In this article, we will take a look at the 10 stocks to buy according to Michael Rothenberg's Moab Capital. If you want to skip our comprehensive analysis of the history, investment philosophy, and hedge fund preference of Moab Capital, you can go directly to 5 Stocks to Buy According to Michael Rothenberg's Moab Capital.
Based in New York City, Moab Capital Partners is an investment management firm that focuses on technology, healthcare, and services companies' stocks. Founded in 2006, Moab Capital manages a portfolio of approximately $41 million and employs a value-oriented, event-driven investment strategy. The fund aims to deliver superior, long-term returns while minimizing risk.
Mr. Rothenberg entered the investment management industry roughly 23 years ago. He graduated with a B.S. degree in Economics with a major in finance from The Wharton School in The University of Pennsylvania in the year 1995. Before co-founding Moab Capital Partners, LLC with David Sackler in 2006, Mr. Rothenberg was a senior investment professional at Xerion Capital Partners, LLC from 2003 to 2005. Mr. Rothenberg has also worked at Peter J. Solomon Company, Perry Capital, LLC, Gracie Capital Partners, LLC, and Troy Capital Management, LLC.
Some noteworthy stocks in Moab Capital's 13F portfolio as of the third quarter include Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Apple Inc. (NASDAQ:AAPL), and Johnson & Johnson (NYSE:JNJ).
For this article, we used Moab Capital Partners’ third-quarter holdings data and picked its top 10 stocks. Moreover, we used data from the 867 hedge funds tracked by Insider Monkey as of the third quarter of 2021 for the hedge funds analysis.
With this context in mind, here is our list of the 10 stocks to buy according to Michael Rothenberg's Moab Capital.
10 Stocks to Buy According to Michael Rothenberg's Moab Capital
10. Nam Tai Property Inc (NYSE:NTP)
Moab Capital’s Stake Value: $600,000
Percentage of Moab Capital’s 13F Portfolio: 1.46%
Number of Hedge Fund Holders as of Q3 2021: 3
One of the 10 stocks to buy according to Michael Rothenberg's Moab Capital is Nam Tai Property Inc (NYSE:NTP). The property development and management company is based in China.
The real estate stocks in China have been weakening since September this year as the country's government plans to impose an additional property tax. Consequently, Nam Tai Property Inc (NYSE:NTP) fell by 22.9% to $21.7 in September and then dropped to $20.9 in November.
With over 5 million shares of Nam Tai Property Inc (NYSE:NTP) worth roughly $137 million, Brian Sheehy's Iszo Capital is the biggest shareholder of the company, based on the data of 867 funds tracked by Insider Monkey as of the end of Q3 2021. Overall, 3 funds held shares of Nam Tai Property Inc (NYSE:NTP) at the end of the third quarter of 2021 like in the previous quarter.
In its Q2 2021 investor letter, Arquitos Capital shared its stance on Nam Tai Property Inc (NYSE:NTP). Here is what the fund said about Nam Tai Property Inc (NYSE:NTP):
“For the portfolio, despite the great recent performance, I made two mistakes that significantly affected results. One mistake involved Nam Tai Property (NTP), which was a more recent holding. Last quarter, I wrote about how we had trimmed our position in NTP. A chunk of NTP’s cash was caught in the Credit Suisse Greensill scandal; and it is likely the company will suffer some sort of permanent loss from it. The decision to invest company cash into Greensill Capital highlighted decision-making issues with the NTP management that activist investors are attempting to dislodge.
I sold out for that reason, and the fact that the special meeting that had previously been scheduled—and in which the activists were likely to prevail—was postponed.
I thought this would provide an opportunity to reinvest at a lower price. We did make a nearly 200% return in the equity and an even higher return in options. But we never had the chance to reinvest as I had intended. We sold out in the $14 range. Shares then began a rapid ascent, hitting a peak of $37.88 before coming back down to the mid $20s where they are now. Ouch.
In hindsight, it should have been obvious to me that investors friendly to both the entrenched management and to the activists would bid up shares. We missed out massively by selling out when we did.”
In addition to its stake in Nam Tai Property Inc (NYSE:NTP), the fund owned significant shares in Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Apple Inc. (NASDAQ:AAPL), and Johnson & Johnson (NYSE:JNJ) by the end of the third quarter of 2021.
9. NetSol Technologies Inc. (NASDAQ:NTWK)
Moab Capital’s Stake Value: $955,000
Percentage of Moab Capital’s 13F Portfolio: 2.32%
Number of Hedge Fund Holders as of Q3 2021: 3
The California-based software company announced its strategic partnership with the American Financial Services Association in October. The association would give NetSol Technologies Inc. (NASDAQ:NTWK) opportunities to participate in events within the auto finance industry.
On 11 November 2011, NetSol Technologies Inc. (NASDAQ:NTWK) announced its Q1 2022 revenue of $13.42 million which grew by 6.2% year over year. The company became an associate member of the Consumer Bankers Association in July this year.
At the end of the September quarter of 2021, Moab Capital held 208,434 shares of NetSol Technologies Inc. (NASDAQ:NTWK). Overall, at the end of Q3, 3 hedge funds tracked by Insider Monkey held stakes in NetSol Technologies Inc. (NASDAQ:NTWK) worth over $4 million, down from 4 funds in Q2.
