In this article, we discuss the top 10 stock picks of Tom Purcell’s Alua Capital Management based on Q2 holdings of the fund.
Tom Purcell, the former co-chief investment officer at Viking Global, started Alua Capital Management, one of the most anticipated and biggest hedge fund launches of 2020, with former Lone Pine Capital managing director Marco Tablada. They started the hedge fund in November 2020 with $2 billion.
Purcell began his investment career in 1998 at Tiger Management after graduating from Georgetown University. In 1999, he left Tiger to join Viking Global, where he worked for over 14 years in different investment and managerial roles. Purcell left Viking Global in 2015 to start Lake Trail Capital. He rose to prominence in the financial world over the years as a result of a careful investment strategy that properly balances value and growth equities.
With over 16 years of experience in the finance world and a graduate degree from Harvard Business School, Purcell has successfully established Alua Capital Management, based in New York. The portfolio value of his hedge fund at the end of the second quarter of 2021 was $1.9 billion with the top 10 holdings comprising 89.33% of the portfolio. The hedge fund has a diversified portfolio with investments concentrated in the communications, information technology, healthcare and financial sectors.
Some of the top stocks in Alua Capital Management Portfolio at the end of the second quarter of 2021 were Sea Ltd (NYSE: SE), New York Times Company (NYSE: NYT) and CIT Group Inc. (NYSE: CIT), amongst others. These along with others are discussed below.
Our Methodology
With this context in mind, here is our list of the top 10 stock picks of Tom Purcell’s Alua Capital Management. These were picked from the investment portfolio of Alua Capital Management at the end of the second quarter of 2021.
The analyst ratings of each company are also discussed to provide readers with some more context about their investment decisions.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why should we pay attention to Purcell’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 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.
With this context in mind, let’s now discuss our list of the top 10 stock picks of Tom Purcell’s Alua Capital Management.
Top 10 Stock Picks of Tom Purcell’s Alua Capital Management
10. Dun & Bradstreet Holdings, Inc. (NYSE:DNB)
Alua Capital Management Stake Value: $45 million
Percentage of Alua Capital Management’ 13F Portfolio: 2.35%
No. of Hedge Fund Holders: 45
Dun & Bradstreet Holdings, Inc. (NYSE: DNB), headquartered in Jacksonville, Florida, provides data and analytics for business insights. The company is tenth on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $7.3 billion. In the second quarter of 2021 Dun & Bradstreet Holdings, Inc. (NYSE: DNB) reported an EPS of $0.25, beating estimates by $0.01. The company’s revenue in the second quarter came in at $520.9 million, an increase of 23.8% year over year, and beat revenue estimates by $7.29 million.
On September 29, investment advisory Citi kept a Neutral rating on Dun & Bradstreet Holdings, Inc. (NYSE: DNB) stock and lowered the price target to $21 from $28, citing low level of confidence in any near-term expectations being met.
Our data shows that Eminence Capital is one of the biggest stakeholders of Dun & Bradstreet Holdings, Inc. (NYSE: DNB) with 9 million shares worth $194.8 million.
At the end of the second quarter of 2021, 45 hedge funds in the database of Insider Monkey held stakes worth $869.5 million in Dun & Bradstreet Holdings, Inc. (NYSE: DNB), up from 29 the preceding quarter worth $835.5 million.
Just like Sea Limited (NYSE: SE), New York Times Company (NYSE: NYT) and CIT Group Inc. (NYSE: CIT), Dun & Bradstreet Holdings, Inc. (NYSE: DNB) is one of the top stock picks of Tom Purcell’s Alua Capital Management.
Weitz Investment Management, an investment management firm, published its Q1 2021 investor letter and mentioned Dun & Bradstreet Holdings, Inc. (NYSE: DNB). Here is what Weitz Investment Management has to say about the company:
“Dun & Bradstreet collects and provides proprietary data used by businesses to understand the credit risk of their counterparties. Under the management of its Chairman Bill Foley and CEO Anthony Jabbour, who both joined the company in 2019, Dun & Bradstreet has moved to modernize its technology, improve its sales and contracting practices, invest in new data and capabilities to enhance its value to customers, and evaluate potential acquisitions to boost each of these efforts.”
9. First Citizens BancShares, Inc. (NASDAQ:FCNCA)
Alua Capital Management Stake Value: $45.9 million
Percentage of Alua Capital Management’ 13F Portfolio: 2.38%
No. of Hedge Fund Holders: 21
First Citizens BancShares, Inc. (NASDAQ: FCNCA), headquartered in Raleigh, North Carolina, is a bank holding company for First-Citizens Bank & Trust Company and IronStone Bank. It provides banking services to retail and commercial customers. The company is ninth on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $8.4 billion. In the second quarter of 2021 First Citizens BancShares, Inc. (NASDAQ: FCNCA) reported an EPS of $15.09, beating estimates by $3.36. The company’s revenue in the second quarter came in at $480.5 million, a decrease of 4.4% year over year, and beat revenue estimates by $25.4 million.
