Top 10 Stock Picks of Jacob Doft’s Highline Capital Management

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In this article, we discuss the top 10 stock picks of Jacob Doft’s Highline Capital Management. If you want to skip our detailed analysis of these stocks, go directly to the Top 5 Stock Picks of Jacob Doft’s Highline Capital Management.

Jacob Doft is the founder and chief executive officer at Highline Capital Management, which is an investment firm based in New York City. Highline Capital Management specializes in complex long and short investment opportunities within the US equity markets, managing assets mainly for pension funds, university endowments, and charitable organizations.

Doft’s strategy to create a successful investment portfolio consists of conducting fundamental research and deciding on an appropriate risk/return payoff while choosing equities. Highline Capital Management has successfully achieved a risk-adjusted performance record when compared to the US stock market indices.

Jacob Doft enrolled for a Bachelor’s degree in economics at The Wharton School, and completed his MBA from Harvard University. Prior to establishing Highline Capital Management, Doft was employed at a New York investment bank, Gleacher & Co, where he was responsible for private equity investments, corporate restructuring, and mergers and acquisitions. Doft manages a portfolio of securities worth $119.7 million at Highline Capital, in addition to assets under management valued over $355 million, as of the 13F filings at the end of June this year.

Doft’s top stocks are from the materials, healthcare, transport, information technology, finance, and consumer discretionary sectors, with a top ten holdings concentration of 86.04%. The largest holding in Doft’s Q2 portfolio is Vimeo, Inc. (NASDAQ:VMEO), which represents 11.18% of his investment portfolio.

Some of the notable stocks in Doft’s portfolio as of the second quarter include Amazon.com, Inc. (NASDAQ:AMZN), Vimeo, Inc. (NASDAQ:VMEO), Passage Bio, Inc. (NASDAQ:PASG), and Avantor, Inc. (NYSE:AVTR), among others discussed in detail below.

Our Methodology

With this context in mind, let’s discuss the top 10 stock picks of Jacob Doft’s Highline Capital Management. We used Doft’s investment portfolio for the second quarter to select these stocks, and they are ranked according to Doft’s stake value in each holding.

Photo by Marga Santoso on Unsplash

Why should we pay attention to Jacob Doft’s stock picks? 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 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). 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.

Top Stock Picks of Jacob Doft’s Highline Capital Management

10. Catalent, Inc. (NYSE:CTLT)

Highline Capital Management’s Stake Value: $5,486,000

Percentage of Highline Capital Management’s 13F Portfolio: 4.57%

Number of Hedge Fund Holders: 40

A multinational corporation from New Jersey, Catalent, Inc. (NYSE:CTLT) specializes in drug manufacturing, gene therapies, consumer health products, and biologics. Catalent, Inc. (NYSE:CTLT) also provides supply chain and logistics services by using innovative delivery technology. Catalent, Inc. (NYSE:CTLT) is a top stock pick of Jacob Doft, who owns 50,744 shares in the healthcare corporation as of June this year, via Highline Capital Management. With an approximate stake value of $5.48 million, Catalent, Inc. (NYSE:CTLT) represents 4.57% of Doft’s Q2 portfolio.

Catalent, Inc. (NYSE:CTLT) on November 2 posted its Q3 results. EPS for the period totaled $0.71, beating estimates by $0.05. Revenue for the quarter came in at $1.02 billion, missing estimates by -$4.94 million.

As of June, 40 hedge funds monitored by Insider Monkey were bullish on Catalent, Inc. (NYSE:CTLT), up from 29 in the preceding quarter.

Here is what Madison Small Cap Fund has to say about Catalent, Inc. (NYSE:CTLT) in their Q4 2020 investor letter:

“Healthcare continued its streak of underperformance in the fourth quarter. The biotech industry component of the Russell 2000 was up 34% for the quarter and 53% for the year. While we have become more open to investing in this space where appropriate, we prefer molecular diagnostics given less regulatory risk and better revenue diversification. With the new administration comes a shift in healthcare philosophy. We believe that further access to care and coverage expansion will benefit some parts of the sector. However, the risk of further reimbursement cuts, particularly in pharmaceuticals, will bear monitoring. We would note that one of our strong outperformers, Catalent, benefited from increased demand due to the Covid-19 pandemic. This stock returned 84% in 2020. While we think the fundamentals here are still strong, the stock has grown into a midcap.”

9. Commercial Metals Company (NYSE:CMC)

Highline Capital Management’s Stake Value: $6,019,000

Percentage of Highline Capital Management’s 13F Portfolio: 5.02%

Number of Hedge Fund Holders: 22

Commercial Metals Company (NYSE:CMC) is a top stock in Jacob Doft’s Q2 portfolio, with Highline Capital Management owning 195,935 shares worth over $6 million in Commercial Metals Company (NYSE:CMC) as of June this year. This stock accounts for 5.02% of the firm’s investment portfolio. Commercial Metals Company (NYSE:CMC) is a steel and metal manufacturer from Texas, specializing in scrap metal recycling and steel fabrication. Commercial Metals Company (NYSE:CMC) is focused on sustainability in modern infrastructure, and uses completely recycled steel for its products.

