gregory Peters kept an Outperform rating on shares and raised the firm’s price target to $140 from $135.
Overall, the company remained a popular stock among hedge funds. At the end of the second quarter of 2022, 54 hedge funds in the database of Insider Monkey held stakes worth $1.82 billion in The Progressive Corporation (NYSE:PGR). As of September 12, Orbis Investment Management owned shares worth $542.01 million in The Progressive Corporation (NYSE:PGR), making it the largest shareholder.
Here is what LRT Capital Management has to say about The Progressive Corporation (NYSE:PGR) in its Q1 2022 investor letter:
Progressive is a leading U.S. auto insurer that has pioneered telemetrics as a source of differentiation in its underwriting and it operates through a direct (non-agency) sales model. We believe that the company’s sales model, which is still the minority model in the industry, confers on the company a durable process-based cost advantage that has allowed the company to deliver industry leading combined ratios (a standard measure of profitability in the insurance industry).
The company has plenty of room to grow and take market share from players such as State Farm, Farmers and Nationwide. The cost advantages conferred by the direct sales model are unstoppable, and the scale advantages the company has in advertising and other customer acquisition costs furthers its strong competitive position. We believe the industry structure is going to evolve towards a duopoly with Progressive and GEICO as the two main players.
While we do not believe telemetrics itself confers any competitive advantage as it is a technology that has been copied by other players, Progressive is a very innovative company, and it has evolved from being an insurer for the highest risk drivers to one that now targets the general population. GEICO on the other hand began its life as an insurer for the best drivers and has now evolved in the direction of insuring everyone. On the surface the companies are similar, but their different pasts continue to shape their corporate cultures and are evident in subtle ways in their decision-making processes arounds expense management and claims processing.
The company has a very conservative investment portfolio with over $44 billion in fixed income securities. 75% of their portfolio is held in securities with a duration of under five years, which means that an increase in interest rates will benefit the company as the portfolio will relatively rapidly reprice into higher yielding securities.
3. HCA Healthcare, Inc. (NYSE:HCA)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $103.35 million
Percentage of Abrams Bison Investments portfolio: 11.68%
Number of Hedge Funds: 63
Headquartered in Tennessee, HCA Healthcare, Inc. (NYSE:HCA) provides healthcare services in the US. Abrams Bison Investments has been a significant shareholder in the company stock since 2020. In the second quarter of 2022, the hedge fund increased its position in the stock by 4%, bringing the total value of stakes owned by Abrams Bison Investments to $103.35 million. This represents 11.68% of the hedge fund’s total portfolio.
In the Q2 fiscal year report, the company reported $14.82 billion in revenue and normalized EPS of $4.21. Both beat the estimates by $90.20 million and $0.50, respectively.
John Ransom, an analyst at Raymond James, kept an Outperform rating on the shares in September 2022.
When looking at the institutional investors followed by Insider Monkey, Harris Associates, holds the biggest position in HCA Healthcare, Inc. (NYSE:HCA).
2. Pioneer Natural Resources Company (NYSE:PXD)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $133.40 million
Percentage of Abrams Bison Investments portfolio: 15.08%
Number of Hedge Funds: 56
Pioneer Natural Resources Company (NYSE:PXD) is an oil and gas exploration company. The year has been good for energy stocks which gave high returns to investors. Amongst these stocks Pioneer Natural Resources Company (NYSE:PXD) was a prominent name. The company has a good dividend history and has been paying dividends for 4 years. In August 2022, Pioneer Natural Resources Company (NYSE:PXD) reported a dividend of $1.10 with a 1.81% dividend yield.
Citi analyst Scott Gruber maintained a Buy rating on the shares and lowered the firm’s price target for Pioneer Natural from $260 to $257.
In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks, and Pioneer Natural Resources Company (NYSE:PXD) was one of them. Here is what the fund said:
Pioneer Natural Resources (NYSE:PXD) performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.
1. TD SYNNEX Corporation (NYSE:SNX)
Stake Value in Abrams Bison Investment’s 13F Portfolio: $197.75 million
Percentage of Abrams Bison Investments portfolio: 22.34%
Number of Hedge Funds: 19
Operating in the information technology sector, TD SYNNEX Corporation (NYSE:SNX) provides business process services in the United States and internationally. Abrams Bison Investments holds shares worth $197.59 million in TD SYNNEX Corporation (NYSE:SNX).
On Oct 6 2022, RBC Capital analyst Ashish Sabadra initiated coverage of TD Synnex with a Sector Perform rating and $95 price target.
You can also take a look at Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks and 10 Best Stocks to Buy Now According to Billionaire Andreas Halvorsen.
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Disclosure. None. Top 10 Stock Picks of Gavin Abrams’ Abrams Bison Investments is originally published on Insider Monkey.