On August 27, investment advisory Janney Montgomery Scott initiated coverage of First Citizens BancShares, Inc. (NASDAQ: FCNCA) stock with a Buy rating and a price target of $1,075.
Our data shows that Egerton Capital Limited is one of the biggest stakeholders of First Citizens BancShares, Inc. (NASDAQ: FCNCA) with 138,970 shares worth $115.7 million.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $686.9 million in First Citizens BancShares, Inc. (NASDAQ: FCNCA), down from 29 the preceding quarter worth $606.7 million.
Just like Sea Limited (NYSE: SE), New York Times Company (NYSE: NYT) and CIT Group Inc. (NYSE: CIT), First Citizens BancShares, Inc. (NASDAQ: FCNCA) is one of the top stock picks of Tom Purcell’s Alua Capital Management.
Oakmark Select Fund, an investment management firm, published its Q1 2021 investor letter and mentioned First Citizens BancShares, Inc. (NASDAQ: FCNCA). Here is what Oakmark Select Fund has to say about the company:
“We bought two new positions in the Fund this quarter: Humana and First Citizens BancShares. First Citizens BancShares is a well-run, undervalued community bank that we believe is creating significant shareholder value through a nicely timed merger with CIT Group. Note that we consider our purchases of the A & B share classes of First Citizens and of CIT Group to be investments in the same entity.”
8. The New York Times Company (NYSE:NYT)
Alua Capital Management Stake Value: $92.8 million
Percentage of Alua Capital Management’ 13F Portfolio: 4.83%
No. of Hedge Fund Holders: 48
The New York Times Company (NYSE: NYT), headquartered in Manhattan, New York, is a media company that focuses on news and information creation, collection and distribution. The company publishes The New York Times newspaper. It is eighth on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $8.3 billion. In the second quarter of 2021 The New York Times Company (NYSE: NYT) reported an EPS of $0.36, beating estimates by $0.09. The company’s revenue in the second quarter came in at $498.5 million, an increase of 23.5% year over year, and beat revenue estimates by $10.15 million.
Our data shows that Darsana Capital Partners is one of the biggest stakeholders of The New York Times Company (NYSE: NYT) with 9 million shares worth $410 million.
At the end of the second quarter of 2021, 48 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in The New York Times Company (NYSE: NYT), the same as the preceding quarter worth $2.4 billion.
Just like Sea Limited (NYSE: SE), New York Times Company (NYSE: NYT) and CIT Group Inc. (NYSE: CIT), The New York Times Company (NYSE: NYT) is one of the top stock picks of Tom Purcell’s Alua Capital Management.
7. The Charles Schwab Corporation (NYSE:SCHW)
Alua Capital Management Stake Value: $120 million
Percentage of Alua Capital Management’ 13F Portfolio: 6.27%
No. of Hedge Fund Holders: 72
The Charles Schwab Corporation (NYSE: SCHW) is a financial services corporation based in the United States. Through its operating subsidiaries, it offers a broad range of brokerage, banking and financial advisory services. The company is seventh on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $138.7 billion. In the second quarter of 2021 The Charles Schwab Corporation (NYSE: SCHW) reported an EPS of $0.70, missing estimates by $0.01. The company’s revenue in the second quarter came in at $4.53 billion, an increase of 84.9% year over year, and beat revenue estimates by $70 million.
On July 23, investment advisory Deutsche Bank kept a Buy rating on The Charles Schwab Corporation (NYSE: SCHW) stock and increased the price target to $92 from $90, appreciating the company’s growth potential.
Our data shows that Ivy Lane Capital is one of the biggest stakeholders of The Charles Schwab Corporation (NYSE: SCHW) with 164,000 shares worth $11.9 billion.
At the end of the second quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in The Charles Schwab Corporation (NYSE: SCHW), down from 76 the preceding quarter worth $4.9 billion.
Just like Sea Limited (NYSE: SE), New York Times Company (NYSE: NYT), and CIT Group Inc. (NYSE: CIT), The Charles Schwab Corporation (NYSE: SCHW) is one of the top stock picks of Tom Purcell’s Alua Capital Management.
In the Q2 2021 investor letter of Lakehouse Capital, the fund mentioned that it became ecstatic after Charles Schwab Corporation (NYSE: SCHW)’s +100.9% quarterly return. Here is what Lakehouse Capital has to say about the firm:
“Charles Schwab is not a household name in Australia but it is in the US where it is the largest discount broker with more than 32 million brokerage accounts, 2 million corporate retirement plans, and total client assets of US$7.4 trillion. Schwab’s shares performed extremely well during the year thanks to a confluence of factors including a strong stock market with the S&P 500 up 39% year-on-year, the company’s recent merger with industry heavyweight TD Ameritrade, and expectations that interest rate income would grow as the US economy gained steam.
