Top 10 Stock Picks of Donald Sussman’s Paloma Partners

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In this article, we discuss the top 10 stock picks of Donald Sussman’s Paloma Partners based on Q2 holdings of the fund. If you want to skip our detailed analysis of Sussman’s history, investment philosophy, and hedge fund performance, go directly to the Top 5 Stock Picks of Donald Sussman’s Paloma Partners.

Selwyn Donald Sussman is a philanthropist and asset manager in the United States. He was the vice president and chief financial officer of Titan Industrial Corporation, a privately held trade corporation. Subsequently, he managed money for the partners of Gelberg & Abrams, a New York law firm. In 1981, Sussman founded Paloma Partners, a hedge fund in Greenwich, Connecticut, primarily for institutional investors. In addition to the Paloma funds, Sussman founded Trust Asset Management and New China Capital Management LLC.

Paloma Partners is a multi-strategy investment entity that has operated through several market cycles and decades. It aims to produce good long-term risk-adjusted returns with little market correlation.

Paloma had a 1.5% return in October, thanks to substantial gains in its fixed-income relative value bets. This year, the $4.2 billion multi-strategy fund has gained over 10%.

Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), among others, are some of the most important holdings of Donald Sussman’s fund as of the second quarter of 2021.

Paloma Partners owns 24,077 shares in Microsoft Corporation (NASDAQ:MSFT) after reducing its stake in the company by 71% in the second quarter of 2021. On November 1, Deutsche Bank analyst Brad Zelnick initiated coverage of Microsoft, rating the stock as “Buy” and gave a price target of $390.

Based on the latest 13F holdings for the second quarter of 2021, Paloma Partners owns 135,198 shares in Apple Inc. (NASDAQ:AAPL) after cutting its holding in the company by 1% from the first quarter of 2021. On November 9, Arete analyst Richard Kramer raised his price target on Apple to $180 from $168 and kept a “Buy” rating on the shares.

Donald Sussman’s Paloma Partners is also bullish on Amazon.com, Inc. (NASDAQ:AMZN), according to the hedge fund’s disclosed holdings data as of the end of the second quarter of 2021. The fund increased its holding in Amazon by 21% in the second quarter, ending the period with 6,942 shares. On November 11, Tigress Financial analyst Ivan Feinseth raised his price target on Amazon.com to $4,460 from $4,370 and kept a “Buy” rating on the shares. According to the analyst, the firm is well-placed to withstand near-term supply chain difficulties and produce solid sales growth in 2022.

Top 10 Stock Picks of Donald Sussman’s Paloma Partners

Donald Sussman of Paloma Partners

Average investors have to tread the financial markets with extreme caution. Even experts are having a hard time making sense of the rapidly changing world. The hedge fund industry’s reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 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.

Here is a list of top 10 stock picks of Donald Sussman’s Paloma Partners. We used Sussman’s 13F portfolio for Q2 2021 for this analysis.

Top Stock Picks of Donald Sussman’s Paloma Partners

10. Global Payments Inc. (NYSE:GPN)

Paloma Partners Stake Value: $19,769,000

Percentage of Paloma Partners’ 13F Portfolio: 0.35%

Number of Hedge Fund Holders: 66

Global Payments Inc. (NYSE:GPN) is a firm that specializes in payment software and technology.

On November 3, Truist analyst Andrew Jeffrey lowered his price target on Global Payments to $165 from $240 but maintained a “Buy” rating on the shares.

On November 2, the company declared a quarterly dividend of $0.25 per share, in line with the previous. Out of the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in Global Payments Inc. (NYSE:GPN) with 651,087 shares worth more than $102.60 million.

In its second-quarter 2021 investor letter, Carillon Tower Advisers mentioned Global Payments Inc. (NYSE:GPN), and shared their insights on the company. Here is what the fund said:

“Global Payments is a payments technology company delivering innovative payments and software solutions that allow customers to operate their businesses more efficiently. Investors have been disappointed at the pace of the revenue acceleration given the uneven nature of the reopening globally. The U.S. is doing well with issues, but Europe and Asia remain in various stages of reopening and lockdowns and thus, spending has been curtailed. However, we believe that the U.S. is leading the way and as vaccines are rolled out worldwide, Global Payments stands to benefit in the second half of this year and into 2022.”

9. Caterpillar Inc. (NYSE:CAT)

Paloma Partners Stake Value: $19,843,000

Percentage of Paloma Partners’ 13F Portfolio: 0.35%

Number of Hedge Fund Holders: 62

Caterpillar Inc. (NYSE:CAT), a construction and mining equipment manufacturer, is on the list of top 10 stock picks of Donald Sussman’s Paloma Partners.

