In this article, we discuss the 10 stocks to buy today according to Phil Frohlich's Prescott Group Capital Management based on Q2 holdings of the fund. If you want to skip our detailed analysis of Frohlich's history, investment philosophy, and hedge fund performance, go directly to the 5 Stocks to Buy Today According to Phil Frohlich's Prescott Group Capital Management.
Phil Frohlich formed Prescott Group Capital Management in 1992. Phil Frohlich earned a bachelor's degree in economics from the University of Oklahoma, an MBA from the University of Texas at Austin, and a law degree from the University of Tulsa. He is an Investment Advisor Representative with Prescott Group Capital Management in Tulsa, OK, with over 19 years of financial expertise.
Oklahoma-based Prescott Group Capital Management is a registered investment advisor. Through private limited partnerships, the hedge fund invests in publicly listed stocks with small and mid-capitalization. The hedge fund handled more than $500 million in assets as of June 30, 2021. In the second quarter of 2021, the total value of the Prescott Group Capital Management13F portfolio is $353.65 million.
Phil Frohlich’s stock picks include Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT).
Prescott Group Capital Management owns 6,000 shares in Microsoft Corporation (NASDAQ: MSFT), worth $1.63 million. On September 8, Jefferies analyst Brent Thill raised the price target on Microsoft Corporation (NASDAQ: MSFT) to $345 from $335 and kept a “Buy” rating on the shares.
Based on the latest 13F holdings for the second of 2021, Prescott Group Capital Management owns 9,500 shares in NVIDIA Corporation (NASDAQ: NVDA), after increasing its holding in the company by 90% from the first quarter of 2021. On August 20, Benchmark analyst David Williams initiated coverage of NVIDIA Corporation (NASDAQ: NVDA) with a “Buy” rating and gave a price target of $230.
Phil Frohlich also owns 5,294 shares in Walmart Inc. (NYSE: WMT), worth $747,000. On September 2, Walmart Inc. (NYSE: WMT) posted earnings for the second quarter of 2021. It reported earnings per share of $1.78, surpassing the estimates by $0.21. On August 18, Cowen analyst Oliver Chen raised the price target on Walmart to $175 from $170 and maintained an “Outperform” rating on the shares.
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Why should we care about Prescott'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 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 Phil Frohlich's Prescott Group Capital Management stock picks in 2021. We used Frohlich's 13F portfolio for Q2 2021 for this analysis.
Stocks to Buy Today According to Phil Frohlich's Prescott Group Capital Management
Percentage of Phil Frohlich's 13F Portfolio: 1.76%
Number of Hedge Fund Holders: 28
NVR, Inc. (NYSE: NVR) functions as a homebuilder in the United States. The company was founded in 1980, and it stands tenth on the list of 10 stocks to buy today according to Phil Frohlich's Prescott Group Capital Management.
On July 21, NVR, Inc. (NYSE: NVR) announced earnings for the second quarter of 2021. It posted earnings per share of $82.45, beating the estimates by $7.74. Revenue over the period was $2.22 billion, up 39.6% year over year, surpassingthe estimates by $10 million. On June 10, Zelman analyst Alan Ratner downgraded NVR, Inc. (NYSE: NVR) to “Hold.” In May, the homebuilder survey conducted by Zelman & Associates revealed a fourth consecutive month of lower-than-seasonal order activity.
In the second quarter of 2021, Phil Frohlich's Prescott Group Capital Management owned 1,254 shares in NVR, Inc. (NYSE: NVR), worth $6.24 million. This represented 1.76% of the investment portfolio of Prescott Group Capital Management. Ric Dillon’s Diamond Hill Capital is a leading shareholder in NVR, Inc. (NYSE: NVR), with 118,565 shares worth $589.66 million.
In addition to Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT), analysts are paying attention to NVR, Inc. (NYSE: NVR) amid the company's long-term growth potential.
Black Bear Value Partners, in its second-quarter 2021 investor letter, mentioned NVR, Inc. (NYSE: NVR). Here is what the fund said:
“I would point you to our Q1 letter to read our discussion of NVR. We own 3 homebuilding related names which comprise a healthy chunk of the portfolio. Given the concentrated nature of the portfolio I am going to keep the names of the remaining 2 companies out of this discussion. 2 of the 3 companies are homebuilders while the 3rd is in an adjacent business line supplying the homebuilding industry.…” (Click here to see the full text)
Percentage of Phil Frohlich's 13F Portfolio: 1.83%
Number of Hedge Fund Holders: 7
Rattler Midstream LP (NASDAQ: RTLR) is a West Texas-based midstream and energy-related infrastructure company that owns, operates, develops, and acquires midstream and energy-related infrastructure assets. It was incorporated in 2018 and ranks ninth on the list of 10 stocks to buy today according to Phil Frohlich's Prescott Group Capital Management.
On August 13, Barclays analyst Christopher Tillett downgraded Rattler Midstream LP (NASDAQ: RTLR) to “Underweight” from “Equal Weight” and gave a price target of $11 down from $12. On August 12, Rattler Midstream LP (NASDAQ: RTLR) declared a quarterly dividend of $0.25 per share, a 25% increase from the previous dividend of $0.20.