Two other important contributors to Schwab’s year, which were a mix of cyclical and structural, were an increase in net new accounts and increased trading activity. We view these as cyclical in the sense that markets are performing very well and that retail investors have been bored and emboldened during the American lockdowns, however, also structural because Schwab’s shift to $0 commissions on equity trades has permanently reduced a barrier to trading for investors with smaller accounts. We also note that, while brokerage activity is cyclical, the average brokerage account itself is very sticky — we estimate normalised annual retention rates for accounts of better than 93% — and that the average client assets per account grow over time thanks to asset growth and clients collectively being net savers…” (Click here to see the full text)
6. Cardlytics, Inc. (NASDAQ:CDLX)
Alua Capital Management Stake Value: $157.9 million
Percentage of Alua Capital Management’ 13F Portfolio: 8.23%
No. of Hedge Fund Holders: 29
Cardlytics, Inc. (NASDAQ: CDLX), headquartered in Atlanta, Georgia, specializes in transaction-based marketing solutions. The company is sixth on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $2.8 billion. In the second quarter of 2021 Cardlytics, Inc. (NASDAQ: CDLX) reported an EPS of -$0.39, missing estimates by $0.08.
On August 4, investment advisory Craig-Hallum kept a Buy rating on Cardlytics, Inc. (NASDAQ: CDLX) stock and lowered the price target to$120 from $160.
Our data shows that CAS Investment Partners is one of the biggest stakeholders of Cardlytics, Inc. (NASDAQ: CDLX) with 4.5 million shares worth $569.8 million.
At the end of the second quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Cardlytics, Inc. (NASDAQ: CDLX), down from 38 the preceding quarter worth $1 billion.
5. ICICI Bank Limited (NYSE:IBN)
Alua Capital Management Stake Value: $210.4 million
Percentage of Alua Capital Management’ 13F Portfolio: 10.96%
No. of Hedge Fund Holders: 28
ICICI Bank Limited (NYSE: IBN) is a bank based in India. It offers various services like loans, debit, credit cards, mortgages, insurance, banking and investment services. It is fifth on our list of top stock picks of Tom Purcell’s Alua Capital Management.
India’s economy is expected to rise by 9.5% in 2021 according to IMF’s predictions. ICICI Bank Limited (NYSE: IBN) could profit from increased loan and deposit growth as one of India’s top banks. The banks core profit grew by 16.9% year over year in 2021. Similarly account profits increased by 25.5% during fiscal year 2021.
Our data shows that Lone Pine Capital is one of the biggest stakeholders of ICICI Bank Limited (NYSE: IBN) with 43 million shares worth $737.9 million.
At the end of the second quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $2.5 billion in ICICI Bank Limited (NYSE: IB), down from 31 the preceding quarter worth $1.9 billion.
4. CIT Group Inc. (NYSE:CIT)
Alua Capital Management Stake Value: $231.4 million
Percentage of Alua Capital Management’ 13F Portfolio: 12.05%
No. of Hedge Fund Holders: 30
CIT Group Inc. (NYSE: CIT), headquartered in New York City, is a bank holding company as well as a financial holding company. The company mainly serves middle-market enterprises in North America and provides financing, leasing, and advising services to them. It is fourth on our list of top stock picks of Tom Purcell’s Alua Capital Management.
On April 29, investment advisory Wells Fargo kept an Equal Weight rating on CIT Group Inc. (NYSE: CIT) stock and increased the price target to $54 from $38, following good quarterly results.
Our data shows that Alua Capital Management is one of the biggest stakeholders of CIT Group Inc. (NYSE: CIT) with 4.5 million shares worth $231.4 million.
At the end of the second quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $751.8 million in CIT Group Inc. (NYSE: CIT), up from 28 the preceding quarter worth $802 million.
3. Carvana Co. (NYSE:CVNA)
Alua Capital Management Stake Value: $244.9 million
Percentage of Alua Capital Management’ 13F Portfolio: 12.76%
No. of Hedge Fund Holders: 63
Carvana Co. (NYSE: CVNA) is an e-commerce company headquartered in Tempe, Arizona. The company sells secondhand vehicles online. It is third on our list of top stock picks of Tom Purcell’s Alua Capital Management.
On August 9, investment advisory Needham kept a Buy rating on Carvana Co. (NYSE: CVNA) stock and increased the price target to $400 from $325, appreciating the company’s second quarter results of 2021.
Our data shows that Tiger Global Management LLC is one of the biggest stakeholders of Carvana Co. (NYSE: CVNA) with 6.4 million shares worth $1.9 billion.
