Top 10 Stock Picks of Brian Scudieri’s Kehrs Ridge Capital

view original post

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

Brian Scudieri is the founder and portfolio manager of Kehrs Ridge Capital, which is a New Jersey-based investment management firm. As of the Q3 13F filings, Scudieri manages a portfolio worth $309.7 million for Kehrs Ridge Capital, as well as assets under management valued at roughly $261 million.

Scudieri’s Q3 portfolio is heavily concentrated in the consumer staples and consumer discretionary sectors, with a top ten holdings concentration of 55.81%. As of September this year, the 13F filings for Kehrs Ridge Capital suggest that Scudieri purchased 19 new stocks in Q3, sold out of 18 securities, bought additional stakes in 8 stocks, and reduced holdings in 4 equities.

Scudieri’s top purchases for the third quarter include The Procter & Gamble Company (NYSE:PG), The Kraft Heinz Company (NASDAQ:KHC), and Colgate-Palmolive Company (NYSE:CL), whereas he sold out of Walmart Inc. (NYSE:WMT), Philip Morris International Inc. (NYSE:PM), and Mondelez International, Inc. (NASDAQ:MDLZ).

The most notable stocks in Scudieri’s portfolio as of September 2021 include The Procter & Gamble Company (NYSE:PG), McDonald’s Corporation (NYSE:MCD), Macy’s, Inc. (NYSE:M), and Starbucks Corporation (NASDAQ:SBUX), among others discussed in detail below.

saknakorn / Shutterstock.com

Why should we pay attention to Brian Scudieri’s top 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.

Our Methodology

We used Brian Scudieri’s Q3 portfolio to choose Kehrs Ridge Capital’s top 10 stock picks, ranking the stocks according to Scudieri’s stake value in each company. Relevant metrics such as Q3 earnings, analyst ratings, and hedge fund sentiment for each stock are also mentioned to give readers meaningful context on each holding.

Top New Stock Picks of Brian Scudieri’s Kehrs Ridge Capital

10. Burlington Stores, Inc. (NYSE:BURL)

Kehrs Ridge Capital’s Stake Value: $10,776,000

Percentage of Kehrs Ridge Capital’s 13 Portfolio: 3.47%

Number of Hedge Fund Holders: 43

Burlington Stores, Inc. (NYSE:BURL) is an American discount retail chain which has outlets across 40 states, including Puerto Rico. Burlington Stores, Inc. (NYSE:BURL) is the third-largest discount store retailer in the US, specializing in clothing, furniture, home decor, pet supplies, and gifts. Kehrs Ridge Capital owns a $10.7 million stake in Burlington Stores, Inc. (NYSE:BURL) as of September this year, which accounts for 3.47% of the firm’s Q3 portfolio.

Laura Champine from Loop Capital reported on October 14 that the diversified retail sector was affected by the rise in inflation, and she observed understocked and understaffed departmental stores. Stores lacked luxury goods on display, inventory and staff levels are hard to maintain, and supply chain issues seem to be on the rise rather than diminishing in the near future. She downgraded Burlington Stores, Inc. (NYSE:BURL) as a result from Buy to Hold, reducing the price target from $410 to $285.

As of the second quarter of 2021, 43 hedge funds tracked by Insider Monkey were bullish on Burlington Stores, Inc. (NYSE:BURL), up from 32 in the previous quarter.

In addition to The Procter & Gamble Company (NYSE:PG), McDonald’s Corporation (NYSE:MCD), Macy’s, Inc. (NYSE:M), and Starbucks Corporation (NASDAQ:SBUX), Burlington Stores, Inc. (NYSE:BURL) is a notable stock in Scudieri’s Q3 portfolio.

Here is what Ariel Investments has to say about Burlington Stores, Inc. (NYSE:BURL) its Q1 2021 investor letter:

“Burlington is a leading off-price retailer offering an assortment of apparel, footwear, home, beauty and toys. Shares have risen as investors are increasingly optimistic the company will benefit from higher consumer spending this year with the US economy expected to reopen. In addition to this cyclical tailwind, we believe the company has several internal drivers and a relatively new CEO is spearheading. These include growing its store footprint through smaller formats (~30,000 square feet versus ~50,000 square feet) as it adapts to the evolving brick-and-mortar retail landscape, and closing its sizable margin gap with peers TJ Maxx and Ross by strengthening its merchant team, purchasing inventory items in-season (reacting to sales trends in real time) and reducing store inventory levels (fewer markdowns, higher merchandise margins).”

9. McDonald’s Corporation (NYSE:MCD)

Kehrs Ridge Capital’s Stake Value: $11,091,000

Percentage of Kehrs Ridge Capital’s 13 Portfolio: 3.58%

Number of Hedge Fund Holders: 66

McDonald’s Corporation (NYSE:MCD) is an American fast food company that is considered the largest restaurant chain by revenue, serving millions of customers across more than 100 countries.

Scudieri’s Kehrs Ridge Capital, as of the third quarter, owns stakes worth $11 million in McDonald’s Corporation (NYSE:MCD), with the fast food giant representing 3.58% of the fund’s total 13F securities. As of June this year, of the 873 hedge funds tracked by Insider Monkey, 66 funds were bullish on McDonald’s Corporation (NYSE:MCD), with an approximate stake value of $2.71 billion, down from 67 funds in the preceding quarter with stakes worth $3.78 billion.

