In this article, we discuss the top 10 stock picks of Jacob Doft’s Highline Capital Management.
Jacob Doft is the founder and chief executive officer at Highline Capital Management, which is an investment firm based in New York City. Highline Capital Management specializes in complex long and short investment opportunities within the US equity markets, managing assets mainly for pension funds, university endowments, and charitable organizations.
Doft’s strategy to create a successful investment portfolio consists of conducting fundamental research and deciding on an appropriate risk/return payoff while choosing equities. Highline Capital Management has successfully achieved a risk-adjusted performance record when compared to the US stock market indices.
Jacob Doft enrolled for a Bachelor’s degree in economics at The Wharton School, and completed his MBA from Harvard University. Prior to establishing Highline Capital Management, Doft was employed at a New York investment bank, Gleacher & Co, where he was responsible for private equity investments, corporate restructuring, and mergers and acquisitions. Doft manages a portfolio of securities worth $119.7 million at Highline Capital, in addition to assets under management valued over $355 million, as of the 13F filings at the end of June this year.
Doft’s top stocks are from the materials, healthcare, transport, information technology, finance, and consumer discretionary sectors, with a top ten holdings concentration of 86.04%. The largest holding in Doft’s Q2 portfolio is Vimeo, Inc. (NASDAQ:VMEO), which represents 11.18% of his investment portfolio.
Some of the notable stocks in Doft’s portfolio as of the second quarter include Amazon.com, Inc. (NASDAQ:AMZN), Vimeo, Inc. (NASDAQ:VMEO), Passage Bio, Inc. (NASDAQ:PASG), and Avantor, Inc. (NYSE:AVTR), among others discussed in detail below.
Our Methodology
With this context in mind, let’s discuss the top 10 stock picks of Jacob Doft’s Highline Capital Management. We used Doft’s investment portfolio for the second quarter to select these stocks, and they are ranked according to Doft’s stake value in each holding.
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Why should we pay attention to Jacob Doft’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Top Stock Picks of Jacob Doft’s Highline Capital Management
10. Catalent, Inc. (NYSE:CTLT)
Highline Capital Management’s Stake Value: $5,486,000
Percentage of Highline Capital Management’s 13F Portfolio: 4.57%
Number of Hedge Fund Holders: 40
A multinational corporation from New Jersey, Catalent, Inc. (NYSE:CTLT) specializes in drug manufacturing, gene therapies, consumer health products, and biologics. Catalent, Inc. (NYSE:CTLT) also provides supply chain and logistics services by using innovative delivery technology. Catalent, Inc. (NYSE:CTLT) is a top stock pick of Jacob Doft, who owns 50,744 shares in the healthcare corporation as of June this year, via Highline Capital Management. With an approximate stake value of $5.48 million, Catalent, Inc. (NYSE:CTLT) represents 4.57% of Doft’s Q2 portfolio.
Catalent, Inc. (NYSE:CTLT) on November 2 posted its Q3 results. EPS for the period totaled $0.71, beating estimates by $0.05. Revenue for the quarter came in at $1.02 billion, missing estimates by -$4.94 million.
As of June, 40 hedge funds monitored by Insider Monkey were bullish on Catalent, Inc. (NYSE:CTLT), up from 29 in the preceding quarter.
Here is what Madison Small Cap Fund has to say about Catalent, Inc. (NYSE:CTLT) in their Q4 2020 investor letter:
“Healthcare continued its streak of underperformance in the fourth quarter. The biotech industry component of the Russell 2000 was up 34% for the quarter and 53% for the year. While we have become more open to investing in this space where appropriate, we prefer molecular diagnostics given less regulatory risk and better revenue diversification. With the new administration comes a shift in healthcare philosophy. We believe that further access to care and coverage expansion will benefit some parts of the sector. However, the risk of further reimbursement cuts, particularly in pharmaceuticals, will bear monitoring. We would note that one of our strong outperformers, Catalent, benefited from increased demand due to the Covid-19 pandemic. This stock returned 84% in 2020. While we think the fundamentals here are still strong, the stock has grown into a midcap.”
9. Commercial Metals Company (NYSE:CMC)
Highline Capital Management’s Stake Value: $6,019,000
Percentage of Highline Capital Management’s 13F Portfolio: 5.02%
Number of Hedge Fund Holders: 22
Commercial Metals Company (NYSE:CMC) is a top stock in Jacob Doft’s Q2 portfolio, with Highline Capital Management owning 195,935 shares worth over $6 million in Commercial Metals Company (NYSE:CMC) as of June this year. This stock accounts for 5.02% of the firm’s investment portfolio. Commercial Metals Company (NYSE:CMC) is a steel and metal manufacturer from Texas, specializing in scrap metal recycling and steel fabrication. Commercial Metals Company (NYSE:CMC) is focused on sustainability in modern infrastructure, and uses completely recycled steel for its products.