At the end of the second quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $8.9 billion in Carvana Co. (NYSE: CVNA), down from 64 the preceding quarter worth $7.5 billion.
2. Herbalife Nutrition Ltd. (NYSE:HLF)
Alua Capital Management Stake Value: $274.9 million
Percentage of Alua Capital Management’ 13F Portfolio: 14.32%
No. of Hedge Fund Holders: 40
Herbalife Nutrition Ltd. (NYSE: HLF), headquartered in Los Angeles, California, is a nutrition company. The company offers services like weight management, sports and fitness, targeted nutrition, healthy meals and snacks and personal care products. The company is second on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $4.9 billion. In the second quarter of 2021 Herbalife Nutrition Ltd. (NYSE: HLF) reported an EPS of $1.52, beating estimates by $0.24. The company’s revenue in the second quarter came in at $1.55 billion, an increase of 14.8% year over year.
On September 15, investment advisory B. Riley kept a Buy rating on Herbalife Nutrition Ltd. (NYSE: HLF) stock and lowered the price target from $70 to $ 61, quoting that the company’s valuation was attractive despite lowered estimates.
Our data shows that Renaissance Technologies is one of the biggest stakeholders of Herbalife Nutrition Ltd. (NYSE: HLF) with 8.9 million shares worth $469 million.
At the end of the second quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Herbalife Nutrition Ltd. (NYSE: HLF), same as the preceding quarter worth $1.9 billion.
Appleseed Fund, an investment management firm, published its Q2 2021 investor letter and mentioned Herbalife Nutrition Ltd. (NYSE: HLF). Here is what Appleseed Fund has to say about the company:
“For long-term investors in Appleseed Fund, Herbalife should be a familiar name, as this will now be the third time that we have purchased Herbalife shares. We only hope that the third time will be as profitable for Appleseed Fund shareholders as the first two times. For those unfamiliar with the company, Herbalife is a global marketer of nutritional products to consumers worldwide. With just 20% of revenues attributable to the United States, the company markets its products through a multi-level distributor network. The business is currently growing at a double-digit annual rate and is generating gross margins of more than 75%, making Herbalife a quickly growing and we believe an attractive business. Herbalife’s business is “capital-light,” which means that the company does not require much in the way of capital investment to grow, allowing Herbalife to generate free cash flow that can mostly be returned to shareholders. Since 2013, Herbalife has used its free cash flow to buy back its stock, resulting in a share count that has declined by more than a third since 2013. Herbalife has a clean bill of health from a regulatory standpoint; its compliance function is the gold standard within the multi-level marketing industry.
At our purchase price, Herbalife shares were trading at the same share price as 2018. The company is firing on almost all cylinders right now, but its shares are undervalued for two reasons. First, the company’s China business has been struggling. We are not so worried about Herbalife’s China business because China represents only 5.5% of company revenues. Moreover, we believe the setbacks are temporary, and management has put a plan in place to reinvigorate revenue growth in China. Second, investors are worried that the company’s growth rate will be harmed as the economy opens up again. We conservatively assume that the company’s long-term growth rate will be 5% per annum, which is quite a bit lower than the 19% growth rate that Herbalife posted in Q1 2021. However, even assuming a 5% growth rate, Herbalife shares are significantly undervalued. Herbalife was trading at less than 10x earnings per share when we bought the stock, which represented an outstanding bargain, in our view.”
1. Sea Limited (NYSE:SE)
Alua Capital Management Stake Value: $290.3 million
Percentage of Alua Capital Management’ 13F Portfolio: 15.12%
No. of Hedge Fund Holders: 104
Sea Limited (NYSE: SE), headquartered in Singapore, is a gaming and e-commerce company. The company provides electronic commerce, digital entertainment and digital financial services through its integrated platform. Sea Limited (NYSE: SE) stands first on our list of top stock picks of Tom Purcell’s Alua Capital Management.
The company has a market cap of $175 billion. In the second quarter of 2021 Sea Limited (NYSE: SE) reported an EPS of -$0.61, beating estimates by $0.07.
On September 15, investment advisory Stifel upgraded Sea Limited (NYSE: SE) stock to Buy from Hold rating and increased the price target to $400 from $325, appreciating the company’s growth potential.
Our data shows that Aubrey Capital Management is one of the biggest stakeholders of Sea Limited (NYSE: SE) with 218,115 shares worth $59.9 billion.
At the end of the second quarter of 2021, 104 hedge funds in the database of Insider Monkey held stakes worth $12.2 billion in Sea Limited (NYSE: SE), up from 98 the preceding quarter worth $10.4 billion.
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Disclosure. None. Top 10 Stock Picks of Tom Purcell’s Alua Capital Management. is originally published on Insider Monkey.
