January 20, 2022

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10 Stocks to Invest in According to Thomas Bancroft’s Makaira Partners

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Makaira Partners LLC is an investment firm located in La Jolla, California. It was founded by Mr. Thomas Bancroft in 2007. The firm is named after the Makaira Indica, also known as the Black Marlin, which is one of the largest fish in the world and often weighs over 1,000 pounds.

Mr. Bancroft has decades of experience in the financial sector. He started his journey at GEICO in 1994. The executive is a graduate of the University of Colorado in Boulder, from where he completed his bachelor’s in political science in 1988. He spent 12 years at GEICO, which is a division of the famed investment firm Berkshire Hathaway. He has also had the honor of working with the Oracle of Omaha, the legendary Warren Buffett.

Makaira Partners mirrors Mr. Buffet’s investment approach, which generally espouses to always go long. In layman’s terms, it means patiently identifying companies that the investor believes have the greatest long term potential and then holding on to the investment for years. The firm often holds its investments for at least five years and believes that the underlying business and competitive advantage of a company are closely tied to its share price performance.

Makaira Partners’ portfolio was worth $473 million as of the third quarter of this year. The firm’s largest investments are in Liberty Broadband Corporation (NASDAQ:LBRDA) and Bath & Body Works, Inc. (NYSE:BBWI). Alongside, it also holds a stake in the well known fashion brand Victoria’s Secret & Co. (NYSE:VSCO).

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Thomas Bancroft of Makaira Partners

Our Methodology

To determine Mr. Bancroft’s top ten stocks, we looked through Makaira Partners’ 13-F filings for the third quarter of this year.

10. HEICO Corporation (NYSE:HEI)

Makaira Partners’ Holdings: $4 million

Makaira Partners’ Portfolio: 0.85%

Number of Hedge Fund Holders: 35

HEICO Corporation (NYSE:HEI) is an aerospace and defense component provider. Its products cover jet engine components and electronic systems such as suppression filters. It is headquartered in Hollywood, Florida, United States.

Mr. Bancroft’s Makaira partners held 34,191 HEICO Corporation (NYSE:HEI) shares as the third quarter of 2021 came to an end. These were worth $4 million and represented 0.85% of its investment portfolio. During the same time period, 35 of the 867 hedge funds polled by Insider Monkey had holdings in the aerospace firm.

HEICO Corporation (NYSE:HEI) earned $471 million in revenue and $0.56 in GAAP EPS during its third fiscal quarter, beating analyst estimates for EPS only. RBC Capital set a $145 price target for the aerospace firm in an October 2021 analyst note, highlighting that mergers and good margins are positives for the company.

Bo Shan’s Gobi Capital is HEICO Corporation (NYSE:HEI)’s largest investor as it owns 928,879 shares worth $110 million.

HEICO Corporation (NYSE:HEI) joins Victoria’s Secret & Co. (NYSE:VSCO), Liberty Broadband Corporation (NASDAQ:LBRDA) and Bath & Body Works, Inc. (NYSE:BBWI) in Mr. Bancroft’s list of hot stocks.

9. Cactus, Inc. (NYSE:WHD)

Makaira Partners’ Holdings: $5 million

Makaira Partners’ Portfolio: 1.07%

Number of Hedge Fund Holders: 10

Cactus, Inc. (NYSE:WHD) is a drilling equipment provider based in the United States. Its products cover both oil and gas exploration wells and it also providers services such as installation, maintenance, and repair.

For its third fiscal quarter, Cactus, Inc. (NYSE:WHD) brought in $115 million in revenue and $0.21 for GAAP EPS, beating analyst estimates for EPS only. Citi raised its price target on the stock to $50 in a November 2021 note.

As Q3 2021 ended, Makaira Partners held 135,000 Cactus, Inc. (NYSE:WHD) shares worth $5 million and making up 1% of its portfolio. 10 of the 867 hedge funds surveyed by Insider Monkey for Q3 2021 had invested in the firm.

Cactus, Inc. (NYSE:WHD)’s biggest investor is Todd J. Kantor’s Encompass Capital Advisors who owns one million shares worth $38 million.

8. The Progressive Corporation (NYSE:PGR)

Makaira Partners’ Holdings: $6.8 million

Makaira Partners’ Portfolio: 1.44%

Number of Hedge Fund Holders: 47

The Progressive Corporation (NYSE:PGR) is an insurance provider that covers several different markets in the United States. These markets include residential, automotive, and personal liability among others.