McDonald’s Corporation (NYSE:MCD) posted its Q3 results on October 27. EPS in the period totaled $2.76, exceeding estimates by $0.29. Revenue for the quarter equaled $6.20 billion, up 14.46% year-over-year, beating estimates by $158.29 million.

Credit Suisse analyst Lauren Silberman on October 28 kept an Outperform rating on McDonald’s Corporation (NYSE:MCD), raising the price target from $271 to $281, following the strong Q3 earnings beat.

8. Bunge Limited (NYSE:BG)

Kehrs Ridge Capital’s Stake Value: $12,198,000

Percentage of Kehrs Ridge Capital’s 13 Portfolio: 3.98%

Number of Hedge Fund Holders: 40

Brian Scudieri’s Kehrs Ridge Capital owns 150,000 shares in Bunge Limited (NYSE:BG), which represents 3.98% of the firm’s Q3 portfolio. Bunge Limited (NYSE:BG) is a food company from Missouri, which is known for being an international exporter of soybean, in addition to specializing in food processing, fertilizers, and grains. Bunge Limited (NYSE:BG) is also categorized as an agribusiness.

On October 27, Bunge Limited (NYSE:BG)’s EPS for Q3 totaled $3.72, beating estimates by $2.30. Revenue for the quarter amounted to $14.12 billion, exceeding estimated revenue by $226.90 million.

At the end of June, 40 hedge funds monitored by Insider Monkey were long Bunge Limited (NYSE:BG), down from 44 funds in the preceding quarter.

Barclays analyst Benjamin Theurer on October 28 increased the price target on Bunge Limited (NYSE:BG) from $100 to $110, keeping an Overweight rating on the stock following the Q3 earnings beat and higher guidance.

In addition to The Procter & Gamble Company (NYSE:PG), McDonald’s Corporation (NYSE:MCD), Macy’s, Inc. (NYSE:M), and Starbucks Corporation (NASDAQ:SBUX), Bunge Limited (NYSE:BG) is a notable stock in Scudieri’s Q3 portfolio.

7. Colgate-Palmolive Company (NYSE:CL)

Kehrs Ridge Capital’s Stake Value: $13,604,000

Percentage of Kehrs Ridge Capital’s 13 Portfolio: 4.39%

Number of Hedge Fund Holders: 58

Another top stock from Scudieri’s Q3 portfolio is Colgate-Palmolive Company (NYSE:CL), with Kehrs Ridge Capital owning 180,000 shares in the consumer staples giant, worth $13.6 million, representing 4.39% of the firm’s investment portfolio. Colgate-Palmolive Company (NYSE:CL) is a multinational consumer goods company that offers several brands catering to household, health care, personal care, and veterinary products.

At the end of June this year, 58 hedge funds tracked by Insider Monkey were bullish on Colgate-Palmolive Company (NYSE:CL), up from 48 funds in the previous quarter.

Colgate-Palmolive Company (NYSE:CL) reported earnings for Q3 on October 29. EPS for the quarter equaled $0.81, beating estimates by $0.01. Fulvio Cazzol from the investment advisory Berenberg, on November 2, kept a Hold rating on Colgate-Palmolive Company (NYSE:CL), citing mixed Q3 results, as margins were lower due to higher input and distribution costs.

Here is what First Eagle Investment Management has to say about Colgate-Palmolive Company (NYSE:CL) in their Q1 2021 investor letter:

“The leading detractors in the quarter (included) Colgate-Palmolive Company. After a strong 2020 fueled in part by lockdown-driven demand, consumer staples stocks generally cooled during the first quarter as investors shifted attention to the more economically sensitive areas of the market likely to benefit from re-openings and improved discretionary spending. The effects of this rotation could be seen in the share price underperformance of names like Colgate-Palmolive.”

6. The Kraft Heinz Company (NASDAQ:KHC)

Kehrs Ridge Capital’s Stake Value: $16,569,000

Percentage of Kehrs Ridge Capital’s 13 Portfolio: 5.34%

Number of Hedge Fund Holders: 33

The Kraft Heinz Company (NASDAQ:KHC) is an American food company that was formed as a result of a merger between Kraft Foods and Heinz in 2015. The Kraft Heinz Company (NASDAQ:KHC) has an impressive portfolio of flagship brands under its domain, including Oscar Mayer and Philadelphia Cream Cheese, among others. It is one of the leading American food companies, and one of Scudieri’s top picks as of Q3. Kehrs Ridge Capital holds 450,000 shares in The Kraft Heinz Company (NASDAQ:KHC) as of September, worth $16.56 million, representing 5.34% of the firm’s portfolio.

At the end of the second quarter, 33 hedge funds monitored exclusively by Insider Monkey were bullish on The Kraft Heinz Company (NASDAQ:KHC), with stakes worth $13.57 billion.

The Kraft Heinz Company (NASDAQ:KHC) posted Q3 earnings results on October 27. EPS for the period came in at $0.65, beating estimates by $0.07. The Q3 revenue added up to $6.32 billion, beating estimates by $241.74 million.

Here is what Berkshire Hathaway has to say about The Kraft Heinz Company (NASDAQ:KHC) in their Q4 2020 investor letter:

“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at year end were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.

Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.

We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.

Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”

Click to continue reading and see Top 5 Stock Picks of Brian Scudieri’s Kehrs Ridge Capital.

Suggested articles:

Disclosure: None. Top 10 Stock Picks of Brian Scudieri’s Kehrs Ridge Capital is originally published on Insider Monkey.