10 Stocks to Invest In According to Stephen White’s SW Investment

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In this article, we will discuss 10 stocks to invest in according to Stephen White’s SW Investment based on Q2 holdings of the fund. If you want to skip our detailed analysis of White’s history, investment philosophy, and hedge fund performance, go directly to 5 Stocks to Invest In According to Stephen White’s SW Investment.

SW Investment Management was founded by Stephen White in 2016. White completed his MBA from the University of Chicago Graduate School of Business. White spent four years as a portfolio manager at RMB Capital. He was the managing partner of Castle Union LLC for three years before establishing SW Investment Management.

Some notable holdings of Stephen White’s SW Investment as of the end of the second quarter include Amazon.com, Inc. (NASDAQ: AMZN) and Cloudflare, Inc. (NYSE: NET).

In Amazon.com, Inc. (NASDAQ: AMZN), Stephen White’s SW Investment owns 12,000 shares. JPMorgan analyst Doug Anmuth recently added Amazon (AMZN) in his “Best Ideas in 2021” list. He has an Overweight rating for the ecommerce giant.

Stephen White’s SW Investment also has a stake in Cloudflare, Inc. (NYSE: NET). The hedge fund owns 550,000 shares of the company, worth $58.21 million. On August 11, Cloudflare, Inc. (NYSE: NET) announced that it issued 0% senior unsecured notes due August 15, 2026, whose principal amount is $1.125 billion. Initial buyers were offered the option to acquire an additional $168.75 million worth of notes. Cloudflare plans to spend around $75 million of the net proceeds to cover the cost of the capped call transactions, with the rest going to general business purposes. On August 8, Argus analyst Joseph Bonner raised the price target on Cloudflare, Inc. (NYSE: NET) to $140 from $125 and kept a “Buy” rating on the shares.

Photo by Nicholas Cappello on Unsplash

Why should we pay attention to White’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 124 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 115 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.

With this context in mind, here is our list of stocks to invest in according to Stephen White’s SW Investment. We used White’s 13F portfolio for the second quarter for this analysis.

Stocks to Invest In According to Stephen White’s SW Investment

10. Stitch Fix, Inc. (NASDAQ: SFIX)

White’s Stake Value: $370,000 Percentage of Stephen White’s 13F Portfolio: 0.14% Number of Hedge Fund Holders: 35

Stitch Fix, Inc. (NASDAQ: SFIX) provides clothes, shoes, and accessories through its website and mobile app. It was founded in 2011 and is placed tenth on the list of 10 stocks to invest in according to Stephen White’s SW Investment. The company stock has offered investors more than 59.09% in returns over the course of the past 12 months.

On June 8, Canaccord analyst Maria Ripps raised the price target on Stitch Fix, Inc. (NASDAQ: SFIX) to $76 from $68 and kept a “Buy” rating on the shares.

SW Investment holds 15,000 Call options in Stitch Fix, Inc. (NASDAQ: SFIX), worth $370,000. This represents 0.14% of their portfolio. D E Shaw is a leading shareholder in Stitch Fix, Inc. (NASDAQ: SFIX), with 2.66 million shares worth more than $160 million.

Just like Amazon.com, Inc. (NASDAQ: AMZN), Cloudflare, Inc. (NYSE: NET), and Sun Communities, Inc. (NYSE: SUI), Stitch Fix, Inc. (NASDAQ: SFIX) is one of the best stocks according to Stephen White’s SW Investment.

In its second-quarter 2021 investor letter RGA Investment Advisors LLC, mentioned Stitch Fix, Inc. (NASDAQ: SFIX). Here is what the fund said:

“We purchased a new position–Stitch Fix–which is attacking this problem of abundance and the friction of shopping digitally head on with curation and personalization.

Your Own Personal Clothing Store

Stitch Fix is incredibly interesting. Founded by Katrina Lake in 2011, Stitch Fix turned apparel shopping into a delightfully personalized, subscription-based platform. The company collects numerous data points when onboarding a customer from the generics and quirks of each individual’s size and shape to tastes in designers, colors and styles. This empowers the company’s stylists to curate a “fix” with five clothing items on a periodic cadence (monthly, quarterly, semi-annually, etc.) of the customer’s choosing. A box arrives with its contents formerly unseen by the customer, with the constant being each item is already a known fit based on the size and shape of the customer’s body type and the trove of data Stitch Fix has on other “look alikes” across their customer base. Of the 5 items, a customer can keep all or none, but they must pay $20 irrespective of whether they keep anything. After reviewing the items, a customer can keep all items (for which they would get a 25% keep five discount) or return some items and checkout online to pay full price.…” (Click here to see the full text)

9. NI Holdings, Inc. (NASDAQ: NODK)

White’s Stake Value: $1,470,000 Percentage of Stephen White’s 13F Portfolio: 0.56% Number of Hedge Fund Holders: 7

NI Holdings, Inc. (NASDAQ: NODK) underwrites property and liability insurance products. The company was founded in 1946 and stands ninth on the list of 10 stocks to invest in according to Stephen White’s SW Investment. NI Holdings, Inc. (NASDAQ: NODK) currently has a $411.02 million market capitalization.

