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10 Stocks to Invest In: Adam Peterson’s Magnolia Capital Fund Portfolio

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·7 min read
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In this article, we will discuss 10 stocks to invest in: Adam Peterson's Magnolia Capital fund portfolio based on Q2 holdings of the fund. If you want to skip our detailed analysis of Peterson's history, investment philosophy, and hedge fund performance, go directly to the 5 Stocks to Invest In According to Adam Peterson's Magnolia Capital Fund.

Magnolia Capital Fund is a Nebraska-based hedge fund formed by Adam Peterson in November 2012. Mr. Peterson is the only shareholder and owner of the hedge fund. The hedge fund typically invests in publicly listed common stocks and real estate funds to generate long-term financial appreciation. The hedge fund’s 13F portfolio is valued at approximately $804.48 million as of the end of the second quarter of 2021.

Some of the top stocks in the investment portfolio of Adam Peterson's Magnolia Capital Fund in the second quarter of 2021 were Wells Fargo & Company (NYSE:WFC), Discovery, Inc. (NASDAQ:DISCK), and Black Stone Minerals, L.P. (NYSE:BSM), among others.

Based on the latest 13F holdings for the second quarter of 2021, Magnolia Capital Fund owns 3.44 million shares in Wells Fargo & Company (NYSE:WFC). On September 1, Wells Fargo & Company (NYSE:WFC) chose the nCino Bank Operating System to accelerate digital technology in its commercial banking and corporate and investment banking divisions. Wells Fargo & Company (NYSE:WFC) currently has a market capitalization of $196.78 billion.

10 Stocks to Invest In: Adam Peterson's Magnolia Capital Fund Portfolio
10 Stocks to Invest In: Adam Peterson's Magnolia Capital Fund Portfolio

Source:Pixabay

Why it is important to pay attention to hedge funds’ 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 more than 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.

With this background in mind, let’s start our list of 10 stocks to invest in: Adam Peterson's Magnolia Capital fund portfolio. We picked these stocks from the Q2 portfolio of Peterson's hedge fund.

Stocks to Invest In: Adam Peterson's Magnolia Capital Fund Portfolio

10. NACCO Industries, Inc. (NYSE:NC)

Peterson's Stake Value: $5,052,000

Percentage of Adam Peterson's 13F Portfolio: 0.62%

Number of Hedge Fund Holders: 4

NACCO Industries, Inc. (NYSE:NC) is a mining and natural resources company that operates via its subsidiaries.

On August 18, NACCO Industries, Inc. (NYSE:NC) declared a quarterly dividend of $0.1975 per share, in line with the previous. On August 4, NACCO Industries, Inc. (NYSE:NC) posted earnings results for the second quarter of 2021. It reported earnings per share of $0.91, versus the earnings per share of $1.25 for the first quarter of 2021.

Adam Peterson's Magnolia Capital Fund bought 194,014 shares in NACCO Industries, Inc. (NYSE:NC), worth $5.05 million, representing 0.62% of their portfolio. At the end of the second quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $13.21 million in NACCO Industries, Inc. (NYSE:NC), up from 2 the preceding quarter worth $7.88 million. Renaissance Technologies is a leading shareholder of NACCO Industries, Inc. (NYSE:NC), with 274,217 shares worth $7.14 million.

9. Black Stone Minerals, L.P. (NYSE:BSM)

Peterson's Stake Value: $6,706,000

Percentage of Adam Peterson's 13F Portfolio: 0.83%

Number of Hedge Fund Holders: 6

Black Stone Minerals, L.P. (NYSE:BSM) is an oil and gas company located in Houston, Texas.

On September 3, Wells Fargo analyst Joseph McKay initiated coverage of Black Stone Minerals, L.P. (NYSE:BSM) to “Overweight” from “Equal Weight” raising his price target to $13, up from $11. On August 2, Black Stone Minerals, L.P. (NYSE:BSM) declared earnings for the second quarter of 2021. It posted earnings per share of $0.05, missing the estimates by $0.07.

