Jonathan Bloomberg‘s value-investment-oriented firm BloombergSen recently filed its Form 13F for the reporting period of June 30 with the SEC. At the end of the second quarter more than 50% of the fund’s equity portfolio was comprised of companies operating in the finance sector. Over the last 12 months the sector is down by over 11% on average, and has been particularly hard-hit in 2016, which means that there could be a number of good value plays in the sector for patient investors. With that in mind, we decided to dig a little deeper into BloombergSen’s top financial picks heading into the third quarter to see which stocks the financial sector-biased firm is betting most heavily on.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
Pra Group Inc (NASDAQ:PRAA)
– Shares Owned by BloombergSen (as of June 30): 1.95 Million
– Value of Holding (as of June 30): $47.04 Million
After a 1% increase during the April-to-June period, BloombergSen’s Pra Group Inc (NASDAQ:PRAA) holding represented 4.96% of the value of the firm’s equity portfolio. Shares of the $1.3 billion company that is in the business of acquiring and collecting nonperforming loans is down by about 19.7% so far this year. Early last month Pra Group Inc (NASDAQ:PRAA) acquired e-Gov Systems, which provides web-based payment portals and integrated revenue administration solutions to the government sector and processes more than $1.2 million in online transactions every year. Sanford J. Cohen‘s Apex Capital is also bullish on Pra Group Inc (NASDAQ:PRAA), having held about 232,700 shares of the company at the end of March.
Aon plc Class A Ordinary Shares (UK) (NYSE:AON)
– Shares Owned by BloombergSen (as of June 30): 535,905
– Value of Holding (as of June 30): $58.54 Million
BloombergSen’s new position in Aon plc Class A Ordinary Shares (UK) (NYSE:AON) represented 6.17% of its equity portfolio’s value on June 30. Even though the company’s second quarter revenue of $2.77 billion was $90 million lower than estimates, the provider of insurance brokerage, risk management, and human capital consulting services is still up by a hefty 16.2% so far this year. Moreover, Starbucks Corporation (NASDAQ:SBUX) also recently announced that it has joined Aon’s innovative active health exchange platform. LMR Partners, which is managed by Ben Levine, Andrew Manuel and Stefan Renold also initiated a position in Aon plc Class A Ordinary Shares (UK) (NYSE:AON) during the second quarter, of some 7,100 shares.
We’ll check out BloombergSen’s favorite stock and its top two finance stock picks on the next page.
Wells Fargo & Co (NYSE:WFC)
– Shares Owned by BloombergSen (as of June 30): 2.23 million
– Value of Holding (as of June 30): $105.70 Million
The fund’s Wells Fargo & Co (NYSE:WFC) holding was halved during the second quarter, to 2.23 million shares, falling from the fund’s top long position to its 5th-largest. Ken Fisher’s Fisher Asset Management trimmed its own Wells Fargo position by 1% during the quarter, to 18.96 million shares of the bank holding company, which has met or exceeded Wall Street earnings estimates for the last 12 quarters, though the ability to meet those expectations has been partly due to one-time gains realized from the sale of securities and other assets. Recently, Wells Fargo & Co (NYSE:WFC) also completed the acquisition of General Electric Company’s Commercial Distribution Finance (CDF) business in Australia & New Zealand, which has further increased its market share in commercial lending.
Credit Acceptance Corp. (NASDAQ:CACC)
– Shares Owned by BloombergSen (as of June 30): 813,537
– Value of Holding (as of June 30): $150.57 Million
BloombergSen has held a stake in Credit Acceptance Corp. (NASDAQ:CACC) since the first quarter of 2011 and the position was largely unchanged during the second quarter, being raised by 1%. Shares of the $4.22 billion provider of financing programs to automobile dealers are down by more than 9.8%. However, in its financial results for the second quarter, Credit Acceptance managed to top analysts’ estimates, as its revenue of $238.5 million was $6.13 million above expectations, while its EPS of $4.38 came out $0.52 ahead. Gavin M. Abrams‘ Abrams Bison Investments held nearly 1.1 million shares of Credit Acceptance Corp. (NASDAQ:CACC) at the end of March.
Charter Communications, Inc. (NASDAQ:CHTR)
– Shares Owned by BloombergSen (as of June 30): 757,444
– Value of Holding (as of June 30): $173.18 Million
After an 8% reduction to its stake during the second quarter, BloombergSen’s Charter Communications, Inc. (NASDAQ:CHTR) position represented over 18% of its equity portfolio’s value and its top overall equity holding. Following the completion of its $56 billion takeover of Time Warner Cable and $10 billion buyout of Bright House Networks, Charter Communications is now the second-largest cable company in the U.S. After all that wheeling and dealing, shares of the company are up by 4% this year. At the end of March, Eashwar Krishnan’s Tybourne Capital Management held 2.18 million shares of Charter Communications, Inc. (NASDAQ:CHTR).