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Top 10 Stock Picks of Thomas Bancroft’s Makaira Partners

·7 min read

In this article, we discuss the top 10 stock picks of Thomas Bancroft’s Makaira Partners. You can skip our detailed analysis of Bancroft’s history, investment philosophy, and hedge fund performance, and go directly to the Top 5 Stock Picks of Thomas Bancroft's Makaira Partners.

Thomas Bancroft serves as the Managing Partner and Senior Portfolio Manager at Makaira Partners. Prior to that, he worked for 13 years at GEICO, an auto insurance equity company, which is Berkshire Hathaway’s only independently managed portfolio. For his last 6 years at GEICO, Bancroft served as Portfolio Manager and Senior Managing Director.

Thomas Bancroft received his B.S. in Political Science from the University of Colorado in 1988. Right after receiving his degree, he started his career as a staff writer for Financial World Magazine and then joined Forbes Magazine as a reporter. Thomas Bancroft also serves as the Chairman of the Investments Committee and Trustee of Francis Parker School, San Diego.

Makaira Partners was founded by Thomas Bancroft in 2007 and is based in La Jolla, California. It is an employee-owned investment firm and manages investment partnerships for individuals, family offices, and not-for-profit organizations. 99% of the firm’s investments are made in exchange-traded securities and 1% of the portfolio is represented by cash and cash equivalents.

The investment philosophy of Makaira Partners relies on long-term investments, sometimes holding investments for five years or more. The firm’s 50% of the clients are foreign and the firm also advises several private funds.

Bath & Body Works, Inc. (NYSE:BBWI), The Progressive Corporation (NYSE:PGR), and Zebra Technologies Corporation (NASDAQ:ZBRA) are some of the noteworthy companies in Makaira Partner’s portfolio.

Top 10 Stock Picks of Thomas Bancroft's Makaira Partners
Top 10 Stock Picks of Thomas Bancroft's Makaira Partners

Thomas Bancroft of Makaira Partners

Our Methodology

We used the third-quarter investment portfolio of Makaira Partners to make this list. The list was compiled according to the value of each holding in the investment portfolio.

Top 10 Stock Picks of Thomas Bancroft's Makaira Partners

10. HEICO Corporation (NYSE:HEI)

Makaira Partners’ Stake Value: $4.05 million

Percentage of Makaira Partners’ 13F Portfolio: 0.85%

Number of Hedge Fund Holders: 35

HEICO Corporation (NYSE:HEI) is an aerospace, defense, and electronics company. It primarily focuses on selling parts for aircraft, spacecraft, defense equipment, medical equipment, and telecommunications systems. The company operates from 72 locations across the globe.

On December 17, Truist analyst Michael Ciarmoli raised the price target of HEICO Corporation (NYSE:HEI) to $135 up from $125 and kept a Hold rating on the company’s shares. According to the analyst, the price target raise was due to strong fourth-quarter results from the company. However, Ciarmoli believes that the upcoming first-quarter results might be “seasonally weak.”

On December 28, the CEO and Chairman of HEICO Corporation (NYSE:HEI), Laurans A Mendelson, sold 8,869 shares of the company at $144.25 a share The total transaction was approximately $1.3 million.

9. Cactus, Inc. (NYSE:WHD)

Makaira Partners’ Stake Value: $5.09 million

Percentage of Makaira Partners’ 13F Portfolio: 1.07%

Number of Hedge Fund Holders: 10

Cactus, Inc. (NYSE:WHD) is a Texas-based oil and gas equipment and services company that manufactures, sells, and rents wellheads and pressure control equipment. The company has 660 full-time employees and provides 24-hour service crews to assist with their equipment. It has 14 service centers in the United States and 3 in Australia.

On September 16, Cactus, Inc. (NYSE:WHD) increased its dividend to $0.10 per share.

According to the Insider Monkey data, 10 hedge funds have been bullish towards Cactus, Inc. (NYSE:WHD) in the third quarter of 2021. Todd J. Kantor’s Encompass Capital Advisors held the top position in the company with more than 1 million shares worth $38.7 million.

