In this article, we discuss 10 stocks to buy according to Cheyne Capital. If you want to skip our detailed analysis of the fund’s investment philosophy and performance, go directly to 5 Stocks to Buy According to Cheyne Capital.
In 2000, Jonathan Lourie and Stuart Fiertz, who had previously worked together at Morgan Stanley, founded Cheyne Capital. It is the leading alternative asset and investment management company in Europe. The hedge fund is well-known for its distinct strategy and has been proactive and effective in delivering value to investors in the face of substantial market changes. Cheyne Capital’s specialties are real estate debt, social property impact, corporate credit, convertible bonds, event-driven investments, and stocks. The hedge fund searches for opportunities to disrupt markets and the best ways to sell those opportunities to its investors.
Photo by Adam Śmigielski on Unsplash
Cheyne Capital’s 13F portfolio value decreased in the second quarter from $158.86 million to $118.42 million, with a top 10 holdings concentration of 44.54%. The hedge fund allocated the largest share of its portfolio, roughly 32.63%, to energy and 22.74% to the finance sector. It also invested in information technology, utilities and telecommunications, materials, consumer discretionary, healthcare, and communications. In the second quarter of 2022, the fund sold off 45 stocks and reduced holdings in 51 equities. On the other hand, it purchased 11 new stocks and made additional purchases in 7 existing long positions. Some of the most prominent securities in Cheyne Capital’s portfolio include Suncor Energy Inc. (NYSE:SU), Activision Blizzard, Inc. (NASDAQ:ATVI), and Alibaba Group Holding Limited (NYSE:BABA).
Our Methodology
Let’s start our list of 10 stocks to buy according to Cheyne Capital. We picked these stocks from the second quarter portfolio of Cheyne Capital.
Stocks to Buy According to Cheyne Capital
10. Occidental Petroleum Corporation (NYSE:OXY)
Cheyne Capital’s Stake Value: $2,159,000
Percentage of Cheyne Capital’s 13F Portfolio: 1.82%
Number of Hedge Fund Holders: 67
Occidental Petroleum Corporation (NYSE:OXY) is involved in discovering and exploring oil and gas. The company generated exceptionally high second-quarter earnings by using market pricing. During the quarter, Occidental Petroleum Corporation (NYSE:OXY) earned a staggering $4 billion in FCF and could pay off approximately $5 billion in debt. Currently, the company owes less than $20 billion in debt.
Investors were loading up on Occidental Petroleum Corporation (NYSE:OXY). According to the database of Insider Monkey, 67 hedge funds were bullish on the company’s shares at the end of the first quarter, compared to 58 hedge funds in the previous quarter.
Legendary investor and billionaire Warren Buffett’s Berkshire Hathaway is the most significant stakeholder of Occidental Petroleum Corporation (NYSE:OXY). The Oracle of Omaha owns 158.55 million shares of the company worth $9.34 billion.
Suncor Energy Inc. (NYSE:SU), Activision Blizzard, Inc. (NASDAQ:ATVI), and Alibaba Group Holding Limited (NYSE:BABA) are some of the stocks to buy according to Cheyne Capital portfolio, just like Occidental Petroleum Corporation (NYSE:OXY). Cheyne Capital owns a position worth $2.16 million in Occidental Petroleum Corporation (NYSE:OXY), representing 1.82% of the fund’s Q2 portfolio. Occidental Petroleum Corporation (NYSE:OXY) has featured on Cheyne Capital’s portfolio since the fourth quarter of 2020.
As part of a larger research note anticipating Q2 results in the exploration & production market, Truist analyst Neal Dingmann boosted his price target on Occidental Petroleum Corporation (NYSE:OXY) to $105 from $93 and maintained a ‘Buy’ rating on the shares on July 19.
Here is what Smead Capital Management said about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2021 investor letter:
“Oil stocks dominated our winners for the quarter. We showed that we have unlimited ability to tempt fate by buying into Occidental Petroleum (OXY) this year after it was our biggest loser of 2020. It gained 16.64% during the third quarter.”