On October 29, UBS analyst Steven Fisher upgraded Caterpillar to “Buy” from “Neutral” with a price target of $235, up from $232. The hedge fund chaired by Donald Sussman holds close to 91,180 shares in the company worth over $19.84 million. In addition, Paloma Partners’ stake in the company’s shares increased by 1358% in the second quarter of 2021.

At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $5.26 billion in Caterpillar Inc. (NYSE:CAT), up from 53 in Q1, with a total stake value of almost $4.96 billion.

8. Microchip Technology Incorporated (NASDAQ:MCHP)

Paloma Partners Stake Value: $19,954,000

Percentage of Paloma Partners’ 13F Portfolio: 0.36%

Number of Hedge Fund Holders: 50

Microchip Technology Incorporated (NASDAQ:MCHP) is a good investment option for income investors as the semiconductor manufacturing company offered a dividend of $0.232 on November 4, a 6.2% increase from previous dividend. In addition, in the second quarter of 2021, the company’s revenue came in at $1.65 billion up 26.9% YoY.

On October 14, Stifel analyst Tore Svanberg initiated coverage of Microchip rating the stock as “Hold” and gave a price target of $76. Shares of Microchip Technology Incorporated (NASDAQ:MCHP) rallied 31.15% over the last 12 months, and it features on the list of top 10 stock picks of Donald Sussman’s Paloma Partners.

The company is also getting the attention of the smart money, as 50 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the second quarter, up from 42 funds a quarter earlier.

In addition to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), Microchip Technology Incorporated (NASDAQ:MCHP) is one of the stocks attracting the attention of Donald Sussman’s Paloma Partners.

7. Las Vegas Sands Corp. (NYSE:LVS)

Paloma Partners Stake Value: $20,270,000

Percentage of Paloma Partners’ 13F Portfolio: 0.36%

Number of Hedge Fund Holders: 48

Las Vegas Sands Corp. (NYSE:LVS), a developer of destination resorts, announced its financial results for the third quarter. The company’s revenue came in at $857 million, missing the estimates by $353 million. The company’s shares are down 29% over the last 12 months, and it features on the list of top 10 stock picks of Donald Sussman’s Paloma Partners.

On October 21, Credit Suisse analyst Ben Combes lowered his price target on Las Vegas Sands to $60 from $69 and maintained an “Outperform” rating on the shares following third quarter results. According to the analyst, increased pandemic-related restrictions and reduced visitation continue to impact financial results.

At the end of the second quarter of 2021, 48 funds out of the 873 tracked by Insider Monkey had stakes in Las Vegas Sands Corp. (NYSE:LVS), compared to 62 in the previous quarter. Paloma Partners owns 384,693 shares of the company after increasing its stake by 686% in the second quarter of 2021.

Baron Funds, an asset management firm, in its second-quarter 2021 investor letter, mentioned Las Vegas Sands Corp. (NYSE:LVS). Here is what the fund said:

“The shares of Las Vegas Sands Corporation, a leading developer of luxury casino resorts in Macau and Singapore, declined in the most recent quarter in large part due to COVID-19 travel-related restrictions. We believe the shares are attractively valued and will recover sharply when travel restrictions are lifted.”

6. Norfolk Southern Corporation (NYSE:NSC)

Paloma Partners Stake Value: $20,278,000

Percentage of Paloma Partners’ 13F Portfolio: 0.36%

Number of Hedge Fund Holders: 58

Norfolk Southern Corporation (NYSE:NSC), a transportation firm that runs a freight train, is one of the top 10 stock picks of Donald Sussman’s Paloma Partners. In the third quarter, the company posted an EPS of $3.06 beating the consensus by $0.14. Revenue over the period was $2.85 billion, up 13.5% YoY.

On October 28, TD Securities analyst Cherilyn Radbourne raised her price target on Norfolk Southern to $330 from $315 and kept a “Buy” rating on the shares after third-quarter results. On October 26, the company declared a quarterly dividend of $1.09 per share, in line with the previous.

Overall, hedge funds are loading up on Norfolk Southern Corporation (NYSE:NSC), as 58 out of the 873 funds tracked by Insider Monkey held stakes in the company, compared to 46 funds a quarter earlier. The company’s shares are up 18.56% year to date. Ken Fisher’s Fisher Asset Management is the most significant stakeholder in the company, with 636,834 shares worth $152.36 million.

Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN) are some of the notable stocks in Donald Sussman’s Paloma Partners 13F portfolio in Q2, just like Norfolk Southern Corporation (NYSE:NSC).

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Disclosure: None. Top 10 Stock Picks of Donald Sussman’s Paloma Partners is originally published on Insider Monkey.