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Top Stocks to Invest In According to Jeffrey Ubben’s ValueAct Capital

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·12 min read
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In this article we will take a look at the top stocks to invest in according to Jeffrey Ubben's ValueAct Capital. If you want to skip our detailed analysis of Ubben’s history, investment philosophy, and hedge fund performance, go directly to the Top 5 Stocks to Invest In According to Jeffrey Ubben's ValueAct Capital.

Jeffrey Ubben is an American businessman and co-founder of ValueAct Capital. He has served as the chairman of the company since 2000 and retired from chairmanship in June 2020 to pursue social investment. He founded another fund, Inclusive Capital Partners, which lays its focus on clean energy. Earlier this year, Bloomberg reported that Jeff Ubben was planning to raise up to $8 billion for The Spring Fund II, a fund at his investment firm Inclusive Capital Partners. The fund would focus on impact investing that aims to bring changes in big companies for the betterment of society.

As of the end of the first quarter of 2021, the total value of ValueAct 13F portfolio is $8.56 billion, compared with $8.62 billion in the previous quarter. The portfolio shows stakes in 13 companies.

ValueAct has sold its positions in Morgan Stanley (NYSE: MS) and CDW Corporation (NASDAQ: CDW). Seagate Technology Holdings plc (NASDAQ: STX) remains the top holding of ValueAct Capital, accounting for over 20% of its 13F portfolio. The position can be attributed to the stock’s solid performance over time, gaining 268% in the past five years. The fund started its position in the company in 2016 with 3 million shares. During the first quarter, however, ValueAct reduced its stake in Seagate Technology Holdings plc (NASDAQ: STX) by 24%.

Along with this, the fund also reduced its positions in Citigroup Inc. (NYSE: C) and KKR & Co. Inc. (NYSE: KKR) by 20% and 17%, respectively. Citigroup Inc. (NYSE: C) is the second-largest holding of ValueAct Capital, constituting 18.4% of its portfolio.

ValueAct Capital did not change its position in LKQ Corporation (NASDAQ: LKQ), CBRE Group, Inc. (NYSE: CBRE), and Bausch Health Companies Inc. (NYSE: BHC). CBRE Group, Inc. (NYSE: CBRE) is one of the oldest holdings of ValueAct, as the fund built its position in the company in 2011. The real estate enterprise, CBRE Group, Inc. (NYSE: CBRE) holds the fifth position in ValueAct’s 13F portfolio. The share price of the stock has soared by 216% in the past 5 years, making it one of the top stocks to invest in according to Jeffrey Ubben’s ValueAct Capital.

ValueAct increased its stake in Fiserv, Inc. (NASDAQ: FISV) by 162% in Q1. The company accounts for 1.19% of its total 13F portfolio. ValueAct has bought shares in Insight Enterprises, Inc. (NASDAQ: NSIT), which accounts for 1.22% of its portfolio.

The Q1 portfolio of ValueAct Capital shows some solid investments in the financial, technology, and services sectors. This is evident from the move as the fund has not changed its positions in automobile services company LKQ Corporation (NASDAQ: LKQ) and real estate company CBRE Group, Inc. (NYSE: CBRE). The newly found position in Insight Enterprises, Inc. (NASDAQ: NSIT) shows the ValueAct’s inclination towards the technology sector. The fund holds over 1 million shares in the company as of the end of the first quarter.

Top Stocks to Invest In According to Jeffrey Ubben's ValueAct Capital
Top Stocks to Invest In According to Jeffrey Ubben's ValueAct Capital

Jeffrey Ubben of ValueAct Capital

In the light of these, let’s analyze the top stocks to invest in according to Jeffrey Ubben’s ValueAct Capital. The list is curated by taking ValueAct’s 13F portfolio into account.

Why pay attention to Ubben's fund? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Let's now discuss the top stocks to invest in according to Jeffrey Ubben's ValueAct Capital.

Top Stocks to Invest In According to Jeffrey Ubben's ValueAct Capital

10. Fiserv, Inc. (NASDAQ: FISV)

Ubben’s Stake Value: $102,374,000 Percentage of Jeffrey Ubben’s 13F Portfolio: 1.19% Number of Hedge Fund Holders: 75

Fiserv, Inc. (NASDAQ: FISV) is a multinational company providing financial services to its customers. As of Q1 2021, ValueAct Capital holds 860,000 shares in the company worth $102 million.

Fiserv, Inc. (NASDAQ: FISV) reported solid earnings in Q1, with $3.7 billion generated in revenues. The EPS stood at $1.17, beating the market estimate of $1.13. The stock price has soared by 6% in the past year but declined by 3% year to date.

