Below we present the list of top 5 stocks to buy and hold according to MIG Capital. If you want to read our comprehensive analysis of Richard Merage’s history, investment philosophy, and hedge fund performance, go directly to Top 10 Stocks to Buy and Hold According to MIG Capital.
5. Ball Corporation (NYSE:BLL)
Ball Corporation (NYSE:BLL) leads us into the second half of our list, having been owned by MIG Capital since the middle of 2018. The fund owned 549,854 shares of the packaging company on September 30, which had a market value of $49.47 million.
There was a substantial hedge fund exodus from Ball Corporation (NYSE:BLL) in Q3, as 37% of Ball Corporation (NYSE:BLL)’s former hedge fund shareholders from within Insider Monkey’s database unloaded the stock during the period. Hedge funds apparently didn’t approve either of Ball Corporation (NYSE:BLL)’s plans to build a new $290 million beverage can plant in Nevada, which was announced in September, or of Ball Corporation (NYSE:BLL)’s $850 million offering of senior notes earlier that month, or both.
ClearBridge Investments, an investment management firm, published its “Sustainability Leaders Strategy” third quarter 2021 investor letter and highlighted Ball Corporation (NYSE:BLL). Here is what the fund said:
“Ball, the largest manufacturer of recyclable aluminum beverage cans in North America, bucked headwinds for the materials sector with strong quarterly results and was supported by contracts indicative of further growth.”
4. Armstrong World Industries, Inc. (NYSE:AWI)
MIG Capital’s ownership of Armstrong World Industries, Inc. (NYSE:AWI) dates all the way back to the first quarter of 2017. As of the end of September, the fund had a $45.2 million position in the stock that contained 473,417 shares. Hedge fund ownership of AWI fell by half during the first two quarters of 2021 but rebounded by 38% in Q3.
Black Bear Value Partners discussed the stock in its Q1 2021 investor letter, where it noted that 70% of Armstrong World Industries, Inc. (NYSE:AWI)’s sales are to repair and remodel segments of the home industry, making it less sensitive to new home starts. The fund believes Armstrong World Industries, Inc. (NYSE:AWI) is an excellent stock at an attractive valuation, with the capability of generating $4-$5 in free cash flow annually.
Black Bear Value Partners, an investment management firm, published its first quarter 2021 investor letter,and mentioned Armstrong World Industries, Inc. (NYSE:AWI). Here is what the fund said:
“AWI is a 129-year old designer and manufacturer of commercial and residential ceiling, wall, and suspension systems. 95% of their sales are for commercial use with the majority (70%) for repair and remodel (R&R). This translates to less sensitivity to new construction as R&R is a more stable revenue stream.
The US ceiling industry is consolidated with the top 3 companies controlling 98% of the market. AWI is the market leader with 65% market share. (Click here to see the full text)
3. Norwegian Cruise Line Holdings Ltd. (NASDAQ:NCLH)
MIG Capital has owned a stake in Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) since Q3 of 2016 and stuck with the stock through a disastrous period for the cruise industry. The fund owned 1.85 million Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) shares on September 30, shares which have cratered in value by more than half since the start of the pandemic.
In its Q4 2020 investor letter, Miller Value Partners liked Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH)’s chances of coming out of the pandemic in decent shape and expected the travel industry to rebound far more than early expectations pegged for it. However, with omicron now becoming prevalent and some regions locking down and closing up their borders again, full recovery in travel could be years away.
2. Liberty Global Inc. (NASDAQ:LBTYK)
Liberty Global Inc. (NASDAQ:LBTYK) is one of the two oldest holdings in MIG Capital’s 13F portfolio, dating back to the third quarter of 2014. The fund held a 1.67-million share stake in the multinational telecommunications giant on September 30, a position valued at $49.26 million.
Liberty Global Inc. (NASDAQ:LBTYK) added just over 266,000 new broadband and mobile subscribers during Q3, while its full-year guidance for adjusted free cash flow was raised to $1.45 billion, representing 35% year-over-year growth. Thanks to its growing pile of cash, Liberty Global Inc. (NASDAQ:LBTYK) has begun aggressively buying back its stock, buying back $1.1 billion in shares through October and with plans to buy back a further 10% of its outstanding shares in both 2022 and 2023.
1. Cogent Communications Holdings Inc. (NASDAQ:CCOI)
As with Liberty Global, Cogent Communications Holdings Inc. (NASDAQ:CCOI) has been in MIG Capital’s 13F portfolio since Q3 of 2014. Over seven years later the fund is still extremely bullish on the internet service provider, as Cogent Communications Holdings Inc. (NASDAQ:CCOI) ranks as its largest stock holding as of September 30. MIG owned 863,953 shares at that time, valued at $61.2 million.
While MIG remains extremely bullish, White Brook Capital isn’t, having recently sold out of Cogent Communications Holdings Inc. (NASDAQ:CCOI). In its Q3 2021 investment letter, the fund said that the pandemic is likely to have permanently shrunk Cogent’s customer base, as smaller businesses will increasingly opt to work remotely rather than in a small office, which is what Cogent specializes in. The fund does believe that Cogent will figure out some alternatives or look to sell itself, but wanted to deploy its capital into more promising investment opportunities.
You can also take a peek at the Top 10 High Growth Stocks To Buy in 2021 and 15 Biggest Companies That Use Shopify.