Black Stone Minerals, L.P. (NYSE:BSM) is a new arrival on Adam Peterson's portfolio, as his hedge fund bought 623,832 shares worth $6.71 million, representing close to 0.83% of their portfolio. In addition, hedge funds are loading up on Black Stone Minerals, L.P. (NYSE:BSM), as Insider Monkey’s data shows that 6 hedge funds held stakes in the company as of the end of the second quarter of 2021, up from 5 funds a quarter earlier.

8. Nicholas Financial, Inc. (NASDAQ:NICK)

Peterson's Stake Value: $24,385,000

Percentage of Adam Peterson's 13F Portfolio: 3.03%

Number of Hedge Fund Holders: 2

Nicholas Financial, Inc. (NASDAQ:NICK) is a Florida-based consumer and auto loan company. Nicholas Financial, Inc. (NASDAQ:NICK) delivered 60.57% return in the past 12 months.

On July 30, Nicholas Financial, Inc. (NASDAQ:NICK) announced earnings for the first quarter of 2021. It posted earnings per share of $0.22 versus earnings per share of $0.24 for the fourth quarter of 2020. Revenue over the period was $12.6 million, down -11.0% YoY.

Magnolia Capital Fund holds 2.18 million shares in Nicholas Financial, Inc. (NASDAQ:NICK) worth $24.39 million, thereby making it the company's biggest stakeholder. This represents 3.03% of their portfolio. The latest data reveals that the hedge fund stake in Nicholas Financial, Inc. (NASDAQ:NICK) increased by 5% in the second quarter of 2021.

7. Discovery, Inc. (NASDAQ:DISCK)

Peterson's Stake Value: $37,471,000

Percentage of Adam Peterson's 13F Portfolio: 4.65%

Number of Hedge Fund Holders: 35

Discovery, Inc. (NASDAQ:DISCK), located in New York City, is an American international factual television corporation. Discovery, Inc. (NASDAQ:DISCK) shares have offered investors more than 23.31% in returns over the course of the past 12 months.

On August 3, Discovery, Inc. (NASDAQ:DISCK) posted earnings for the second quarter of 2021. The company declared earnings per share of $1.01, beating the estimates by $0.50.

Discovery, Inc. (NASDAQ:DISCK) is a new arrival on Adam Peterson's portfolio, as his hedge fund bought about 1.29 million shares, worth over $37.47 million. This represents 4.65% of their portfolio. In addition, D E Shaw is a leading shareholder in Discovery, Inc. (NASDAQ:DISCK), with 5.69 million shares worth more than $165.02 million.

Smead Capital Management, in its second quarter 2021 investor letter, mentioned Discovery, Inc. (NASDAQ:DISCK). Here is what the fund said:

“We were most negatively affected by Discovery’s (DISCK) stock backing off from their meme-stock fame of the first quarter. Their share price then weakened further by announcing a merger with Warner Media to aggregate the best of unscripted TV shows with the best of sports and scripted TV and movies.”

6. Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Peterson's Stake Value: $38,670,000

Percentage of Adam Peterson's 13F Portfolio: 4.8%

Number of Hedge Fund Holders: 4

Alliance Resource Partners, L.P. (NASDAQ:ARLP) is a diversified steam coal producer and marketer in the United States. Alliance Resource Partners, L.P. (NASDAQ:ARLP) currently has a $1.24 billion market capitalization and was able to deliver a 242.46% return in the past 12 months.

On August 6, Alliance Resource Partners, L.P. (NASDAQ:ARLP) announced earnings for the second quarter of 2021. It reported earnings per share of $0.34, beating the estimates by $0.13. On July 26, Alliance Resource Partners, L.P. (NASDAQ:ARLP) declared a quarterly dividend of $0.10 per share, in line with previous.

The hedge fund chaired by Adam Peterson holds 5.36 million shares in Alliance Resource Partners, L.P. (NASDAQ:ARLP) worth $38.67 million, representing 4.8% of their portfolio. Alliance Resource Partners, L.P. (NASDAQ:ARLP) saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions declined to 4 in the first quarter of 2021 compared to 7 positions in the previous quarter.

Click to continue reading and see 5 Stocks to Invest In According to Adam Peterson's Magnolia Capital Fund.

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Disclosure: None. 10 Stocks to Invest In: Adam Peterson's Magnolia Capital Fund Portfolio is originally published on Insider Monkey.