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10 Small-Cap Stocks to Buy According to ‘Australia’s Warren Buffett’ Kerr Neilson

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·9 min read
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In this article, we discuss the 10 small-cap stocks to buy according to Australian billionaire Kerr Neilson. If you want to skip our detailed analysis of Neilson’s history, investment philosophy, and hedge fund performance, go directly to the 5 Small-Cap Stocks to Buy According to Australian Billionaire Kerr Neilson.

Billionaire Kerr Neilson co-founded Platinum Asset Management in 1994, and it is one of the most successful Australian hedge funds with over $4.3 billion in managed securities according to the latest 13F filings. The portfolio has grown by 0.96% this year under Neilson’s investment strategies. With a personal net worth of $1.2 billion, Neilson has often been dubbed as the Australian Warren Buffett. He frequently invests in Asia since he believes that the region is vastly underestimated by investors. Neilson is open to investing in risky stocks as he is prepared to face the downside. Neilson is currently interested in artificial intelligence, quantum computing, and data storage, and he continues to hunt for companies that have a high potential for growth in these sectors.

The top ten holdings comprise 53.32% of the portfolio with investments concentrated in healthcare, materials, information technology, industrials, and consumer discretionary sectors. According to the latest 13F filings, the Sydney-based fund made new purchases in 15 stocks, bought additional stakes in 45, reduced holdings in 34 stocks, and sold 12 equities during the second quarter of 2021. The largest holding in Neilson’s portfolio is ZTO Express (Cayman) Inc. (NYSE:ZTO), with the hedge fund owning more than 16.8 million shares worth over $512.6 million.

Some of the most notable stocks in Neilson’s portfolio for the second quarter of 2021 include Alibaba Group Holding Limited (NYSE:BABA), Facebook Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).

10 Small-Cap Stocks to Buy According to Australian Billionaire Kerr Neilson
10 Small-Cap Stocks to Buy According to Australian Billionaire Kerr Neilson

Kerr Neilson of Platinum Asset Management

Why should we pay attention to the Australian Warren Buffett'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 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.

Our Methodology

With this context in mind, here are the 10 small-cap stocks to invest in according to Australian billionaire Kerr Neilson. We used Platinum Asset Management’s 13F portfolio for the second quarter of 2021 to rank these stocks. The list was compiled according to the value of each holding in the investment portfolio. Companies with market capitalization ranging from $300 million to $3 billion were considered as small-cap stocks.

The analyst ratings for 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.

Small-Cap Stocks to Buy According to Australian Billionaire Kerr Neilson

10. Prometheus Biosciences Inc. (NASDAQ:RXDX)

Neilson’s Stake Value: $8,716,000

Percentage of Neilson’s 13F Portfolio: 0.2%

Market Cap: $975.537 million

Number of Hedge Fund Holders: 16

Prometheus Biosciences Inc. (NASDAQ:RXDX) is a biopharmaceutical company engaged in the development and discovery of medicinal products to diagnose and cure inflammatory bowel diseases, and ranks tenth on our list of the 10 small-cap stocks to buy according to Australian billionaire Kerr Neilson. The company has a market cap of $975.537 million.

Neilson’s Platinum Asset Management owns 354,901 shares in Prometheus Biosciences Inc. (NASDAQ:RXDX), amounting to $8.7 million, and making up 0.32% of Neilson’s portfolio.

At the end of the second quarter of 2021, 16 hedge funds in Insider Monkey’s database held stakes amounting to $263.9 million, up from 24 in the previous quarter with stakes worth over $204.4 million.

Out of the hedge funds being tracked by Insider Monkey, New York-based Perceptive Advisors is a leading shareholder in Prometheus Biosciences Inc. (NASDAQ:RXDX) with 3.3 million shares worth more than $81.3 million.

Like Alibaba Group Holding Limited (NYSE:BABA), Facebook Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Prometheus Biosciences Inc. (NASDAQ:RXDX) is a notable stock in Neilson’s Q2 portfolio.

9. Warrior Met Coal, Inc. (NYSE:HCC)

Neilson’s Stake Value: $13,934,000

Percentage of Neilson’s 13F Portfolio: 0.32%

Market Cap: $1.119 billion

Number of Hedge Fund Holders: 21

The ninth stock on our list of the 10 small-cap stocks to buy according to Australian billionaire Kerr Neilson is Warrior Met Coal Inc. (NYSE:HCC), which is a renowned producer and exporter of metallurgical coal for the steel industry worldwide. It mines coal from some of the deepest vertical shaft coal mines in North America, in addition to extracting methane gas from the Blue Creek coal seam. The company provides coal to markets in the USA, Europe, Asia, and South America. Warrior Met Coal Inc. (NYSE:HCC) has a market cap of $1.119 billion.

Neilson’s Platinum Asset Management owns 810,120 shares in Warrior Met Coal Inc. (NYSE:HCC), amounting to $13.9 million, and making up 0.32% of Neilson’s 13F portfolio.

At the end of the second quarter of 2021, 21 hedge funds in Insider Monkey’s database held stakes in Warrior Met Coal Inc. (NYSE:HCC) amounting to $130.2 million, down from 26 in the previous quarter with stakes worth over $150.4 million.

