Cristan Blackman’s Empirical Capital Partners is a Tennessee-based hedge fund founded in 2000 that takes a small number of concentrated positions in high-quality companies, with the fund investing the bulk of its assets in those companies which it sees as having the greatest potential for near-term gains. The fund managed a 13F portfolio containing $70.1 million in assets as of June 30, 2020.
Empirical Capital Partners, L.P. has delivered a compound annual return of 8.21% through March 2020. 2019 was an incredible year for the fund, which returned 51.19%. Empirical’s returns have been wildly uneven in recent years however, with double-digit losses posted in both 2018 and 2015. The fund was also devastated by the Covid-19 pandemic in the first quarter of 2020, losing 32.95%.
Let’s take a look at Empirical Capital Partners’ favorite stocks, which it believes to have a great opportunity to deliver stellar near-term returns (two of which have certainly done that in recent months).
5 Stocks Owned by Empirical Capital Partners
Empirical Capital owns 391,000 shares of Marten Transport, Ltd (NASDAQ:MRTN) as of June 30, 2020, down by 3% quarter-over-quarter. With over 14% of the fund’s 13F portfolio value allocated to MRTN, it is by far the most bullish hedge fund on the company among the select group of top hedge funds tracked by Insider Monkey, 2.3% of which are Marten Transport shareholders. Stephens analyst Jack Atkins ranked Marten Transport as his Best Idea earlier this year until it was replaced by fellow delivery service provider FedEx Corporation (NYSE:FDX) in August.
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Hedge fund interest in Pinterest, Inc. (NYSE:PINS) was somewhat muted upon the social media platform’s IPO, but shot up by 39% in Q2 among the funds tracked by Insider Monkey. Empirical Capital is one of its biggest supporters, allocating over 13% of the value of its 13F portfolio to the stock. That positioning had Empirical set up for big returns, as PINS has gained over 127% in the second-half of 2020. The company’s Q3 guidance may end up being very conservative due to a seeming resurgence in ad spending as evidenced by Snap Inc. (NYSE:SNAP)’s strong quarterly results.
Empirical lowered the size of its The Wendy’s Company (NASDAQ:WEN) holding by 6% in Q2, but remains very bullish on the company, which is owned by 3.9% of the select group of hedge funds tracked by Insider Monkey. Wendy’s is working on building out its breakfast service and digital capabilities, including a new rewards program launched in the U.S in July. The fast food chain’s Q2 same store sales slumped by 5.8% quarter-over-quarter, but rebounded strongly in July. Wendy's isn't in our list of the 10 fastest growing franchises in the U.S.
Empirical Capital has slashed its Callaway Golf Company (NYSE:ELY) position by over 50% this year, while the company’s biggest hedge fund supporter, Barry Rosenstein’s JANA Partners, has also been trimming its ELY position in 2020. JANA Partners took a large activist stake in the small-cap golf club manufacturer last June and was rewarded with big returns throughout the remainder of 2019. Callaway’s sales slumped by over 30% in the June quarter and a recovery to pre-2020 sales may not happen until 2022, which could explain the newfound caution from some of the company’s biggest hedge fund backers.
Penn National Gaming
Empirical Capital is also a fan of a different sports-based company, Penn National Gaming, Inc (NASDAQ:PENN), which operates over 40 casinos and horse racing tracks across North America. Ownership of PENN among the hedge funds tracked by Insider Monkey jumped by 89% in Q2 just ahead of a big second-half of the year for the stock, which has gained over 98% since June 30. The September launch of Penn National’s Barstool sports betting app in Pennsylvania appears to have been a success, achieving an estimated 16% market share according to Rosenblatt analyst Bernie McTernan.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.