On August 4, NI Holdings, Inc. (NASDAQ: NODK) released earnings for the second quarter of 2021. It reported net loss of $2.644 million (-$0.12 per share), compared to a net income of $18.733 million ($0.86 per share) in the prior-year quarter.

The hedge fund chaired by Stephen White holds 77,376 shares in NI Holdings, Inc. (NASDAQ: NODK), worth $1.47 million. Michael Price’s MFP Investors is the most significant shareholder in NI Holdings, Inc. (NASDAQ: NODK), with 528,791 shares worth more than $10 million.

Just like Amazon.com, Inc. (NASDAQ: AMZN), Cloudflare, Inc. (NYSE: NET), and Sun Communities, Inc. (NYSE: SUI), NI Holdings, Inc. (NASDAQ: NODK) is one of the best stocks according to Stephen White’s SW Investment.

8. Sun Communities, Inc. (NYSE: SUI)

White’s Stake Value: $13,712,000 Percentage of Stephen White’s 13F Portfolio: 5.24% Number of Hedge Fund Holders: 30

Sun Communities, Inc. (NYSE: SUI) invests in manufactured housing communities, RV resorts, and marinas. The company was founded in 1975 and ranks eighth on the list of 10 stocks to invest in according to Stephen White’s SW Investment. Sun Communities, Inc. (NYSE: SUI) currently has a $22.86 billion market capitalization, and was able to deliver a 36.52% return in the past 12 months.

On July 26, Sun Communities, Inc. (NYSE: SUI) announced earnings for the second quarter of 2021. The company declared funds from operations (FFO) of $1.80, beating the estimates by $0.19. In addition, the revenue over the period was $603.86 million, up 99.1% YoY, beating the predictions by $152.39 million. On June 3, Michael Goldsmith initiated coverage on Sun Communities, Inc. (NYSE: SUI) with a “Buy” rating and gave a $190 price target.

SW Investment holds 80,000 shares in Sun Communities, Inc. (NYSE: SUI), worth over $13 million, representing 5.24% of its portfolio. Sun Communities, Inc. (NYSE: SUI) saw a decrease in hedge fund sentiment recently. The number of hedge fund positions declined to 30 at the end of the second quarter compared to 35 positions in the previous quarter.

7. Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC)

White’s Stake Value: $14,688,000 Percentage of Stephen White’s 13F Portfolio: 5.61% Number of Hedge Fund Holders: 29

Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) produces tools and equipment for assembling semiconductors. The company was founded in 1951 and is placed seventh on the list of 10 stocks to invest in according to Stephen White’s SW Investment.

On August 6, Craig-Hallum analyst Christian Schwab raised the price target on Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) to $88 from $64 and kept a “Buy” rating on the shares. On August 4, Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) announced its earnings for the second quarter of 2021. Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) posted earnings per share of $1.87, beating the estimates by $0.51. Furthermore, the revenue over the period was $424.3 million, up 182.1% YoY, surpassing the forecast by $24.36 million.

Stephen White’s SW Investment currently holds 240,000 shares of Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) that amounts to $14.69 million. Kulicke occupies 5.61% of SW Investment’s total portfolio. Royce & Associates is a leading shareholder in Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC), with 2.80 million shares worth more than $171 million.

Just like Amazon.com, Inc. (NASDAQ: AMZN), Cloudflare, Inc. (NYSE: NET), and Sun Communities, Inc. (NYSE: SUI), Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) is one of the best stocks according to Stephen White’s SW Investment.

6. The AES Corporation (NYSE: AES)

White’s Stake Value: $19,552,000 Percentage of Stephen White’s 13F Portfolio: 7.47% Number of Hedge Fund Holders: 39

The AES Corporation (NYSE: AES) is a utility firm with a diverse portfolio. It was incorporated in 1981 and is ranked sixth on the list of 10 stocks to invest in according to Stephen White’s SW Investment.

On August 6, Wolfe Research analyst Steve Fleishman upgraded The AES Corporation (NYSE: AES) to “Outperform” from “Peer Perform” with a $29 price target. On August 5, The AES Corporation (NYSE: AES) posted earnings results for the second quarter of 2021. The earnings per share was $0.31, missing the estimates by $0.13. In addition, the revenue over the period was $2.7 billion, up 21.6% YoY, surpassing the predictions by $180 million.

The hedge fund managed by Stephen White holds 750,000 shares in The AES Corporation (NYSE: AES), worth over $19 million, representing 7.47% of their portfolio. In the second quarter of 2021, 39 hedge funds in Insider Monkey’s database of 873 funds held stakes in The AES Corporation (NYSE: AES) compared to 51 funds in the quarter earlier.

Just like Amazon.com, Inc. (NASDAQ: AMZN), Cloudflare, Inc. (NYSE: NET), and Sun Communities, Inc. (NYSE: SUI), The AES Corporation (NYSE: AES) is one of the best stocks according to Stephen White’s SW Investment.

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Disclosure: None. 10 Stocks to Invest In According to Stephen White’s SW Investment is originally published on Insider Monkey.