As of the second quarter of 2021, 22 hedge funds tracked by Insider Monkey were long Commercial Metals Company (NYSE:CMC), up from 20 in the previous quarter.
8. Meritor, Inc. (NYSE:MTOR)
Highline Capital Management’s Stake Value: $8,466,000
Percentage of Highline Capital Management’s 13F Portfolio: 7.06%
Number of Hedge Fund Holders: 18
Meritor, Inc. (NYSE:MTOR) is a Michigan-based organization that manufactures automobile spare parts for defense, commercial trailer, truck, off-highway and aftermarket customers. With distribution centers and offices in 19 countries, Meritor, Inc. (NYSE:MTOR) serves clients around the world in the commercial vehicle and industrial markets.
Jacob Doft’s Highline Capital Management owns 361,471 shares in Meritor, Inc. (NYSE:MTOR) as of the end of June, worth $8.46 million, representing 7.06% of the firm’s stock portfolio.
At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey were long Meritor, Inc. (NYSE:MTOR), down from 21 in the first quarter.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Vimeo, Inc. (NASDAQ:VMEO), Passage Bio, Inc. (NASDAQ:PASG), and Avantor, Inc. (NYSE:AVTR), Meritor, Inc. (NYSE:MTOR) is a top stock in Doft’s Q2 portfolio.
7. Steel Dynamics, Inc. (NASDAQ:STLD)
Highline Capital Management’s Stake Value: $8,663,000
Percentage of Highline Capital Management’s 13F Portfolio: 7.23%
Number of Hedge Fund Holders: 26
Steel Dynamics, Inc. (NASDAQ:STLD), a top stock pick of Jacob Doft, is an American steel manufacturer based out of Indiana. The company is involved in metal recycling and steel fabrication, and is the third largest American producer of carbon steel. Highline Capital Management, as of June this year, owns 145,355 shares in Steel Dynamics, Inc. (NASDAQ:STLD), worth $8.66 million, making up 7.23% of the firm’s portfolio.
Morgan Stanley analyst Carlos De Alba, on October 18, lowered the price target for Steel Dynamics, Inc. (NASDAQ:STLD) from $77 to $61, and kept an Equal Weight rating on the shares, down from Overweight.
As of Q2, 26 hedge funds tracked by Insider Monkey reported owning stakes in Steel Dynamics, Inc. (NASDAQ:STLD), worth $538.3 million.
6. Magna International Inc. (NYSE:MGA)
Highline Capital Management’s Stake Value: $9,850,000
Percentage of Highline Capital Management’s 13F Portfolio: 8.22%
Number of Hedge Fund Holders: 39
Magna International Inc. (NYSE:MGA) is a Canadian manufacturer of automobile spare parts, specializing in mobility technology, automotive systems, assemblies, modules, and components. Magna International Inc. (NYSE:MGA) supplies automobile components to clients like General Motors Company (NYSE:GM), Tesla, Inc. (NASDAQ:TSLA), Ford Motor Company (NYSE:F), and Toyota Motor Corporation (NYSE:TM), among others.
Magna International Inc. (NYSE:MGA) is a top stock pick of Jacob Doft’s Highline Capital Management, which owns 106,324 shares in the Canadian mobility technology company as of June 2021, worth $9.85 million. Magna International Inc. (NYSE:MGA) represents 8.22% of the firm’s Q2 portfolio.
Raymond James analyst Michael Glen downgraded Magna International Inc. (NYSE:MGA) on October 20 from Market Perform to Underperform, lowering the price target from $83 to $68. The analyst believes that conditions of auto parts companies continue to worsen as a whole, due to shortages of raw materials and supply chain disruptions.
As of Q2, 39 hedge funds were bullish on Magna International Inc. (NYSE:MGA), up from 34 in Q1.
Like Amazon.com, Inc. (NASDAQ:AMZN), Vimeo, Inc. (NASDAQ:VMEO), Passage Bio, Inc. (NASDAQ:PASG), and Avantor, Inc. (NYSE:AVTR), Magna International Inc. (NYSE:MGA) is a top stock in Doft’s Q2 portfolio.
