10 Best Stocks According to Clint Carlson’s Carlson Capital
In this article, we discuss the 10 Best Stocks According to Clint Carlson's Carlson Capital. You can skip our comprehensive analysis of Carlson Capital’s history, investment philosophy, and hedge fund performance and go directly to 5 Best Stocks According to Clint Carlson's Carlson Capital.
Clint Carlson launched Carlson Capital, a Dallas-based alternative asset management hedge fund, in 1993 with the primary purpose of employing a multi-strategy investment approach. From 1985 to 1988, Mr. Carlson was the head of risk arbitrage at Bass Brothers and co-managed the risk arbitrage fund at Maxxam Group and related firms.
The Wall Street Journal claims that Carlson Capital has continued to be successful since its launch, earning 39% returns on a $1 billion investment in distressed house bonds in 2010. The multi-strategies employed by Carlson Capital in its investment process include risk arbitrage, convertible arbitrage, relative value arbitrage (mostly pairs trading), event-driven arbitrage, distressed/credit arbitrage, and conventional long/short strategies. The fund makes its investment selections based on three pillars: philosophy, people, and process.
Carlson Capital has a 13F portfolio worth about $1.45 billion as of Q2 2022. Securities filings for Q2 2022 also reveal that Clint Carlson's Carlson Capital added 40 new stocks to its portfolio, increased its holdings in 44 stocks, sold 67 companies, and reduced its holdings in 27 securities. The hedge fund's key investments are in technology, finance, services, and basic materials. Some of the hedge fund’s most notable holdings include Bank of America Corporation (NYSE:BAC) and Dell Technologies Inc. (NYSE:DELL).
Clint Carlson of Carlson Capital
Methodology
We used the Q2 2022 Clint Carlson's Carlson Capital portfolio for this analysis, selecting the hedge fund’s top 10 holdings. The stocks are ranked according to Carlson Capital’s stake value in each company.
10. Vonage Holdings Corp. (NYSE:VG)
Carlson Capital’s Stake Value: $38,245,000
Percentage of Carlson Capital’s 13F portfolio: 2.62%
Number of Hedge Fund Holders: 41
Vonage Holdings Corp. (NASDAQ:VG) is a company that offers communication services using cloud-connected devices. Clint Carlson's Carlson Capital owned 2.03 million shares of Vonage Holdings Corp. (NASDAQ:VG) at the end of Q2 2022, worth $38.2 million representing 2.62% of the total 13F holdings.
Craig-Hallum analyst George Sutton on June 10 lowered Vonage Holdings Corp. (NASDAQ:VG) to Sell from Hold, with a $14.50 price objective, down from $21.
According to Insider Monkey’s Q2 2022 database, 41 hedge funds were bullish on Vonage Holdings Corp. (NASDAQ:VG), up from 37 in the previous quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is the leading stakeholder of the company, with 5.3 million shares worth $100.6 million.
Vonage Holdings Corp. (NASDAQ:VG) was featured in Adestella Investment Management's fourth-quarter 2020 investor letter. Here is what the fund said:
“Vonage (VG) – the VG thesis has largely played out as expected. The market has gradually shifted its focus from the declining consumer operations to the growing business ones, highlighted by the API unit. As its legacy home phone VOIP solutions continue to become a smaller and smaller portion of the overall pie, we think this trend will continue. If the API unit can continue to grow at 25-30%, that segment alone covers most of the enterprise value at just a ~6x sales multiple before giving any credit to the sizable UCaaS operations. The API unit’s closest comparable, Twilio (TWLO), currently trades at 31x sales, so it’s not unreasonable to think there’s upside to our estimate here. Shares have returned around 80% since our writeup (and slightly higher from our cost as we added in the weeks that followed), but we’ve maintained most of our position as the key growth drivers remain intact.”
9. Black Knight, Inc. (NYSE:BKI)
Carlson Capital’s Stake Value: $38,580,000
Percentage of Carlson Capital’s 13F portfolio: 2.65%
Number of Hedge Fund Holders: 46
Black Knight, Inc. (NYSE:BKI) delivers integrated software, data, and analytics solutions in North America and internationally. Securities filings for Q2 2022 reveal that Clint Carlson's Carlson Capital added 590,000 shares of Black Knight, Inc. (NYSE:BKI) to its portfolio worth $38.5 million, representing 2.65% of the total securities.
Following the company's agreement to be taken over by Intercontinental Exchange, Inc. (NYSE:ICE), Keefe Bruyette analyst Ryan Tomasello on May 8 downgraded Black Knight, Inc. (NYSE:BKI) to Market Perform from Outperform, with a price objective of $80, down from $83. According to Tomasello's research report, the transaction spread is now at 15% relative to the projected $82 value based on ICE's current share price. While this "provides optionality should the merger conclude well," the analyst downgraded the shares since his revised scenario-weighted price target represents 13% upside.