Like LKQ Corporation (NASDAQ: LKQ), Bausch Health Companies Inc. (NYSE: BHC), CBRE Group, Inc. (NYSE: CBRE), Citigroup Inc. (NYSE: C), KKR & Co. Inc. (NYSE: KKR) and Seagate Technology Holdings plc (NASDAQ: STX), Fiserv, Inc. (NASDAQ: FISV) is one of the most notable stocks in ValueAct's Q1 portfolio.

Madison Funds, an investment management firm, released its Q1 2021 investor letter and mentioned Fiserv, Inc. (NASDAQ: FISV). Here is what the fund has to say:

“This quarter we researched several new stock ideas, but because of high prices, acted on only one. Thus, a new portfolio name is Fiserv, Inc. (NASDAQ: FISV) , with corporate headquarters in Brookfield, WI, just down I-94 from us. Fiserv is a technology company serving financial institutions (“FIs”) and retail merchants. It has two main business lines. In the first, it’s a market leader in outsourced IT solutions for banks and credit unions, online and mobile banking technology, digital money movement solutions, and card issuing services. Fiserv’s second core business is merchant acquiring and processing, where it’s a leader in providing a variety of solutions to help all types of merchants accept digital payments. They entered this business through the acquisition of First Data in 2019.

Within the first business, Fiserv’s software is critical to the daily operations of FI clients. Their solutions not only provide the vital central processing systems, but also enable services such as electronic bill pay and digital money transfers at both large institutions and local banks and credit unions alike. As such, it is an incredibly sticky business that is resilient through economic cycles. On the merchant acquiring side of Fiserv, they process trillions of dollars annually for millions of merchant clients. Their solutions cater to all types of merchants and optimize for seamless acceptance and high authorization rates while also limiting fraud. Similar to the IT outsourcing business, Fiserv’s merchant solutions are critical to their customers’ daily operations. Furthermore, we are especially encouraged by their investments in new solutions, particularly Clover and Carat. Clover is a small and midsize business merchant acquiring platform and Carat is an e-commerce acquiring platform. Both these products hit the bullseye in terms of the way people are interacting with the retail industry, and both are growing at above market rates, which we believe will sustain into the future." (Click here to read the entire message)

9. Insight Enterprises, Inc. (NASDAQ: NSIT)

Ubben’s Stake Value: $104,962,000 Percentage of Jeffrey Ubben’s 13F Portfolio: 1.22% Number of Hedge Fund Holders: 17

Insight Enterprises, Inc. (NASDAQ: NSIT) is an information technology company, dealing in cloud and data services and is based in Arizona. As of Q1 2021, ValueAct Capital holds 1.1 million shares in the company, worth nearly $105 million. Insight Enterprises, Inc. (NASDAQ: NSIT) is one of the recent acquisitions of ValueAct Capital.

In Q1 2021, Insight Enterprises, Inc. (NASDAQ: NSIT) generated $2.1 billion in revenues and $1.30 earnings per share, missing the market estimate of $1.43. The NSIT stock’s growth has also been tremendous, gaining by 99.6% in the past year and 30.2% year to date.

At the end of Q1 2021, 17 hedge funds tracked by Insider Monkey held stakes worth nearly $105 million in Insight Enterprises, Inc. (NASDAQ: NSIT), down from 19 funds in the quarter earlier.

An investment management firm, L1 Capital, published its Q1 2021 investor letter and mentioned Insight Enterprises, Inc. (NASDAQ: NSIT) in it. Here is what the firm has to say:

“The share price of Insight Enterprises increased by 25% (local currency). This company facilitate the continued rise of enterprise cloud software spend and are also able to add value through personalised service to companies and Government entities that are below the size targeted by the global technology companies’ own salesforces.”

8. SLM Corporation (NASDAQ: SLM)

Ubben’s Stake Value: $472,508,000 Percentage of Jeffrey Ubben’s 13F Portfolio: 5.51% Number of Hedge Fund Holders: 27

SLM Corporation (NASDAQ: SLM) stands eighth on our list of the top stocks to invest in according to Jeffrey Ubben’s ValueAct Capital. As of Q1 2021, ValueAct Capital holds over 26.2 million shares in the company, worth $472 million. The fund has reduced its position by 19% in SLM Corporation (NASDAQ: SLM) in the first quarter.

SLM Corporation (NASDAQ: SLM) recently reported a productive first quarter with $744 million generated in revenues, compared with $367 million the quarter earlier. The earnings per share were recorded at $1.77, beating the market estimate of $1.07. The stock price has also soared by 155% in the past year and 59% year to date. SLM Corporation (NASDAQ: SLM) has also announced a quarterly dividend of $0.30 in April 2021.

Like LKQ Corporation (NASDAQ: LKQ), Bausch Health Companies Inc. (NYSE: BHC), CBRE Group, Inc. (NYSE: CBRE), Citigroup Inc. (NYSE: C), KKR & Co. Inc. (NYSE: KKR) and Seagate Technology Holdings plc (NASDAQ: STX), SLM Corporation (NASDAQ: SLM) is one of the most notable stocks in ValueAct's Q1 portfolio.