5. Hawaiian Holdings, Inc. (NASDAQ:HA)
Highline Capital Management’s Stake Value: $11,173,000
Percentage of Highline Capital Management’s 13F Portfolio: 9.32%
Number of Hedge Fund Holders: 16
Hawaiian Holdings, Inc. (NASDAQ:HA) operates airlines that offer non-stop flights from North America, Asia, and the South Pacific to Hawaii, and all major Hawaiian Islands. Hawaiian Holdings, Inc. (NASDAQ:HA) has flights that are themed according to Hawaiian traditions that are meant to engage and educate the passengers.
Hawaiian Holdings, Inc. (NASDAQ:HA) is a top stock in Doft’s portfolio, with Highline Capital Management owning 458,476 shares in the company, worth $11.1 million, representing 9.32% of the firm’s investment portfolio at the end of June.
As of the second quarter, 16 hedge funds in the database of Insider Monkey were bullish on Hawaiian Holdings, Inc. (NASDAQ:HA), with stakes valued at $63.6 million.
On October 26, Hawaiian Holdings, Inc. (NASDAQ:HA) announced Q3 earnings. EPS for the period totaled -$0.95, exceeding estimates by $0.38. The Q3 revenue came in at $508.85 million, beating estimates by $20.02 million.
4. Avantor, Inc. (NYSE:AVTR)
Highline Capital Management’s Stake Value: $11,332,000
Percentage of Highline Capital Management’s 13F Portfolio: 9.45%
Number of Hedge Fund Holders: 44
Avantor, Inc. (NYSE:AVTR) is a Pennsylvania-based chemicals and materials company which is one of the top holdings of Highline Capital Management, with the investment firm owning 319,119 shares in the company. The total stake value of Doft’s Highline Capital in Avantor, Inc. (NYSE:AVTR) is $11.3 million, which represents 9.45% of the firm’s Q2 portfolio. Avantor, Inc. (NYSE:AVTR) offers its products and services to the life sciences, advanced technologies, and applied materials industries.
Avantor, Inc. (NYSE:AVTR) reported Q3 earnings on October 28. The Q3 EPS came in at $0.35, beating estimates by $0.03. Revenue for the quarter was $1.83 billion, missing estimates by -$6.55 million.
Barclays analyst Luke Sergott on November 1 kept an Overweight rating on Avantor, Inc. (NYSE:AVTR), raising the price target from $43 to $48. The analyst stated that Avantor, Inc. (NYSE:AVTR)’s Q3 results were solid and the underlying business is accelerating.
3. Amazon.com, Inc. (NASDAQ:AMZN)
Highline Capital Management’s Stake Value: $11,851,000
Percentage of Highline Capital Management’s 13F Portfolio: 9.89%
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is one of the top stocks in Jacob Doft’s Highline Capital Management’s portfolio, with the investment firm owning stakes worth $11.85 million in the US tech giant, which represents 9.89% of Doft’s portfolio as of the end of June. Amazon.com, Inc. (NASDAQ:AMZN) is engaged in ecommerce, cloud computing, digital streaming, and artificial intelligence. Recently, Amazon.com, Inc. (NASDAQ:AMZN) is expanding its cloud computing business segment by entering into long-term contracts with vendors like Teradata Corporation (NYSE:TDC) and Allegiant Travel Company (NASDAQ:ALGT), so they can migrate to the cloud with Amazon Web Services.
At the end of the second quarter of 2021, 271 hedge funds out of the 873 funds tracked by Insider Monkey were bullish on Amazon.com, Inc. (NASDAQ:AMZN), up from 243 in the preceding quarter.
Here is what Madison Funds has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter:
“We did add a modest new position weight to the portfolio in the quarter in Amazon.com, Inc. stock (AMZN). We acknowledge that many aspects of Amazon’s merit as an investment are well appreciated. However, our work leads us to conclude that shares are attractive. Leadership positions in both e-commerce and cloud computing provide the company with significant durable competitive advantages in industries that we think can produce above average growth over the next decade. Over the past year, AMZN shares have trailed the market as investors debate near-term growth prospects following the pandemic-induced e-commerce demand. Additionally, margins have been depressed due to Amazon’s unprecedented increases in spending to build out fulfillment and in-house logistics capabilities – Amazon will build out more square footage this year and last than it did cumulatively over the previous 10 years, more than doubling its in-house delivery capacity. We like the investments Amazon is making and believe they will further advantage the company relative to other retailers, making it nearly impossible for competitors to match the same level of delivery speed and convenience. With its large and frequently engaged customer base, Amazon has multiple mechanisms to make money, including selling advertising and enhanced subscription services. Within the cloud business, we forecast Amazon Web Services (AWS) leveraging its strengths in Infrastructure-as-a-service (IaaS) to move into higher value segments of cloud computing (such as platform-as-a-service: PaaS), allowing the company to continue outgrowing the overall IT sector with strong profitability. While Amazon shares have performed extremely well over the long-term, we think near-term concerns about whether Amazon will earn a return on its accelerated investments provide an opportunity now for investors willing to look through the investment period. Our view is that the investments likely earn strong returns and extend Amazon’s competitive advantages and above average growth.”