The hedge fund managed by Phil Frohlich's owns 594,734 shares in Rattler Midstream LP (NASDAQ: RTLR), worth over $6.49 million, representing 1.83% of their portfolio. The hedge fund has decreased its stake in the firm by 43% in the second quarter of 2021. The biggest stakeholder of the company is Cardinal Capital, with 3.37 million shares, worth $36.77 million.
In addition to Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT), analysts are paying attention to Rattler Midstream LP (NASDAQ: RTLR) amid the company’s long-term growth potential.
Percentage of Phil Frohlich's 13F Portfolio: 1.85%
Number of Hedge Fund Holders: 35
Skechers U.S.A., Inc. (NYSE: SKX) is a lifestyle and performance footwear business based in the United States. It was founded in 1992 and is placed eighth on the list of 10 stocks to buy today according to Phil Frohlich's Prescott Group Capital Management.
On July 23, B. Riley analyst Susan Anderson raised the price target on Skechers U.S.A., Inc. (NYSE: SKX) to $61 from $51 and reiterated a “Buy” rating on the shares. On July 22, Skechers U.S.A., Inc. (NYSE: SKX) posted earnings for the second quarter of 2021. It reported earnings per share of $0.88, beating the estimates by $0.38. Revenue over the period was $1.66 billion, up 127.6% YoY, exceeding the analysts' expectations by $170 million.
Prescott Group Capital Management holds 131,641 shares in Skechers U.S.A., Inc. (NYSE: SKX), worth over $6.56 million, representing 1.85% of their portfolio. Hedge fund sentiment increased for Skechers U.S.A., Inc. (NYSE: SKX) in the second quarter of 2021. Insider Monkey’s data shows that 35 elite hedge funds held stakes in the company in the second quarter, up from 29 funds a quarter earlier.
Percentage of Phil Frohlich's 13F Portfolio: 1.87%
Number of Hedge Fund Holders: 15
Plains GP Holdings, L.P. (NASDAQ: PAGP) owns and manages midstream energy infrastructure in Canada and the US. It was incorporated in 2013 and stands seventh on the list of 10 stocks to buy today according to Phil Frohlich's Prescott Group Capital Management. Plains GP Holdings, L.P. (NASDAQ: PAGP) shares have offered investors returns exceeding 45.63% over the course of the past 12 months.
On August 26, Plains All American Pipeline, L.P. (NASDAQ: PAA) and Plains GP Holdings, L.P. (NASDAQ: PAGP) announced that PAA's two credit facilities had been renewed and extended. In addition, the company announced that it issued $1.35 billion senior unsecured notes due April 2026, whose principal amount is $1.35 billion. The new facilities are a $1.35 billion senior unsecured revolving credit facility with an initial term of August 2026 and a $1.35 billion senior secured hedged inventory facility with an initial maturity of August 2024. The funds will be used for general corporate purposes, and they will replace PAA's previous credit facilities. On July 13, Citi analyst Timm Schneider raised the price target on Plains GP Holdings, L.P. (NASDAQ: PAGP) to $13 from $11 and kept a “Buy” rating on the shares.
Prescott Group Capital Management handles 554,217 shares of Plains GP Holdings, L.P. (NASDAQ: PAGP), worth $6.62 million. This represented 1.87% of the investment portfolio of Group Capital Management. The hedge fund has raised its stake in Plains GP Holdings, L.P. (NASDAQ: PAGP) by 64% in the second quarter of 2021. Arrowstreet Capital is the company’s most significant stakeholder, with 2.45 million shares worth $29.24 million.
In addition to Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT), analysts are paying attention to Plains GP Holdings, L.P. (NASDAQ: PAGP) amid the company's long-term growth potential.
Percentage of Phil Frohlich's 13F Portfolio: 2.07%
Number of Hedge Fund Holders: 10
Ocwen Financial Corporation (NYSE: OCN) is a financial services firm. It was founded in 1988 and is placed sixth on the list of 10 stocks to buy today according to Phil Frohlich's Prescott Group Capital Management. Ocwen Financial Corporation (NYSE: OCN) shares have offered investors more than 60.28% in returns over the course of the past 12 months.
On September 9, B. Riley initiated coverage of Ocwen Financial Corporation (NYSE: OCN) with a “Buy” rating and gave a price target of $50. On August 5, Ocwen Financial Corporation (NYSE: OCN) announced earnings for the second quarter of 2021. It reported earnings per share of -$1.19, missing the estimates by $1.17. Revenue for the second quarter was $265.45 million, missing the forecast by $39.63 million.
Phil Frohlich's Prescott Group Capital Management increased its holding in Ocwen Financial Corporation (NYSE: OCN) by 42% in the second quarter of 2021. The fund owns 236,428 shares of Ocwen Financial Corporation (NYSE: OCN), worth $7.33 million. Howard Marks’ Oaktree Capital Management is Ocwen Financial Corporation (NYSE: OCN) most significant stakeholder, with 596,870 shares worth $18.49 million.
