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Was Joseph Samuels’s Islet Management Right About These 10 Stocks?

In this article, we discuss the top 10 stock picks of Joseph Samuels's Islet Management as of the end of the second quarter of 2021 and assess their performance over the past 12 months. If you want to skip our detailed analysis of the hedge fund, its investment philosophy, and hedge fund performance, go directly to Was Joseph Samuels's Islet Management Right About These 5 Stocks?

We prepared the actual contents of this article in November last year, when we analyzed the Q2 portfolio of Joseph Samuels's Islet Management to discuss some of the notable stocks in the hedge fund portfolio at that time. We are publishing this article today because it’s always interesting for the readers to analyze how good the so-called “smart money” is when it comes to stock picking. When we look at the stock picks/sells of hedge funds in hindsight, we can better analyze their performance and see whether they were right or wrong.

In this article you will see the notable stock picks of Joseph Samuels's Islet Management as of the second quarter of last year.

To assess the performance of these stocks, we have mentioned their performance over the past 12 months through November 27, 2022.

At the time of writing we had mentioned analyst ratings for these stocks from famous Wall Street analysts. It’d be interesting for our readers to see how right or wrong were these analysts’ price targets and calls.

However, we should keep the 2022 market crash in mind when reading this article. You will notice that most of the stocks in this list lost value over the past 12 months. That doesn’t, however, mean that the hedge fund was entirely wrong. The fund believes in holding stocks for longer periods of time. These holdings might end up creating profits for the hedge fund in the months and years to come as analysts believe the market could rebound strongly in 2023 and beyond.

It’s also important to note that the hedge fund sold or reduced its stakes in some of these stocks in the subsequent quarters of 2021 and 2022.

Now, let’s start the article by first reading the introduction to the hedge fund we wrote back in November 2021.

Islet Management is a New-York based hedge fund that was founded by Mr. Joseph Samuels after he left his position as head of US equities and executive managing director at Och-Ziff Capital Management Group in July 2016. He worked at Och-Ziff Capital for 13 years. Before joining Och-Ziff, Mr. Samuels worked at the discontinued Pequot Capital Management and Merrill Lynch.

Mr. Samuels' hedge fund uses a tactical long/short equity strategy focused on pinpointing and benefitting from three key opportunities, namely dislocations, transformative corporate events, and capital market opportunities.

Dislocations in the market take place under stressful conditions that result in the mispricing of assets at a broad level. This theme came into play during the COVID-19 pandemic as various sectors came to a halt, resulting in the stock price of numerous prominent corporations plummeting, despite the businesses having strong fundamentals.

The theme of a transformative business event is very much self-explanatory and the hedge fund is focused on capitalizing on such events for a corporation by taking a long/short position. According to Insider Monkey's database, the portfolio value of Joseph Samuel's Islet Management stood at approximately $3.63 billion at the end of the second quarter of 2021.

10. Coca-Cola Europacific Partners Plc (NASDAQ:CCEP)

Islet Management’s Stake Value: $32,626,000

Stock performance over the past 12 months through November 27: +1.7%

Coca-Cola Europacific Partners Plc (NASDAQ:CCEP) is the bottler of the Coca-Cola Company (NYSE:KO) in the Western Europe and Asia Pacific region and serves two million customers across 26 countries. This new entity came into being after the Australian bottler of Coca-Cola known as Amatil was acquired by Coca-Cola European Partners for $9.8 billion in April 2021.

Coca-Cola Europacific Partners Plc (NASDAQ:CCEP) is on the path of recovery following the impact of the pandemic on its business. However, the company is now facing new challenges in the form of supply chain disruptions and higher commodity prices globally. Coca-Cola Europacific Partners Plc (NASDAQ:CCEP) has pricing, productivity, and cost levers to counter these disruptions.

On November 10, Mitch Collett at Deutsche Bank raised the target price on Coca-Cola Europacific Partners Plc (NASDAQ:CCEP) from $71 to $73, while maintaining a Buy rating.