2. Passage Bio, Inc. (NASDAQ:PASG)
Highline Capital Management’s Stake Value: $13,207,000
Percentage of Highline Capital Management’s 13F Portfolio: 11.02%
Number of Hedge Fund Holders: 16
Passage Bio, Inc. (NASDAQ:PASG) is a genetics medicine company from Philadelphia, offering therapeutics for central nervous system disorders. Passage Bio, Inc. (NASDAQ:PASG) is a notable stock in Doft’s portfolio as of June this year, with Highline Capital Management owning 997,506 shares in the healthcare company. With an approximate stake value of $13.2 million, Passage Bio, Inc. (NASDAQ:PASG) represents 11.02% of Highland Capital’s Q2 portfolio.
Passage Bio, Inc. (NASDAQ:PASG) announced on November 4 earnings for the third quarter. The EPS for Q3 totaled -$0.77, beating estimates by $0.10.
As of the second quarter of 2021, 16 hedge funds in the database of Insider Monkey’s elite funds were long Passage Bio, Inc. (NASDAQ:PASG), up from 14 in the preceding quarter.
1. Vimeo, Inc. (NASDAQ:VMEO)
Highline Capital Management’s Stake Value: $13,400,000
Percentage of Highline Capital Management’s 13F Portfolio: 11.18%
Number of Hedge Fund Holders: 48
Vimeo, Inc. (NASDAQ:VMEO) is the largest holding in Jacob Doft’s portfolio as of June this year. Highland Capital Management owns 273,474 shares in Vimeo, Inc. (NASDAQ:VMEO), worth $13.4 million, representing 11.18% of the firm’s Q2 portfolio. Vimeo, Inc. (NASDAQ:VMEO) is an American video hosting platform that allows high definition video sharing across multiple devices. Vimeo, Inc. (NASDAQ:VMEO) operates an SaaS platform, where subscribers can gain access to content creation tools, editing software, broadcasting and enterprise software solutions, and a platform where clients and professionals can collaborate.
Vimeo, Inc. (NASDAQ:VMEO) reported Q3 earnings on November 3, with the EPS for the period being -$0.07, beating estimates by $0.03. Revenue for the quarter came in at $100.19 million, missing estimates by -$1,410.
BMO Capital analyst Daniel Salmon, on November 5, kept a Market Perform rating on Vimeo, Inc. (NASDAQ:VMEO), lowering the price target from $42 to $28, citing muted growth for 2022 and tough comps.
As of the second quarter, 48 hedge funds tracked by Insider Monkey reported owning stakes in Vimeo, Inc. (NASDAQ:VMEO), worth $1.12 billion.
Here is what Alphyn Capital Management has to say about Vimeo, Inc. (NASDAQ:VMEO) in its Q2 2021 investor letter:
“Clients will notice a new ticker, VMEO, on your brokerage statements following its spin-out from IAC. I profiled IAC’s companies, including Vimeo, in some detail last year. The pandemic accelerated the use of video by both enterprises and small businesses, and I believe this will continue given the high engagement that video generates. The most recent numbers bear this out: May revenues rose 42% from a year earlier while subscriber base and average revenue per user increased 18%. With its comprehensive set of tools to make video creation more accessible, Vimeo has a great opportunity to capture a share of this growth. It further benefits from an attractive customer acquisition funnel – 65% of Fortune 500 enterprises have at least one self-serve Vimeo subscription (with ARPU6 of $250). The company is building out its sales team to help upsell these into enterprise accounts (with ARPU of $12,000). Finally, by buying IAC shares ahead of the spin, we received a long-term, high-growth SAAS “call option” at a much more palatable valuation than the current 20x price-to-sales. Historically, it has been very rewarding to hold onto IAC spins…”
You can also take a look at 10 Best Stocks to Buy According to Peter Lewis’ LFL Advisers and 10 Monthly Dividend Covered Call ETFs and ETNs You Can Count On.
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Disclosure: None. Top 10 Stock Picks of Jacob Doft’s Highline Capital Management is originally published by Insider Monkey.
