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Top 10 Stock Picks of Benjamin Natter’s Kent Lake Capital

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·8 min read
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  • FVRR
  • ENSG
  • AHCO
  • TRMR
  • UPWK
  • EHC
  • SSTK
  • ADUS

In this article, we discuss the top 10 stock picks of Benjamin Natter's Kent Lake Capital. If you want to skip our detailed analysis of these stocks, go directly to the Top 5 Stock Picks of Benjamin Natter's Kent Lake Capital.

Benjamin Natter has been the managing member of Kent Lake Capital since January 2019. At the California-based investment management firm, Natter oversees a portfolio worth $232.5 million, in addition to discretionary assets under management of roughly $397 million, as per the latest 13F filings as of September this year.

Natter holds a Bachelor’s in Business Administration degree from the University of California, Berkeley. He began his career as a summer associate at Llenroc Capital in 2012, and shifted to Emrose Capital shortly after as a research analyst. After 2 years at Emrose Capital, Natter was promoted as the portfolio manager of the hedge fund, a position he held for almost 4 years. He left the firm to join Kent Lake Capital in 2019.

The Q3 portfolio at Kent Lake Capital is concentrated in the information technology, healthcare, finance, communications, and consumer discretionary sectors, with the top ten holdings comprising 57.94% of the total 13F securities. The largest holding in Natter’s portfolio as of September 2021 is Shutterstock, Inc. (NYSE:SSTK), which represents 11.19% of his total investments.

Top 10 Stock Picks of Benjamin Natter's Kent Lake Capital
Top 10 Stock Picks of Benjamin Natter's Kent Lake Capital

Source:Pixabay

The most notable stocks from Benjamin Natter’s Q3 portfolio include Upwork Inc. (NASDAQ:UPWK), Shutterstock, Inc. (NYSE:SSTK), XPEL, Inc. (NASDAQ:XPEL), and Encompass Health Corporation (NYSE:EHC), among others discussed in detail below.

Our Methodology

With this context in mind, let’s discuss the top 10 stock picks of Benjamin Natter's Kent Lake Capital. We used Kent Lake Capital’s Q3 portfolio to select the firm’s top stocks.

Top Stock Picks of Benjamin Natter's Kent Lake Capital

10. Fiverr International Ltd. (NYSE:FVRR)

Kent Lake Capital’s Stake Value: $9,134,000

Percentage of Kent Lake Capital’s 13F Portfolio: 3.92%

Number of Hedge Fund Holders: 29

Fiverr International Ltd. (NYSE:FVRR), an online platform for freelancing services, is one of Benjamin Natter’s top stock picks as of September 2021, with his investment firm owning a $9.1 million stake in the company, which represents 3.92% of Kent Lake Capital’s total 13F securities.

Fiverr International Ltd. (NYSE:FVRR) posted its Q3 results on November 10. EPS in the period equaled $0.19, beating estimates by $0.17. The $74.32 million revenue was up 41.99% from the prior-year quarter, outperforming estimates by $3.22 million.

On November 11, MKM Partners analyst Rohit Kulkarni raised the price target on Fiverr International Ltd. (NYSE:FVRR) to $175 from $170 but kept a Neutral rating on the shares. He stated that the Q3 results were better than expected but the company did not report a high number of new buyers in the last six months.

As of Q3 2021, 29 hedge funds tracked by Insider Monkey reported owning stakes in Fiverr International Ltd. (NYSE:FVRR), down from 30 funds in the preceding quarter. The total value of these stakes amounted to $520.4 million. The leading stakeholder in Fiverr International Ltd. (NYSE:FVRR) is Karthik Sarma’s SRS Investment Management, with 1.2 million shares valued at $233.1 million.

In addition to Upwork Inc. (NASDAQ:UPWK), Shutterstock, Inc. (NYSE:SSTK), XPEL, Inc. (NASDAQ:XPEL), and Encompass Health Corporation (NYSE:EHC), Fiverr International Ltd. (NYSE:FVRR) is a notable stock in Natter’s Q3 portfolio.

Here is what Baron Small Cap Fund has to say about Fiverr International Ltd. (NYSE:FVRR) in its Q1 2021 investor letter:

“We sold out of Fiverr International Ltd., the marketplace for freelance services, since the stock ran up multiple fold since our purchase less than a year ago and traded at a valuation that we thought captured much of the future opportunity.”

9. AdaptHealth Corp. (NASDAQ:AHCO)

Kent Lake Capital’s Stake Value: $9,665,000

Percentage of Kent Lake Capital’s 13F Portfolio: 4.15%

Number of Hedge Fund Holders: 21

AdaptHealth Corp. (NASDAQ:AHCO) is a company that offers medical equipment and services for sleep and respiratory therapy, diabetes management, mobility, wound care, non-invasive ventilation, and nutrition. Benjamin Natter, via Kent Lake Capital, owns 415,000 shares in AdaptHealth Corp. (NASDAQ:AHCO) as of Q3 2021, worth $9.6 million, representing 4.15% of the firm’s portfolio.

Truist analyst David MacDonald on October 13 lowered the price target on AdaptHealth Corp. (NASDAQ:AHCO) to $30 from $40 and kept a Buy rating on the stock, stating that he was positive about the healthcare services sector, but ongoing labor pressures could affect the 2022 performance.

