In this article, we discuss the top 5 stock picks of John D. Gillespie’s Prospector Partners. If you want our detailed analysis of these stocks, go directly to the Top 10 Stock Picks of John D. Gillespie’s Prospector Partners.
5. KeyCorp (NYSE:KEY)
Prospector Partners’ Stake Value: $19,952,000
Percentage of Prospector Partners’ 13F Portfolio: 2.56%
Number of Hedge Fund Holders: 40
KeyCorp (NYSE:KEY) is a bank holding company that operates primarily via its subsidiary, KeyBank National Association. KeyBank offers retail and commercial banking, commercial leasing, investment management, consumer finance, commercial mortgage, and investment banking services to individual, corporate, and institutional clients.
Gillespie’s Prospector Partners holds 922,850 shares in KeyCorp (NYSE:KEY) as of September end, valued at $19.95 million, representing 2.56% of the firm’s Q3 portfolio. At the end of the second quarter, 40 hedge funds were bullish on KeyCorp (NYSE:KEY), down from 41 in the preceding quarter.
KeyCorp (NYSE:KEY), on October 21, posted its Q3 results. EPS in the period equaled $0.65, beating estimates by $0.08. Revenue for the quarter came in at $1.82 billion, up 8% year-over-year, beating estimates by $78.59 million.
Wedbush analyst Peter Winter reported that Q3 earnings for KeyCorp (NYSE:KEY) were solid, credit metrics were improving, and income growth was owed to strong loan momentum. The analyst predicts a solid performance track in Q4 as well, which is why he kept an Outperform rating on KeyCorp (NYSE:KEY), raising the price target from $27 to $39 on October 22.
4. U.S. Bancorp (NYSE:USB)
Prospector Partners’ Stake Value: $20,582,000
Percentage of Prospector Partners’ 13F Portfolio: 2.64%
Number of Hedge Fund Holders: 41
U.S. Bancorp (NYSE:USB), a top stock from Prospector Partners’ Q3 portfolio, is a Minnesota-based bank holding company, which is recognized for its subsidiary, U.S. Bank National Association, which is one of the leading American banks offering trust, mortgage, investment, and payment services to corporate, institutional, individual, and government clients.
Gillespie’s investment firm holds a $20.5 million stake in U.S. Bancorp (NYSE:USB) as of the latest 13F filings, which accounts for 2.64% of the firm’s Q3 portfolio. At the end of June this year, 41 hedge funds monitored by the database of Insider Monkey were long U.S. Bancorp (NYSE:USB), reporting a stake value of $8.3 billion.
U.S. Bancorp (NYSE:USB)’s Q3 EPS on October 14 came in at $1.30, beating estimates by $0.14. Gerard Cassidy from RBC Capital kept an Outperform rating on U.S. Bancorp (NYSE:USB) on October 15, following the Q3 earnings beat. He also raised the price target from $62 to $66.
Here is what Mairs & Power has to say about U.S. Bancorp (NYSE:USB) in their Q4 2020 investor letter:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
3. Comerica Incorporated (NYSE:CMA)
Prospector Partners’ Stake Value: $22,113,000
Percentage of Prospector Partners’ 13F Portfolio: 2.83%
Number of Hedge Fund Holders: 33
Comerica Incorporated (NYSE:CMA) is a financial services company from Texas, and is one of the largest US retail banks operating in multiple states. Comerica Incorporated (NYSE:CMA) offers commercial banking, retail banking, and wealth management services to customers. Prospector Partners holds a $22.1 million stake in Comerica Incorporated (NYSE:CMA), which accounts for 2.83% of the firm’s Q3 securities.
As of June this year, 33 hedge funds tracked by Insider Monkey reported owning stakes worth roughly $547 million in Comerica Incorporated (NYSE:CMA).
Earnings for the third quarter were disclosed by Comerica Incorporated (NYSE:CMA) on October 20. EPS in Q3 totaled $1.90, beating estimated EPS by $0.26. Comerica Incorporated (NYSE:CMA)’s revenue came in at $755 million, up 6.34% year-over-year.
Citi analyst Jill Shea on October 28 raised the price target on Comerica Incorporated (NYSE:CMA) from $93 to $100, and kept a Buy rating on the shares. She stated that investors who are looking for high short-term rates ought to choose Comerica Incorporated (NYSE:CMA) for their portfolios, especially since commercial loan growth has also improved.
2. Alleghany Corporation (NYSE:Y)
Prospector Partners’ Stake Value: $22,914,000
Percentage of Prospector Partners’ 13F Portfolio: 2.94%
Number of Hedge Fund Holders: 32
Alleghany Corporation (NYSE:Y) is an investment holding company that owns and operates subsidiaries and investments, anchoring its portfolio in property, casualty reinsurance, and insurance companies. According to Andrew Bary from Barron’s, Alleghany Corporation (NYSE:Y) operates on a smaller scale when compared to Berkshire Hathaway Inc. (NYSE:BRK-A), yet the company adopts a similar strategy as Warren Buffett. He also stated that Alleghany Corporation (NYSE:Y) has strong property and casualty insurance businesses that are benefiting from higher industry pricing.
As of the second quarter of 2021, 32 hedge funds in the database of 873 exclusive funds maintained by Insider Monkey were bullish on Alleghany Corporation (NYSE:Y), down from 34 in the preceding quarter.
1. Berkshire Hathaway Inc. (NYSE:BRK-A)
Prospector Partners’ Stake Value: $43,922,000
Percentage of Prospector Partners’ 13F Portfolio: 5.64%
Number of Hedge Fund Holders: 116
Billionaire Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK-A) is the largest holding in John Gillespie’s Q3 portfolio, with Prospector Partners owning 160,920 shares in Berkshire Hathaway Inc. (NYSE:BRK-A), worth $43.92 million, representing 5.64% of the firm’s Q3 portfolio. Berkshire Hathaway Inc. (NYSE:BRK-A) is an American multinational conglomerate holding company that deals in diversified investment, insurance, aerospace, automotive, and real estate sectors, among others. Some of the top wholly owned subsidiaries of Berkshire Hathaway Inc. (NYSE:BRK-A) include Duracell, Helzberg Diamonds, and Dairy Queen, among others. The conglomerate also owns valuable minority holdings in The Kraft Heinz Company (NYSE:KHC), American Express Company (NYSE:AXP), The Coca-Cola Company (NYSE:KO), Apple Inc. (NASDAQ:AAPL), and Bank of America Corporation (NYSE:BAC).
Berkshire Hathaway Inc. (NYSE:BRK-A) reported Q3 earnings on November 6. EPS in the period totaled $6,882, which is comparable to earnings per share of $18,994 in the same period last year. Berkshire Hathaway Inc. (NYSE:BRK-A)’s revenue for the third quarter equaled $70.58 billion, up 11.99% year-over-year.
As of the third quarter of 2021, Bill & Melinda Gates Foundation Trust is the leading stakeholder in Berkshire Hathaway Inc. (NYSE:BRK-A), with roughly 38.6 million shares worth $10.55 billion.
Here is what Black Bear Value Partners has to say about Berkshire Hathaway Inc. (NYSE:BRK-A) in its Q3 2021 investor letter:
“Please see the Q1 letter for our Berkshire on a Napkin investment exercise. We have written on it extensively and will save your eyeballs from extraneous reading. Berkshire is very cheap for owning such high-quality businesses and will continue to grind higher and compound value for us.”
You can also take a look at 10 Stocks to Buy According to Bluegrass Capital Partners and 10 Growth Stocks to Buy According to Jay Chen’s Himension Capital.