7. Bausch Health Companies Inc. (NYSE: BHC)

Ubben’s Stake Value: $569,466,000 Percentage of Jeffrey Ubben’s 13F Portfolio: 6.64% Number of Hedge Fund Holders: 42

Bausch Health Companies Inc. (NYSE: BHC) is a Canadian pharmaceutical company, dealing in medicines for skin, eyes, nerves, and digestive diseases. The company has operations in over 90 countries globally. Bausch Health Companies Inc. (NYSE: BHC) is one of the top stocks to invest in according to Jeffrey Ubben’s ValueAct Capital because the fund has a $569 million stake in the company, at the end of Q1 2021.

Bausch Health Companies Inc. (NYSE: BHC) reported $1.04 earnings per share for the first quarter, beating the estimate of $0.94. The revenue for the quarter stood at over $2 billion. The BHC stock price has also gained 40.9% year to date and 41% in the past six months. In May, the company said it plans to cut its debt by $100 million through the redemption of outstanding senior notes, using cash generated from operations.

At the end of Q1 2021, 42 hedge funds, tracked by Insider Monkey hold positions in Bausch Health Companies Inc. (NYSE: BHC), worth $4.7 billion.

Like LKQ Corporation (NASDAQ: LKQ), CBRE Group, Inc. (NYSE: CBRE), Citigroup Inc. (NYSE: C), KKR & Co. Inc. (NYSE: KKR) and Seagate Technology Holdings plc (NASDAQ: STX), Bausch Health Companies Inc. (NYSE: BHC) is one of the most notable stocks in ValueAct's Q1 portfolio.

Miller Value Partners recently released its Q1 2021 investor letter and mentioned Bausch Health Companies Inc. (NYSE: BHC). Here is what the firm has to say:

“Bausch Health Companies (BHC) climbed 55% during the period. Glenview (6% owner) sent a letter to the company in early February arguing the company has not acted to unlock shareholder value and urging the company to sell its eye care business. Shortly after, activist investor Carl Icahn disclosing a 7.83% stake in the company. The company responded to the filing saying that they remain committed to splitting the business into two parts, but are open to pursuing all opportunities. The company reported strong 4Q results with better-than-expected 2021 guidance. 4Q revenue came in at $2,213M slightly ahead of consensus of $2,165M and EPS of $1.34 beat consensus of $1.12. The company guided for 2021 revenue of $8.6-8.8B coming in ahead of expectations of $8.55B with EBITDA of $3.4-3.55B ahead of $3.46B estimated. The company announced the transition of Paul Herendeen to an advisory role to be succeeded by Sam Eldessouky, previously senior vice president, controller and chief accounting officer. Finally, the company announced the sale of Amoun Pharmaceutical for $740M, which was relatively in line with estimates and should help support debt reduction targets ahead of the planned spin-off of Bausch + Lomb eye care business.”

6. Trinity Industries, Inc. (NYSE: TRN)

Ubben’s Stake Value: $658,286,000 Percentage of Jeffrey Ubben’s 13F Portfolio: 7.68% Number of Hedge Fund Holders: 28

Trinity Industries, Inc. (NYSE: TRN) is an American industrial company, mainly dealing in transportation and energy. As of Q1 2021, ValueAct Capital owns 23.1 million shares in the company, worth $658 million. Trinity Industries, Inc. (NYSE: TRN) ranks sixth on our list of top stocks to invest in according to Jeffrey Ubben’s ValueAct Capital.

Trinity Industries, Inc. (NYSE: TRN) Q1 2021 revenue stood at $399 million, down 35% year-over-year. Earnings per share were reported at $0.07, missing the market estimate of $0.08. TRN stock gained over 15% in the past year.

In the first quarter of 2021, the company's adjusted EPS of $0.07 beat the consensus estimates by $0.02.

The data for Q1 2021 shows that hedge funds are turning bullish on Trinity Industries, Inc. (NYSE: TRN), as 28 funds have positions in the company, up from 22 in the quarter earlier. The total value of these stakes is over $987 million.

Like LKQ Corporation (NASDAQ: LKQ), Bausch Health Companies Inc. (NYSE: BHC), CBRE Group, Inc. (NYSE: CBRE), Citigroup Inc. (NYSE: C), KKR & Co. Inc. (NYSE: KKR) and Seagate Technology Holdings plc (NASDAQ: STX), Trinity Industries, Inc. (NYSE: TRN) is one of the most notable stocks in ValueAct's Q1 portfolio.

Click to continue reading and see the Top 5 Stocks to Invest In According to Jeffrey Ubben's ValueAct Capital.

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Disclosure. None. Top Stocks to Invest In According to Jeffrey Ubben's ValueAct Capital is originally published on Insider Monkey.