Mr. Bancroft’s investment firm held 75,600 The Progressive Corporation (NYSE:PGR) shares by the end of Q3 2021. These were worth $6.8 million and represented 1.44% of its portfolio. Similarly, as Q3 2021 ended, 47 of the 867 hedge funds held stakes in the company according to Insider Monkey’s research.

The Progressive Corporation (NYSE:PGR) brought in $12 billion through net premiums and $0.19 in EPS for its Q3, beating analyst estimates for net premium. Goldman Sachs set a price target of $104 for the company in a November 2021 note, highlighting that investors might look at a brighter future for the company.

William B. Gray’s Orbis Investment Management is The Progressive Corporation (NYSE:PGR)’s largest investor by owning 4.5 million shares worth $408 million.

The Progressive Corporation (NYSE:PGR) was mentioned by Madison Funds in its Q3 2021 investor letter. The firm outlined that:

“Regarding business activity, we have had companies report disruptions to current economic results from the aforementioned logistical challenges. Progressive Corporation continues to see higher accident frequencies and severities as people are driving more this year than last, and more recklessly. We expect Progressive to utilize its superior data capabilities to reprice its policies for improved profitability going forward.”

7. Victoria’s Secret & Co. (NYSE:VSCO)

Makaira Partners’ Holdings: $18.7 million

Makaira Partners’ Portfolio: 3.96%

Number of Hedge Fund Holders: 37

Victoria’s Secret & Co. (NYSE:VSCO) is an American retailer of female specialty garments and beauty products. Some of the products that it offers include nightwear, undergarments, and perfumes.

Victoria’s Secret & Co. (NYSE:VSCO) earned $1.4 billion in revenue and a GAAP EPS of $0.81 during its Q3, beating analyst estimates for revenue only. Its price target was lowered to $69 by Morgan Stanley in a November 2021 analyst note which shared supply chain concerns as hampering visibility into the company’s future.

By Q3 2021 end, Mr. Bancroft’s investment firm’s stake in Victoria’s Secret & Co. (NYSE:VSCO) was worth $18.7 million. This was through owning 339,738 shares and it made up for 3.96% of Makaira Partners’ portfolio. 37 of the 867 hedge funds had invested in the company during the same time period according to Insider Monkey’s survey.

6. Qurate Retail, Inc. (NASDAQ:QRTEA)

Makaira Partners’ Holdings: $30 million

Makaira Partners’ Portfolio: 6.4%

Number of Hedge Fund Holders: 34

Qurate Retail, Inc. (NASDAQ:QRTEA) is a digital commerce provider in the United States. It operates an electronic commerce platform and also sells its products through televised events.

Makaira Capital held 2.9 million Qurate Retail, Inc. (NASDAQ:QRTEA) shares during Q3 2021, which were worth $30 million and represented 6.4% of its portfolio. Out of the 867 hedge funds polled by Insider Monkey for Q3 2021, 34 had held a stake in Qurate Retail, Inc. (NASDAQ:QRTEA).

During its third fiscal quarter, Qurate Retail, Inc. (NASDAQ:QRTEA)  earned $3.14 billion in revenue and $0.30 in GAAP EPS, missing analyst estimates on both counts. Bank of America set a $26 price target for the company in April this year.

Qurate Retail, Inc. (NASDAQ:QRTEA)’s largest investor is Bob Peck and Andy Raab’s FPR Partners which owns 14.8 million shares worth $151 million.

Weitz Investment Management mentioned Qurate Retail, Inc. (NASDAQ:QRTEA) in its Q3 2021 investor letter, stating that:

“Another quarterly detractor, Qurate Retail, was a “stay-at-home” winner through much of the pandemic thanks to its video and eCommerce shopping model. As economies reopen, competition from brick-and-mortar stores will increase, but we continue to like Qurate’s unique retail model and unassuming valuation.”

Qurate Retail, Inc. (NASDAQ:QRTEA) is a part of Mr. Bancroft’s favorite stocks, alongside Liberty Broadband Corporation (NASDAQ:LBRDA), Victoria’s Secret & Co. (NYSE:VSCO), and Bath & Body Works, Inc. (NYSE:BBWI).

To see the rest of the stocks in this list click to read 5 Stocks to Invest in According to Thomas Bancroft’s Makaira Partners.

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Disclosure. None. 10 Stocks to Invest in According to Thomas Bancroft’s Makaira Partners is originally published on Insider Monkey.

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