According to Insider Monkey’s data, 46 hedge funds were long Black Knight, Inc. (NYSE:BKI) at the conclusion of the second quarter of 2022, up from 43 funds in the preceding quarter. Alec Litowitz and Ross Laser’s Magnetar Capital is the largest shareholder of the company, with 2.09 million shares worth $136 million.
Here is what Madison Funds specifically said about Black Knight, Inc. (NYSE:BKI) in its Q2 2022 investor letter:
“Black Knight, Inc. (NYSE:BKI) is the largest provider of software for the mortgage servicing industry. In May, it announced an agreement to be acquired by Intercontinental Exchange at a substantial premium to its unaffected public market valuation. We believe the offer represents fair value for the company.”
8. Bank of America Corporation (NYSE:BAC)
Carlson Capital’s Stake Value: $38,844,000
Percentage of Carlson Capital’s 13F portfolio: 2.66%
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC), via its subsidiaries, provides banking and financial goods and services to individuals, small and medium-sized enterprises, institutional investors, major organizations, and governments across the world. Carlson Capital increased its stake on Bank of America Corporation (NYSE:BAC) by 351% in Q2 2022.
Morgan Stanley analyst Betsy Graseck on October 5 reduced her price objective for Bank of America Corporation (NYSE:BAC) from $40 to $36 and maintained an Equal Weight rating on the stock. Graseck is decreasing price targets throughout her bank coverage by a median of 3%, citing increased liquidity restrictions and the need for banks to fund loan expansion with higher-cost deposits, additional debt, and securities portfolio runoffs.
According to Insider Monkey data, 99 hedge funds were long Bank of America Corporation (NYSE:BAC) at the end of the second quarter of 2022, in line from the previous quarter. Warren Buffett’s Berkshire Hathaway is the company’s largest stakeholder, with 1.01 billion shares worth $31.4 billion.
7. First Horizon National Corporation (NYSE:FHN)
Carlson Capital’s Stake Value: $39,676,000
Percentage of Carlson Capital’s 13F portfolio: 2.72%
Number of Hedge Fund Holders: 43
First Horizon National Corporation (NYSE:FHN) serves as the holding company for First Horizon Bank, which offers a variety of financial services. The business is divided into three divisions: regional banking, specialty banking, and corporate banking. Carlson Capital boosted its holdings in First Horizon National Corporation (NYSE:FHN) by +47% in Q2 2022, purchasing 1.8 million shares worth more than $39 million, or 2.72% of the whole 13F portfolio.
According to Insider Monkey’s data, First Horizon National Corporation (NYSE:FHN) was part of 43 hedge fund portfolios at the end of Q2 2022, down from 44 funds in the prior quarter. Simon Sadler’s Segantii Capital is the leading position holder in the company, with 11.8 million shares worth $259 million.
6. Coherent, Inc. (NASDAQ:COHR)
Carlson Capital’s Stake Value: $46,831,000
Percentage of Carlson Capital’s 13F portfolio: 3.21%
Number of Hedge Fund Holders: 33
Coherent, Inc. (NASDAQ:COHR) develops, manufactures, and sells engineered materials, optoelectronic components, and devices all over the world. It is divided into two business segments: compound semiconductors and photonic solutions. In the second quarter of 2022, Carlson Capital's portfolio held 175,911 shares of Coherent, Inc. (NASDAQ:COHR), worth about $46.8 million representing 3.21% of the total 13F securities.
JPMorgan analyst Samik Chatterjee on September 12 reinstated coverage of Coherent, Inc. (NASDAQ:COHR) with an Overweight rating and a $82 price target. The analyst expects revenues to expand, noting the company's "technology leadership and vertically integrated production capabilities in established sectors," such as optical communications and industrial lasers.
Among the hedge funds tracked by Insider Monkey, 33 funds were bullish on Coherent, Inc. (NASDAQ:COHR) at the end of the second quarter of 2022, down from 36 funds in the prior quarter. Matthew Halbower’s Pentwater Capital Management is the leading shareholder of the company with 900,000 shares worth $239 million.
Here is what Appleseed Fund said about Coherent, Inc. (NASDAQ:COHR) in its Q1 2021 investor letter:
“Our most significant contributors to the Fund’s equity performance during the quarter (includes) Coherent (COHR). During the quarter, Coherent announced that it was being acquired, after which several other bidders emerged. Between the takeover announcement and the bidding war among Coherent suitors, the shares rallied strongly during the quarter.”
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Disclosure: None. 10 Best Stocks According to Clint Carlson's Carlson Capital is originally published on Insider Monkey.