9. RadNet, Inc. (NASDAQ:RDNT)
Cheyne Capital’s Stake Value: $2,392,000
Percentage of Cheyne Capital’s 13F Portfolio: 2.01%
Number of Hedge Fund Holders: 17
RadNet, Inc. (NASDAQ:RDNT) is a radiology company based in the United States. The company owns and operates 351 outpatient imaging centers under the RadNet brand. Among the states RadNet, Inc. (NASDAQ:RDNT) serves are Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.
In the second quarter of 2022, Cheyne Capital increased its hold in RadNet, Inc. (NASDAQ:RDNT) by 3% to 138,419 shares worth $2.39 million. Steve Cohen’s Point72 Asset Management is the top RadNet, Inc. (NASDAQ:RDNT) stakeholder, with 1.49 million shares worth $25.67 million.
On August 9, RadNet, Inc. (NASDAQ:RDNT) released financial data for the second quarter of 2022. The company’s EPS totaled $0.15, beating estimates by $0.06. The net income over the period was $7.9 million, compared to $2.9 million in the second quarter of 2021.
17 out of the 912 hedge funds held stakes in RadNet, Inc. (NASDAQ:RDNT) in the first quarter of 2022, worth $73.36 million, compared to the same number of funds in the preceding quarter, holding stakes in the company valued at $86.04 million.
8. TaskUs, Inc. (NASDAQ:TASK)
Cheyne Capital’s Stake Value: $2,495,000
Percentage of Cheyne Capital’s 13F Portfolio: 2.1%
Number of Hedge Fund Holders: 21
TaskUs, Inc. (NASDAQ:TASK) delivers outsourcing services to organizations worldwide. In June 2021, the company had its initial public offering (IPO), raising around $127 million. TaskUs, Inc. (NASDAQ:TASK) is a new arrival in Cheyne Capital’s portfolio, as it bought about 148,000 shares of the company in Q2 2022, worth $2.50 million.
Daniel Patrick Gibson’s Sylebra Capital Management is TaskUs, Inc. (NASDAQ:TASK)’s most significant stakeholder, with 1.48 million shares worth $24.91 million. Insider Monkey’s data shows that 21 elite hedge funds held stakes in TaskUs, Inc. (NASDAQ:TASK) at the end of the first quarter, down from 30 funds a quarter earlier. The aggregate value of these stakes is over $214.80 million.
On August 15, Morgan Stanley analyst James Faucette lowered TaskUs, Inc. (NASDAQ:TASK)’s rating from ‘Overweight’ to ‘Equal Weight’ and trimmed his price objective from $28 to $19. Because of near-term growth problems created by customer mix and delivery optimization, the analyst expected that shares would likely remain relatively constant in the next quarters.
Alger, an investment management firm, mentioned TaskUs, Inc. (NASDAQ:TASK) in its Q4 2021 investor letter. Here is what the fund said:
“TaskUs is a modern customer care company that manages digital customer experience exclusively for highly innovative “technology Disruptor” clients. The company’s services include managing end-consumers’’ needs for its clients, such as sales, after-sales support, complaint management, trust and safety and transaction processing. It also provides content security and operations services driven by artificial intelligence.
The stock underperformed in the final three months of 2021 despite the company providing a strong third quarter earnings report. We think the underperformance resulted from the company issuing 25% year-over-year earnings growth guidance for fiscal year 2022, which implies a meaningful deceleration. Additionally, an agreement preventing certain insiders from selling shares expires in the middle of January. The company’s shares, furthermore, have significant ownership by hedge funds, making them subject to year-end rebalancing. Despite the recent weakness, we think the fiscal year 2022 guidance is extremely conservative and the company is currently well positioned for future upward revisions to its earnings estimates.”
7. Farfetch Limited (NYSE:FTCH)
Cheyne Capital’s Stake Value: $2,864,000
Percentage of Cheyne Capital’s 13F Portfolio: 2.41%
Number of Hedge Fund Holders: 45
Farfetch Limited (NYSE:FTCH) is a British-Portuguese online high-end apparel retailer that offers goods from over 700 brands and stores worldwide. On August 11, the company announced a new collaboration with Salvatore Ferragamo S.p.A. (OTC:SFRGY), an Italian high-end fashion designer.