9. Fair Isaac Corporation (NYSE:FICO)

Islet Management’s Stake Value: $32,674,000

Stock performance over the past 12 months through November 27: +67

Fair Isaac Corporation (NYSE:FICO) is a data analytics company based out of San Jose, California with a focus on credit scoring services. FICO's consumer credit rating is a widely accepted measure in determining the credit risk of the consumer by lenders in the US. Fair Isaac Corporation (NYSE:FICO) has business interests in more than 90 countries.

In the second quarter, Islet Management held 65000 shares in Fair Isaac Corporation (NYSE:FICO), worth $32.6 million. Of the 873 elite funds being tracked by Insider Monkey, 28 hedge funds held a stake in Fair Isaac Corporation (NYSE:FICO) at the end of Q2, up from 27 in the preceding quarter.

On November 8, Surinder Thind at Jefferies upgraded Fair Issac Corporation (NYSE:FICO) from a Neutral to a Buy rating and revised the price target from $518 to $522.

Carillon Tower Advisers mentioned Fair Isaac Corporation (NYSE:FICO) in its Q3 2021 investor letter. Here’s what the fund said:

"Fair Isaac Corporation (FICO) provides predictive analytics and data management products and services that enable business to automate, improve, and connect decisions. The stock underperformed in the quarter despite posting solid earnings. The recent pressure in the firm’s shares stems from investor concerns that FICO could see a dramatic slowdown in its mortgage business due to intrusion from a competitor as well as the potential for further rising interest rates. At the moment, we feel as though these concerns are overblown and continue to hold the stock."

8. Lightspeed Commerce Inc. (NYSE:LSPD)

Islet Management’s Stake Value: $34,748,000

Stock performance over the past 12 months through November 27: -70%

Lightspeed Commerce Inc. (NYSE:LSPD) is a provider of point-of-sale (POS) and e-commerce software solutions to retail, hospitality, and golf merchants globally. The stock price of the Quebec, Ontario-based company plummeted on November 4 after the company reported losses of $11.1 million during Q2 2021 as opposed to $4.6 million during the same period last year.

On November 5, Raimo Lenschow at Barclays reduced the target price on Lightspeed Commerce Inc. (NYSE:LSPD) from $137 to $123 but kept an Overweight rating on the stock.

7. American International Group, Inc. (NYSE:AIG)

Islet Management’s Stake Value: $35,700,000

Stock performance over the past 12 months through November 27: +11%

American International Group, Inc. (NYSE:AIG) is a widely recognized insurance corporation with a presence in over 80 countries. The New York-based company has general insurance, life and retirement, and investment business units under its wing.

On November 8, Mark Dwelle at RBC Capital increased the target price from $65 to $73 and maintained an Outperform rating on American International Group, Inc. (NYSE:AIG) stock. The analyst noted that the company showed improvement in the core loss ratio, the expense ratio, and manageable catastrophe losses.

6. Invitation Homes Inc. (NYSE:INVH)

Islet Management’s Stake Value: $37,101,000

Stock performance over the past 12 months through November 27: -23%

Invitation Homes Inc. (NYSE:INVH) is a Dallas, Texas-based residential home leasing company with a pool of 80,000 homes. The company also provides smart home maintenance application solutions to its tenants. The app provides control over the thermostat, locks and unlocks doors, and other services for a fixed monthly subscription fee.

On November 2, Aaron Hecht at JMP Securities raised the price target on Invitation Homes, Inc. (NYSE:INVH) from $45 to $50 and maintained an Outperform rating on the stock.

Baron Funds discussed its stance on Invitation Homes Inc. (NYSE:INVH) in its Q1 2021 investor letter. Here’s what the fund said:

“The Fund also has investments in REITs that would benefit from this movement out of urban areas into suburban areas. We expect single-family rental REIT Invitation Homes, Inc. to benefit as more people opt for single-family home rentals rather than apartment rentals.”

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Disclosure: None. Was Joseph Samuels's Islet Management Right About These 10 Stocks? is originally published on Insider Monkey.