As of the second quarter of 2021, 22 hedge funds tracked by Insider Monkey were long Commercial Metals Company (NYSE:CMC), up from 20 in the previous quarter.

8. Meritor, Inc. (NYSE:MTOR)

Highline Capital Management’s Stake Value: $8,466,000

Percentage of Highline Capital Management’s 13F Portfolio: 7.06%

Number of Hedge Fund Holders: 18

Meritor, Inc. (NYSE:MTOR) is a Michigan-based organization that manufactures automobile spare parts for defense, commercial trailer, truck, off-highway and aftermarket customers. With distribution centers and offices in 19 countries, Meritor, Inc. (NYSE:MTOR) serves clients around the world in the commercial vehicle and industrial markets.

Jacob Doft’s Highline Capital Management owns 361,471 shares in Meritor, Inc. (NYSE:MTOR) as of the end of June, worth $8.46 million, representing 7.06% of the firm’s stock portfolio.

At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey were long Meritor, Inc. (NYSE:MTOR), down from 21 in the first quarter.

In addition to Amazon.com, Inc. (NASDAQ:AMZN), Vimeo, Inc. (NASDAQ:VMEO), Passage Bio, Inc. (NASDAQ:PASG), and Avantor, Inc. (NYSE:AVTR), Meritor, Inc. (NYSE:MTOR) is a top stock in Doft’s Q2 portfolio.

7. Steel Dynamics, Inc. (NASDAQ:STLD)

Highline Capital Management’s Stake Value: $8,663,000

Percentage of Highline Capital Management’s 13F Portfolio: 7.23%

Number of Hedge Fund Holders: 26

Steel Dynamics, Inc. (NASDAQ:STLD), a top stock pick of Jacob Doft, is an American steel manufacturer based out of Indiana. The company is involved in metal recycling and steel fabrication, and is the third largest American producer of carbon steel. Highline Capital Management, as of June this year, owns 145,355 shares in Steel Dynamics, Inc. (NASDAQ:STLD), worth $8.66 million, making up 7.23% of the firm’s portfolio.

Morgan Stanley analyst Carlos De Alba, on October 18, lowered the price target for Steel Dynamics, Inc. (NASDAQ:STLD) from $77 to $61, and kept an Equal Weight rating on the shares, down from Overweight.

As of Q2, 26 hedge funds tracked by Insider Monkey reported owning stakes in Steel Dynamics, Inc. (NASDAQ:STLD), worth $538.3 million.

6. Magna International Inc. (NYSE:MGA)

Highline Capital Management’s Stake Value: $9,850,000

Percentage of Highline Capital Management’s 13F Portfolio: 8.22%

Number of Hedge Fund Holders: 39

Magna International Inc. (NYSE:MGA) is a Canadian manufacturer of automobile spare parts, specializing in mobility technology, automotive systems, assemblies, modules, and components. Magna International Inc. (NYSE:MGA) supplies automobile components to clients like General Motors Company (NYSE:GM), Tesla, Inc. (NASDAQ:TSLA), Ford Motor Company (NYSE:F), and Toyota Motor Corporation (NYSE:TM), among others.

Magna International Inc. (NYSE:MGA) is a top stock pick of Jacob Doft’s Highline Capital Management, which owns 106,324 shares in the Canadian mobility technology company as of June 2021, worth $9.85 million. Magna International Inc. (NYSE:MGA) represents 8.22% of the firm’s Q2 portfolio.

Raymond James analyst Michael Glen downgraded Magna International Inc. (NYSE:MGA) on October 20 from Market Perform to Underperform, lowering the price target from $83 to $68. The analyst believes that conditions of auto parts companies continue to worsen as a whole, due to shortages of raw materials and supply chain disruptions.

As of Q2, 39 hedge funds were bullish on Magna International Inc. (NYSE:MGA), up from 34 in Q1.

Like Amazon.com, Inc. (NASDAQ:AMZN), Vimeo, Inc. (NASDAQ:VMEO), Passage Bio, Inc. (NASDAQ:PASG), and Avantor, Inc. (NYSE:AVTR), Magna International Inc. (NYSE:MGA) is a top stock in Doft’s Q2 portfolio.

Click to continue reading and see the Top 5 Stock Picks of Jacob Doft’s Highline Capital Management.

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Disclosure: None. Top 10 Stock Picks of Jacob Doft’s Highline Capital Management is originally published by Insider Monkey.