8. Nuance Communications Inc. (NASDAQ:NUAN)
Moab Capital’s Stake Value: $1.115 million
Percentage of Moab Capital’s 13F Portfolio: 2.71%
Number of Hedge Fund Holders as of Q3 2021: 61
Michael Rothenberg's Moab Capital held over 20,000 shares in the Massachusetts-based software technology company Nuance Communications Inc. (NASDAQ: NUAN) which were valued at roughly $1 million by the end of Q3 2021.
The company is expected to be acquired by the technology giant Microsoft Corporation by the first quarter or early in the second quarter of 2022. According to the agreement between the parties, Microsoft Corporation would purchase all the outstanding shares of the company's common stock for $56 per share.
The investment management firm Rhizome Partners mentioned Nuance Communications Inc. (NASDAQ: NUAN) in its third-quarter 2021 investor letter. Here is what the firm said about Nuance Communications Inc. (NASDAQ: NUAN) in its Q3 2021 investor letter:
“We also exited our small position in Nuance upon Microsoft’s acquisition. Nuance is a leader in voice recognition software, with dominant market share, and its speech-to-text product is the gold standard in radiology. In addition, by eliminating the need for note taking and allowing doctors to focus on patient care, Nuance could transform the way doctors treat patients. We built a 1% position in Nuance after attending its comprehensive investor day. Our view is that if Nuance can successfully grow its voice-recognition software in doctor’s offices, it could be worth multiples of our cost basis. Microsoft’s acquisition eliminated the multi-bagger upside but also partially validates the belief that Nuance is a high-quality technology company. We exited Nuance with a 62% gain in less than a year. This example is representative of the slight adjustments we made to our portfolio construction. We will allocate to small bets on technology and high-growth companies that could increase our exposure to “right tail” upside. Rest assured that our focus is still roughly 50% real estate, 30% high-quality companies trading at cheap multiples of free cash flow, and the rest in investments with the potential for growth and higher upside.”
7. Walmart Inc. (NYSE:WMT)
Moab Capital’s Stake Value: $1.154 million
Percentage of Moab Capital’s 13F Portfolio: 2.81%
Number of Hedge Fund Holders as of Q3 2021: 71
The multinational retail corporation operates its wholesale business in 24 countries around the world. As of Q3 2021, the number of hedge funds having stakes in Walmart Inc. (NYSE:WMT) was 71. The total value of these stakes is roughly $7.9 billion. Ken Fisher’s Fisher Asset Management is the company’s leading shareholder, with over 13 million shares worth $1.8 billion.
For the third quarter of 2021, Walmart Inc. (NYSE:WMT) reported an EPS of $1.45, beating market estimates by $0.06. Moreover, the company’s revenue for the third quarter showed year-over-year growth of 4.3% and came in at $140.5 billion, beating consensus predictions by $6.34 billion.
As a result, on November 19, MKM Partners analyst Bill Kirk raised Walmart Inc. (NYSE:WMT) to "Buy" from "Neutral" and raised his price target to $166 from $156.
ClearBridge Investments mentioned Walmart Inc. (NYSE:WMT) in its second-quarter 2021 investor letter and shared its insights about the company. Here is what the firm had to say about Walmart Inc. (NYSE:WMT):
“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”
6. Alphabet Inc (NASDAQ:GOOG)
Moab Capital’s Stake Value: $1.604 million
Percentage of Moab Capital’s 13F Portfolio: 3.91%
Number of Hedge Fund Holders as of Q3 2021: 195
As of the third quarter of 2021, Moab Capital held 600 shares in Alphabet Inc (NASDAQ:GOOG), worth over $1.6 million which accounts for 3.9% of the fund's portfolio. In October, the parent company of Google reported its Q3 2021 revenue of $65 billion which grew 41% year over year and crossed consensus forecasts by $1.9 billion. Its Q3 EPS of $27.99 beat estimates by $4.67. On November 2, Brian Nowak, an analyst at Morgan Stanley, maintained an "Overweight" rating on the company's shares, raising the price target on Alphabet Inc (NASDAQ:GOOG)'s Class A shares to $3,200 from $3,000.
Out of 867 hedge funds tracked by Insider Monkey, 195 hedge funds reported owning positions worth over $28.5 billion in Alphabet Inc. (NASDAQ: GOOG) by the end of the third quarter of 2021. This is compared to the 190 hedge funds that held stakes worth $26.8 billion in the company by the end of Q2, which indicates a positive hedge fund sentiment.
Giverny Capital, an asset management firm, published its third-quarter 2021 investor letter in which it discussed its stance in Alphabet Inc (NASDAQ:GOOG). Here is what the letter said:
“During the quarter we trimmed two positions, (which includes) Alphabet, after significant run-ups. Alphabet remains our largest holding at a 9% weight. When it rose above a 10% weight in late July, we brought it down a bit. I won’t automatically trim a position when it reaches the 10% threshold, but Alphabet nearly doubled from the summer of 2020 to 2021 and it felt responsible to take some gains.”
Like in Alphabet Inc (NASDAQ:GOOG), Moab Capital held stakes in Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Apple Inc. (NASDAQ:AAPL), and Johnson & Johnson (NYSE:JNJ) by the end of the third quarter of 2021.
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Disclosure: None. 10 Stocks to Buy According to Michael Rothenberg's Moab Capital is originally published on Insider Monkey.