AdaptHealth Corp. (NASDAQ:AHCO) posted its Q3 results on November 4, with EPS in the period equaling $0.37, missing estimates by -$0.02. Revenue for the quarter came in at $653.29 million, exceeding expected revenue by $14.55 million.

At the end of the third quarter of 2021, 21 hedge funds monitored by Insider Monkey were long AdaptHealth Corp. (NASDAQ:AHCO), with James E. Flynn’s Deerfield Management being the largest stakeholder of the company, holding a $188.7 million stake.

8. The Ensign Group, Inc. (NASDAQ:ENSG)

Kent Lake Capital’s Stake Value: $10,110,000

Percentage of Kent Lake Capital’s 13F Portfolio: 4.34%

Number of Hedge Fund Holders: 18

The Ensign Group, Inc. (NASDAQ:ENSG) is a healthcare company offering in-house services including rehabilitative care, physical therapy, and speech and language therapy. Kent Lake Capital, as of the third quarter, owns 135,000 shares in The Ensign Group, Inc. (NASDAQ:ENSG), worth $10.1 million, representing 4.34% of the firm’s total securities.

Truist analyst David MacDonald raised the price target on The Ensign Group, Inc. (NASDAQ:ENSG) on November 11, from $82 to $90 while keeping a Hold rating on the shares since the company's management highlighted the incremental growth opportunities, improving occupancy, and a stable labor force despite the COVID-19 pressures.

The Ensign Group, Inc. (NASDAQ:ENSG) posted on October 27 its Q3 results. EPS for the quarter totaled $0.91, beating estimates by $0.01. The $668.53 million revenue was up 11.56% year-over-year, outperforming estimated revenue by $2.09 million.

As of Q3 2021, Philip Timon’s Owls Nest Partners is the biggest stakeholder in The Ensign Group, Inc. (NASDAQ:ENSG), with 297,665 shares worth $22.2 million. Overall, 18 hedge funds in the database of Insider Monkey reported owning stakes worth $70.5 million in the company as of September.

Here is what Wasatch Core Growth Fund has to say about The Ensign Group, Inc. (NASDAQ:ENSG) in its Q2 2021 investor letter:

“Ensign Group, Inc. (ENSG) also detracted from performance. The company operates facilities offering assisted living, nursing services, rehabilitative care, and physical, occupational and speech therapies. In our view, the company handled the Covid-19 crisis extremely well. Throughout most of the crisis, occupancy levels weren’t down as much as might have been expected. But patients did postpone many treatments. More recently, occupancy levels and treatments have experienced a resurgence. Going forward, we expect impressive comparisons to prior-period financial results and especially strong operating margins that may surprise other investors. Having said that, the stock pulled back in the second quarter after very strong performance in the first quarter.”

7. Addus HomeCare Corporation (NASDAQ:ADUS)

Kent Lake Capital’s Stake Value: $10,766,000

Percentage of Kent Lake Capital’s 13F Portfolio: 4.63%

Number of Hedge Fund Holders: 15

Addus HomeCare Corporation (NASDAQ:ADUS), a Chicago-based home care and support company, posted its Q3 results on November 1. EPS in the period equaled $0.91, in line with analysts’ consensus estimates. The Q3 revenue came in at $216.66 million, missing estimates by -$10.45 million.

Benjamin Natter, via Kent Lake Capital, holds 135,000 shares in Addus HomeCare Corporation (NASDAQ:ADUS), valued at $10.7 million, representing 4.63% of the firm’s portfolio as of September 2021.

As of the third quarter of 2021, 15 hedge funds tracked by Insider Monkey reported owning stakes in Addus HomeCare Corporation (NASDAQ:ADUS), valued at $58.6 million. This is compared to 19 funds in the preceding quarter, with stakes worth $71.6 million.

6. Tremor International Ltd (NASDAQ:TRMR)

Kent Lake Capital’s Stake Value: $10,984,000

Percentage of Kent Lake Capital’s 13F Portfolio: 4.72%

Number of Hedge Fund Holders: 11

Tremor International Ltd (NASDAQ:TRMR) is an Israeli company that offers digital advertising services via its two platforms, Tremor Video and Unruly. Kent Lake Capital, as of September this year, owns 594,720 shares in Tremor International Ltd (NASDAQ:TRMR), worth $10.9 million, representing 4.72% of the firm’s Q3 portfolio.

As of the third quarter of 2021, 11 hedge funds in the database of Insider Monkey were bullish on Tremor International Ltd (NASDAQ:TRMR), with a total stake value of $74.7 million. This is an increase as compared to the preceding quarter, when 5 funds were long Tremor International Ltd (NASDAQ:TRMR), with stakes worth $19.3 million.

On November 11, Tremor International Ltd (NASDAQ:TRMR) reported its Q3 earnings. EPS for the quarter totaled $0.21, beating estimates by $0.04. The $87.02 million revenue also exceeded estimates by $6.2 million.

In addition to Upwork Inc. (NASDAQ:UPWK), Shutterstock, Inc. (NYSE:SSTK), XPEL, Inc. (NASDAQ:XPEL), and Encompass Health Corporation (NYSE:EHC), Tremor International Ltd (NASDAQ:TRMR) is a notable stock in Natter’s Q3 portfolio.

Click to continue reading and see the Top 5 Stock Picks of Benjamin Natter's Kent Lake Capital.

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Disclosure: None. Top 10 Stock Picks of Benjamin Natter's Kent Lake Capital is originally published on Insider Monkey.