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Chimera Investment Corporation (CIM), Hallmark Financial Services, Inc. (HALL) and JPMorgan Chase & Co. (JPM): Cove Street Capital’s Best 3 Finance Picks


Cove Street Capital’s equity portfolio appreciated to $762.5 million in the first quarter of 2015, from $671 million in the fourth quarter of 2014. The development came on the back of deep reforms to the portfolio mix during first quarter.

Cove Street Capital deemed it wise to initiate fresh positions in some 21 stocks and delete another 17 stocks from its portfolio. The fund also increased holding in 47 stocks and slashed its stake in 24 other stocks.

In terms of industries, the portfolio of Cove Street Capital is fairly spread out. The fund’s best interest is in Consumer Discretionary and Finance sectors, each making 27% of its portfolio. Cove Street Capital also has substantial exposure to IT and Industrial stocks.

Here is a closer look at the fund’s top-three largest Finance holdings by dollar value.

Cove Street Capital owned 7.7 million shares, worth $24.3 million, in Chimera Investment Corporation (NYSE:CIM) at the end of quarter one. It reduced its stake in the company during the quarter given that its previous holding was more than 9.6 million shares, valued at $30.6 million.

The fund raised its stake in Hallmark Financial Services, Inc. (NASDAQ:HALL) during the first quarter to more than 1.4 million shares, from about 1.2 million shares at the end of quarter four. The new stake was valued at $15.2 million. The previous stake was valued at $14.6 million.

Cove Street Capital slightly increased its holding in JPMorgan Chase & Co. (NYSE:JPM) to 192,358 shares at the end of quarter one, from 191,383 at the end of the fourth quarter of 2014. While stock holding in JPM increased between quarter one of 2015 and quarter one of 2014, dollar value of the investment dipped to $11.7 million, from nearly $12 million in the previous report.

Sells and buys

Some of the stocks that Cove Street Capital sold out in the first quarter were Wesco Aircraft Holdings Inc (NYSE:WAIR), PMC-Sierra Inc (NASDAQ:PMCS) and AZZ Incorporated (NYSE:AZZ).

 The fund replaced the deleted positions with Dreamworks Animation Skg Inc (NASDAQ:DWA), International Business Machines Corp. (NYSE:IBM) and Actuant Corporation (NYSE:ATU), which featured at the top of its fresh buys in the quarter.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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