Top 5 Stock Picks of Thomas Bancroft’s Makaira Partners

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In this article, we discuss the top 5 stock picks of Thomas Bancroft’s Makaira Partners. If you want our detailed analysis of Bancroft’s history, investment philosophy, and hedge fund performance, go directly to the Top 10 Stock Picks of Thomas Bancroft’s Makaira Partners.

5. CDW Corporation (NASDAQ:CDW)

Makaira Partners’ Stake Value: $52.6 million

Percentage of Makaira Partners’ 13F Portfolio: 11.11%

Number of Hedge Fund Holders: 37

CDW Corporation (NASDAQ:CDW) provides IT products and services to businesses, schools, and governments across the United States. It is headquartered in Lincolnshire, Illinois, and houses more than 11,000 employees.

On December 14, CDW Corporation’s (NASDAQ:CDW) coverage was reinstated by Evercore ISI analyst Amit Daryanani with a $225 price target and an Outperform rating on the company’s shares. The analyst expects the company to preserve high-single-digit revenue and double-digit growth in the future as well.

In the third quarter of 2021, the hedge fund sentiment increased for CDW Corporation (NASDAQ:CDW) compared to the previous quarter. In the second quarter, 27 hedge funds were bullish towards the company compared to 37 in the third quarter, including Makaira Partners.

Here is what Wedgewood Partners had to say about CDW Corporation (NASDAQ:CDW) in its second-quarter 2021 investor letter:

“We have owned CDW stock for nearly two years now, and we have been quite pleased to see our thesis playing out as expected – even with the completely unexpected trauma of the pandemic fireworks during our holding period. These are the key components of our investment thesis, in simplistic form: First, the IT distribution and consulting industry is an attractive place to invest, with secular growth above that of the broad economy. Second, we expect the Company to continue to take share within the IT distribution and consulting industry, growing faster than the industry while continuing to improve margins and returns. The pandemic emerged shortly after our purchase, but even that did not alter the favorable dynamics underlying our thesis, as you can see below.

So, even in a negative year for total economic growth, IT spending in the U.S. came in better than the broad economy. The Company outperformed the industry and with improved profitability – which always be stills our hearts. Additionally, consulting the chart below, you can see that the gap between its growth and the industry’s growth continues to widen over time, and that spread continued to expand during the abnormal conditions in 2020 as well. All of this gives us even greater comfort in our initial thesis…” (Click here to see the full text)

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