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Top 10 Stock Picks of Matthew Halbower’s Pentwater Capital Management

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·8 min read
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In this piece, we will take a look at the top 10 stock picks of Matthew Halbower's Pentwater Capital Management. If you want to take a look at the top five stocks in this list, then head on over to Top 5 Stock Picks of Matthew Halbower's Pentwater Capital Management.

Pentwater Capital Management is an American hedge fund based out of Naples, Florida. It is managed by Mr. Matthew Halbower, who has been at the helm of affairs at the firm ever since he founded it in 2007. The executive has nearly two decades of experience working in the financial sector. Prior to setting up Pentwater Capital, Mr. Halbower worked at Deephaven Capital Management and the Citadel Investment Group. At the former, he was responsible for managing distressed securities, which are those that are not generating sufficient returns to satisfy a hedge fund's return models and requirements.

Additionally, he also focused on what is termed in the financial world as 'event-driven trading' during his career at Deephaven. This refers to watching out for key events related to a company, such as its earnings reports and investing according to the investor's belief for the share price movement once the event has taken place. For instance, a hedge fund might anticipate that a company is geared up to reveal a bumper earnings report. Subsequently, they might buy the firm's shares with the hopes of the share price appreciating. Mr. Halbower is also one of the few hedge fund executives out there, especially out of those responsible for multi-billion dollar portfolios, with a degree in a science, technology, engineering, and mathematics (STEM) field.

The executive received his bachelor's in electrical engineering from the illustrious Massachusetts Institute of Technology (MIT) in 1991. However, after graduating with an engineering degree, he decided to broaden his horizon and ended up receiving a Juris Doctorate (J.D.) from the prestigious Harvard Law School in 1994.

As of the third quarter of last year, Mr. Halbower's Pentwater Capital had $9.8 billion in assets, making it one of the largest hedge funds out there. However, this portfolio value dropped sequentially, as the firm had a whopping $12 billion in assets by the end of Q2 2021. Annually, the latest portfolio value marks for a 27% annual growth, as its value stood at $7.7 billion as Q3 2020 ended. Some of the famous companies in the portfolio are Alibaba Group Holding Limited (NYSE:BABA), The Boeing Company (NYSE:BA), and The Walt Disney Company (NYSE:DIS).

Top 10 Stock Picks of Matthew Halbower's Pentwater Capital Management
Top 10 Stock Picks of Matthew Halbower's Pentwater Capital Management

Matthew Halbower of Pentwater Capital

Our Methodology

In order to determine which stocks made the cut for Pentwater Capital Management in Q3 2021, we dug through the firm's 13F filings with the SEC for the same time period. This enabled us to identify the top holdings in the firm's portfolio.

Top 10 Stock Picks of Matthew Halbower's Pentwater Capital Management

10. Five9, Inc. (NASDAQ:FIVN)

Pentwater Capital's Stake Value: $198.8 million

Percentage of Pentwater Capital's 13F Portfolio: 2.02%

Number of Hedge Fund Holders: 78

Five9, Inc. (NASDAQ:FIVN) is an American company headquartered in California that provides cloud software for customer service centers. Its products allow its customers to manage their interactions across multiple channels such as social media and email.

Five9, Inc. (NASDAQ:FIVN) reported $154 million in revenue and $0.28 in non-GAAP EPS for its third fiscal quarter, beating analyst estimates for both. Its price target was raised to $195 from $175 by UBS in November 2021 who shared optimism for the company's strong revenue growth.

Pentwater Capital held 1.2 million Five9, Inc. (NASDAQ:FIVN) shares in Q3 2021 in what amounted to a $198.8 million stake comprising 2.02% of its investment portfolio. 78 of the 867 hedge funds part of Insider Monkey's research for the same period also owned the company's shares.

Panayotis Takis Sparaggis' Alkeon Capital Management is Five9, Inc. (NASDAQ:FIVN)'s largest investor. It owns 3 million shares worth $480 million.

ClearBridge Investments mentioned Five9, Inc. (NASDAQ:FIVN) in its Q1 2021 investor letter which outlined that:

Five9 is a cloud-based contact center as a service software provider that is replacing aging on-premise legacy solutions that dominate the installed base. Companies are being forced to modernize and cloud penetration is still low; Five9 is positioned to benefit and should see further growth driven by its cross-selling add-on modules and an AI product that generates high revenue.”

Five9, Inc. (NASDAQ:FIVN) meets The Walt Disney Company (NYSE:DIS), Alibaba Group Holding Limited (NYSE:BABA), and The Boeing Company (NYSE:BA) in the list of Mr. Halbower's top stocks.

9. Athene Holding Ltd. (NYSE:ATH)

Pentwater Capital's Stake Value: $247 million

Percentage of Pentwater Capital's 13F Portfolio: 2.51%

Number of Hedge Fund Holders: 50

Athene Holding Ltd. (NYSE:ATH) is a financial company that focuses on financial planning and management for retirees. It is based out of Hamilton, Bermuda and it serves customers in both Bermuda and the United States. The firm offers retirement savings products and insurance.