8. The Progressive Corporation (NYSE:PGR)

Makaira Partners’ Stake Value: $6.83 million

Percentage of Makaira Partners’ 13F Portfolio: 1.44%

Number of Hedge Fund Holders: 47

The Progressive Corporation (NYSE:PGR) is the third-largest insurance carrier and the top commercial auto insurer in the United States. The company was the first insurer in the United States to offer 24/7 claims. It ranks at 74 in Fortune 500 rankings for 2021 and recently has expanded its auto insurance operations to Australia.

The Progressive Corporation (NYSE:PGR) has been outperforming its industry average in every way. Its last 12-month return on equity has been recorded at 17.6% compared to the industry average of 5.6%. The net premium written average growth for the industry has been around 4% in the last decade, while The Progressive Corporation’s (NYSE:PGR) net premium written grew 11%. Lastly, the earnings of the company for 2022 have been estimated at $4.73 per share which is a 32.6% increase from a year ago.

According to the third-quarter 2021 13F filings, Makaira Partners own 75,600 shares of The Progressive Corporation (NYSE:PGR) worth $6.83 million, representing 1.44% of the fund’s portfolio. The company was added to the fund’s portfolio in the same quarter.

Here is what the investment management firm, Ariel Investments, had to say about Progressive Corporation (NYSE:PGR) in their third-quarter 2021 investor letter:

“Conversely, after being the top contributor last year, personal auto insurer, Progressive Corporation (PGR) was the greatest detractor to performance over the trailing one-year period. While PGR continues to drive solid policy growth, the reopening economy has fueled an uptick in accident frequency and supply chain disruptions, which have increased repair costs. Looking ahead, we expect policy rate increases to offset these headwinds and believe PGR will continue to benefit from its digital presence, bundling strategy, and commercial insurance expansion.”

7. Victoria's Secret & Co. (NYSE:VSCO)

Makaira Partners’ Stake Value: $18.77 million

Percentage of Makaira Partners’ 13F Portfolio: 3.96%

Number of Hedge Fund Holders: 37

Victoria's Secret & Co. (NYSE:VSCO) is an American apparel retailer company and has been the largest retailer of lingerie in the United States since the late 1990s. The company was a subsidiary of Bath & Body Works, Inc. (NYSE:BBWI) till August 2021. Since then, it has become a separate independent publicly traded business.

On November 30, Jefferies analyst Corey Tarlow assumed coverage of Victoria's Secret & Co. (NYSE:VSCO) at a $75 price target with a Buy rating on its shares.

Out of 867 hedge funds tracked by Insider Monkey, 37 of them held stakes worth $1.96 billion in Victoria's Secret & Co. (NYSE:VSCO) at the end of the third quarter of 2021. The largest stake was held by Stephen Mandel’s Lone Pine Capital with 8.6 million shares worth $475.76 million, followed by Windacre Partnership with $341.977 million worth of shares.

6. Qurate Retail, Inc. (NASDAQ:QRTEA)

Makaira Partners’ Stake Value: $30.37 million

Percentage of Makaira Partners’ 13F Portfolio: 6.41%

Number of Hedge Fund Holders: 34

Qurate Retail, Inc. (NASDAQ:QRTEA) is an American media holding company founded in 1991. The company operates in Europe, North America, and Asia. Apart from being a media institute the company also operates as an online retailer for apparel, accessories, and beauty products.

According to the third-quarter 13F filings, Makaira Partners owned 2.98 million shares of Qurate Retail, Inc. (NASDAQ:QRTEA) worth $30.37 million, comprising 6.41% of the fund’s portfolio.

The investment management firm Weitz Investment Management mentioned Qurate Retail, Inc. (NASDAQ:QRTEA) in its “Partners III Opportunity Fund” third-quarter investor letter. Here is what the firm said in the letter:

“Another quarterly detractor, Qurate Retail, was a “stay-at-home” winner through much of the pandemic thanks to its video and eCommerce shopping model. As economies reopen, competition from brick-and-mortar stores will increase, but we continue to like Qurate’s unique retail model and unassuming valuation.”

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Disclosure: None. Top 10 Stock Picks of Thomas Bancroft's Makaira Partners is originally published on Insider Monkey.