Out of the hedge funds being tracked by Insider Monkey, New York-based Third Avenue Management is a leading shareholder in Warrior Met Coal Inc. (NYSE:HCC) with 1.7 million shares worth more than $29.6 million.

Like AliBaba Group Holding Limited (NYSE:BABA), Facebook Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Warrior Met Coal Inc. (NYSE:HCC) is a notable stock in Neilson’s Q2 portfolio.

8. Genetron Holdings Limited (NASDAQ:GTH)

Neilson’s Stake Value: $16,408,000

Percentage of Neilson’s 13F Portfolio: 0.37%

Market Cap: $1.225 billion

Number of Hedge Fund Holders: 14

Genetron Holdings Limited (NASDAQ:GTH) is the eighth stock on our list of the 10 small-cap stocks to buy according to Australian Billionaire Kerr Neilson. The Chinese precision oncology company is one of the most popular platforms that is working on utilizing molecular biology and data science to revolutionize cancer treatment. Genetron Holdings Limited (NASDAQ:GTH) has a market capitalization of $1.225 billion.

Neilson’s Platinum Asset Management owns 814,674 shares worth over $16.4 million in Genetron Holdings Limited (NASDAQ:GTH), which make up 0.37% of Neilson’s 13F portfolio.

At the end of the second quarter of 2021, 14 hedge funds in Insider Monkey’s database held stakes amounting to $179.1 million in Genetron Holdings Limited (NASDAQ:GTH), down from 12 in the previous quarter with stakes worth over $188.2 million.

On September 24, BTIG Research maintained a Buy rating on Genetron Holdings Limited (NASDAQ:GTH), and suggested that the price target would increase by 51.08% from the company’s previous close at $21.

Out of the hedge funds being tracked by Insider Monkey, California-based Vivo Capital is a leading shareholder in Genetron Holdings Limited (NASDAQ:GTH), with 6.3 million shares worth more than $127.6 million.

7. NanoString Technologies, Inc. (NASDAQ:NSTG)

Neilson’s Stake Value: $18,185,000

Percentage of Neilson’s 13F Portfolio: 0.42%

Market Cap: $2.146 billion

Number of Hedge Fund Holders: 25

The seventh stock on our list of the 10 small-cap stocks to buy according to Australian billionaire Kerr Neilson is NanoString Technologies Inc. (NASDAQ:NSTG), which is a Seattle-based biotech company that mainly focuses on developing translational research tools. The company has a market cap of $2.146 billion, and is traded as a Russell 2000 Component.

Neilson’s Platinum Asset Management owns 280,671 shares in NanoString Technologies Inc. (NASDAQ:NSTG), amounting to $18.18 million, and making up 0.42% of Neilson’s 13F portfolio.

At the end of the second quarter of 2021, 25 hedge funds in Insider Monkey’s database held stakes amounting to $773.8 million in NanoString Technologies Inc. (NASDAQ:NSTG). This is compared to the same number of hedge funds, with stakes worth over $627.3 million in the previous quarter.

NanoString Technologies Inc. (NASDAQ:NSTG) last issued its quarterly earnings results on August 4. The company reported earnings per share of -$0.41 for the quarter, beating analysts’ consensus estimates of -$0.46 by $0.05.

Out of the hedge funds being tracked by Insider Monkey, New York-based ARK Investment Management is a leading shareholder in NanoString Technologies Inc. (NASDAQ:NSTG), with 2.98 million shares worth over $193.5 million.

Like AliBaba Group Holding Limited (NYSE:BABA), Facebook Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), NanoString Technologies Inc. (NASDAQ:NSTG) is a notable stock in Neilson’s Q2 portfolio.

6. OneConnect Financial Technology Co., Ltd. (NASDAQ:OCFT)

Neilson’s Stake Value: $19,907,000

Percentage of Neilson’s 13F Portfolio: 0.46%

Market Cap: $1.611 billion

Number of Hedge Fund Holders: 13

OneConnect Financial Technology Co. Ltd. (NASDAQ:OCFT) is the sixth stock on our extensive list. Headquartered in Shenzhen, China, the company offers a technology-as-a-service platform to financial institutions. The company has provided its services to 99% of China’s commercial banking sector, and to 53% of the Chinese insurance companies. OneConnect Financial Technology Co. Ltd. (NASDAQ:OCFT) has a market capitalization of $1.611 billion, and it has been added to the FTSE Global Equity Index Series.

Neilson’s Platinum Asset Management owns about 1.65 million shares in OneConnect Financial Technology Co. Ltd. (NASDAQ:OCFT), amounting to $19.9 million, and making up 0.46% of Neilson’s investment portfolio.

At the end of the second quarter of 2021, 13 hedge funds held stakes worth $37.7 million in OneConnect Financial Technology Co. Ltd. (NASDAQ:OCFT). This is compared to 10 hedge funds in the previous quarter, with stakes amounting to $70.8 million.

Out of the hedge funds being tracked by Insider Monkey, Platinum Asset Management is the leading shareholder in OneConnect Financial Technology Co. Ltd. (NASDAQ:OCFT).

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Disclosure: None. 10 Small-Cap Stocks to Buy According to Australian Billionaire Kerr Neilson is originally published on Insider Monkey.