As per Insider Monkey’s Q1 2022 database, 45 hedge funds held stakes in Farfetch Limited (NYSE:FTCH), down from 47 in the previous quarter. These stakes have a consolidated value of over $899.46 million.
On August 2, Oliver Chen, a Cowen analyst, downgraded Farfetch Limited (NYSE:FTCH) from ‘Outperform’ to ‘Market Perform’ with a $9 price target, down from $11. The analyst saw a minimal opportunity for expectations to climb because the firm intended to improve profitability and client retention/acquisition.
At the end of Q2 2022, Cheyne Capital held stakes worth over $2.86 million in Farfetch Limited (NYSE:FTCH), purchasing an additional 200,595 shares during the quarter. As a result, the company represented 2.41% of the hedge fund’s portfolio and stood seventh on the list of 10 stocks to buy, according to Cheyne Capital.
In its Q1 2022 investor letter, Polen Capital highlighted a few stocks and Farfetch Limited (NYSE:FTCH) was one of them. Here is what the fund said:
“We also initiated a position in global luxury fashion e-commerce marketplace Farfetch Limited (NYSE:FTCH) in the first quarter and took advantage of meaningful weakness in the company’s share price during the period. Farfetch previously had too large a market cap for the Portfolio, but it has since moved to a level where it’s appropriate to own it – both in this Portfolio and in our smid-cap strategy. The company’s fundamentals remain attractive as indicated by the compelling results Farfetch reported in February.
The company remains an early mover with “the world’s only truly global marketplace for luxury at scale”. Farfetch Limited (NYSE:FTCH) has broader reach around the world with a diversity of brands that is much larger than its competitors. Many of the items it sells are exclusive. Our research shows that its brand assortment, brand image, geographic breadth, an inventory-light business model, a more compelling offering for luxury partners, and artificial intelligence are all competitive edges for the company. We believe Farfetch is well-positioned for the continued market share shift from offline to online in this category. The personal luxury goods market has trailed other categories in online penetration, but consumer behaviors and preferences shifted as a result of the pandemic creating more comfort with purchasing goods like this online. Changed behavior and the general shift to a higher portion of Millennial and Gen Z luxury shoppers supports this continued shift as does the growth in emerging market demand.”
6. Barrick Gold Corporation (NYSE:GOLD)
Cheyne Capital’s Stake Value: $3,538,000
Percentage of Cheyne Capital’s 13F Portfolio: 2.98%
Number of Hedge Fund Holders: 45
Barrick Gold Corporation (NYSE:GOLD) produces and sells gold and copper, carrying out associated tasks, including mine development and exploration. Jonathan Lourie and Stuart Fiertz, via Cheyne Capital, own 200,000 Barrick Gold Corporation (NYSE:GOLD) shares worth $3.54 million, representing 2.98% of the firm’s total Q2 investments.
Barrick Gold Corporation (NYSE:GOLD), on August 8, posted earnings for the second quarter. The reported EPS came in at $0.24, above market estimates by $0.02. Revenue over the period was down 1% compared to the previous quarter, reaching $2.86 billion, outperforming forecasts by $10 million. In addition, due to the solid operating performance and $636 million in net cash, the business announced a $0.20 dividend per share for the quarter.
On July 19, Barclays analyst Matthew Murphy reduced his price objective on Barrick Gold Corporation (NYSE:GOLD) to $25 from $28 while maintaining an ‘Overweight’ rating on the stock. According to Murphy in a research note, copper equities have increased in value, but they continue to face structural and macroeconomic problems.
The number of hedge funds tracked by Insider Monkey having stakes in Barrick Gold Corporation (NYSE:GOLD) reduced to 45 in Q1 from 46 in the preceding quarter. Hedge funds are instead loading up on other prominent stocks in the portfolio of Cheyne Capital like Suncor Energy Inc. (NYSE:SU), Activision Blizzard, Inc. (NASDAQ:ATVI), and Alibaba Group Holding Limited (NYSE:BABA).
ClearBridge Investments mentioned Barrick Gold Corporation (NYSE:GOLD) in its first-quarter 2022 investor letter. Here is what the firm said:
“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold (NYSE:GOLD). Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”
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Disclosure: None. 10 Stocks to Buy According to Cheyne Capital is originally published on Insider Monkey.