Mr. Halbower's investment firm owned 3.59 million Athene Holding Ltd. (NYSE:ATH) shares during the third quarter of last year, in a $247 million stake that made up 2.51% of its portfolio. During the same time period, 50 out of 867 hedge funds polled by Insider Monkey had owned stakes in the company.

For its fiscal Q3, Athene Holding Ltd. (NYSE:ATH) reported $1.47 billion in net investment income and $2.57 in non-GAAP EPS, beating analyst estimates only for EPS. Truist raised the company's price target to $88 from $68 in November 2021, due to the EPS beat and high Q4 projections.

Athene Holding Ltd. (NYSE:ATH)'s largest investor after Mr. Halbower is Alec Litowitz and Ross Laser's Magnetar Capital who owns 2.3 million shares worth $160 million.

8. Turquoise Hill Resources Ltd. (NYSE:TRQ)

Pentwater Capital's Stake Value: $276 million

Percentage of Pentwater Capital's 13F Portfolio: 2.8%

Number of Hedge Fund Holders: 10

Turquoise Hill Resources Ltd. (NYSE:TRQ) is a Canadian copper, gold, and silver miner headquartered in Montreal, Canada. The company has operations in Southern Mongolia.

Mr. Halbower's investment firm owned 18.7 million Turquoise Hill Resources Ltd. (NYSE:TRQ) shares during Q3 2021. These were worth $276 million and represented 2.8% of its portfolio. An Insider Monkey survey conducted for the same time period saw 10 out of 867 hedge funds with ownership stakes in the company.

Turquoise Hill Resources Ltd. (NYSE:TRQ)'s largest investor is David Iben's Kopernik Global Investors who owns 11.5 million shares worth $169 million.

7. Hill-Rom Holdings, Inc. (NYSE:HRC)

Pentwater Capital's Stake Value: $277.5 million

Percentage of Pentwater Capital's 13F Portfolio: 2.81%

Number of Hedge Fund Holders: 46

Hill-Rom Holdings, Inc. (NYSE:HRC) is a medical devices manufacturer that allows its customers, such as hospitals, to diagnose and prevent diseases alongside providing other services such as patient care. The company was acquired by Baxter International Inc. (NYSE:BAX) in December 2021, for a $10.5 billion price tag.

As the third quarter of last year came to an end, Pentwater Capital owned 1.8 million Baxter International Inc. (NYSE:BAX) shares for a $277.5 million stake that represented 2.81% of its portfolio. Insider Monkey's Q3 2021 survey of 867 hedge funds revealed that 46 had owned the company's shares.

Hill-Rom Holdings, Inc. (NYSE:HRC)'s largest investor after Pentwater Capital was Robert Emil Zoellner's Alpine Associates who owns 1.2 million shares worth $182 million.

6. Coherent, Inc. (NASDAQ:COHR)

Pentwater Capital's Stake Value: $384 million

Percentage of Pentwater Capital's 13F Portfolio: 3.9%

Number of Hedge Fund Holders: 36

Coherent, Inc. (NASDAQ:COHR) is a commercial laser equipment provider that sells its products to researchers and industrial users. These products include precision lasers, laser tools, and other products that are used in a variety of areas such as microelectronics and materials production.

Mr. Halbower's investment firm owned 1.5 million Coherent, Inc. (NASDAQ:COHR) shares during the third quarter of last year. These were worth $384 million and represented 3.9% of its portfolio. Insider Monkey's research covering 867 hedge funds for the same time period revealed that 36 had invested in the firm.

For its fourth fiscal quarter, Coherent, Inc. (NASDAQ:COHR) disappointed Wall Street as it missed analyst estimates for revenue and EPS by raking in $391 million in revenue and $1.77 in non-GAAP EPS. Stifel set a $270 price target for the firm in October 2021, sharing its optimism for an acquisition.

Coherent, Inc. (NASDAQ:COHR)'s largest investor after Pentwater Capital is Alec Litowitz and Ross Laser's Magnetar Capital which owns 671,313 shares worth $167 million.

Appleseed Fund mentioned Coherent, Inc. (NASDAQ:COHR) in its Q1 2021 investor letter which outlined that:

“Our most significant contributors to the Fund’s equity performance during the quarter (includes) Coherent (COHR). During the quarter, Coherent announced that it was being acquired, after which several other bidders emerged. Between the takeover announcement and the bidding war among Coherent suitors, the shares rallied strongly during the quarter.”

Along with The Walt Disney Company (NYSE:DIS), Alibaba Group Holding Limited (NYSE:BABA), and The Boeing Company (NYSE:BA), Coherent, Inc. (NASDAQ:COHR) is a Pentwater Capital favorite.

Click to continue reading and see Top 5 Stock Picks of Matthew Halbower's Pentwater Capital Management.

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Disclosure: None. Top 10 Stock Picks of Matthew Halbower's Pentwater Capital Management is originally published on Insider Monkey.