In this article, we will be looking at 10 stocks to sell according to billionaire Richard Chilton. To skip our detailed analysis of Chilton’s investment strategy, you can go directly to see the 5 Stocks to Sell According to Billionaire Richard Chilton.
Richard Chilton, the founder of Chilton Investment Company, LLC, is an Alfred University graduate with a B.S. degree in Finance and Economics. The billionaire worked at Merrill Lynch and Allen & Company before founding his investment company. His company reported $6 billion in total assets in its last 13F filing and has a portfolio value of $4.05 billion. It invests primarily in companies in the services sector, followed by the technology sector. Chilton made it to the Forbes 400 list in 2012, while also ranking 1533rd on Forbes’ list of wealthiest people in 2015.
Chilton’s Investment Philosophy and Returns
According to the investment firm itself, it applies a “fundamental bottom-up approach to investing with an ownership mentality.” Utilizing long/short and long-only investment strategies the company takes long positions in underpriced stocks and sells short overpriced shares, alongside taking only long positions in other stocks, while seeking undervalued securities.
In 2013, Chilton Investment Company’s Flagship Strategy Fund generated a return of 18.57%. Following this, it generated a 13.99% return in 2015. However, the next year, the fund suffered a loss of 13.66% as well. This loss was then made up for in 2017 with 12.18% in returns, and a total return of 2103.80%. The company has recently, in the third quarter of 2021, sold many positions in a range of companies such as The Clorox Company (NYSE:CLX), Air Products & Chemicals, Inc. (NYSE:APD), and United Parcel Service, Inc. (NYSE:UPS), among others, radically changing its portfolio composition. It is these stocks we turn to below.
Let’s now look at the 10 stocks to sell according to billionaire Richard Chilton.
Our Methodology:
Taking note of Chilton Investment Company’s investment trends over the past year and 13F holdings, we have selected ten stocks that were among the most famous in the market and yet were sold by the fund in the third quarter of 2021. We have also mentioned the number of hedge funds still holding stakes in these stocks, using Insider Monkey’s hedge fund data for the third quarter of 2021. The stocks have been ranked on the basis of the number of hedge funds holding stakes in them, from the lowest to the highest. We have mentioned analyst ratings for each stock as well as their returns in the past six months as of late January 2022.
Stocks to Sell According to Billionaire Richard Chilton
10. RPM International Inc. (NYSE:RPM)
Number of Hedge Fund Holders: 20
RPM International Inc. (NYSE:RPM) is a specialty chemicals company manufacturing chemicals for waterproofing, coating, and institutional roofing systems, among other things. The company is among the stocks to sell according to billionaire Richard Chilton, whose investment company sold its shares in the company in the third quarter.
RBC Capital’s Arun Viswanathan holds a Sector Perform rating on RPM International Inc. (NYSE:RPM) shares as of this January.
The company’s fiscal second quarter of 2022 earnings report showed an EPS of $0.79 and revenue of $1.6 billion, beating estimates by $84.84 million. Despite it gaining 1.5% in the past six months, Chilton Investment Company sold its shares in the company between the second and third quarters, bringing the percentage of the stock in its portfolio from 0.03% to 0%.
The largest stakeholder in RPM International Inc. (NYSE:RPM) in the third quarter was Qing Li’s Sciencast Management, holding 7,636 shares worth $745,000. The total number of hedge funds holding stakes in the company was 20, with a total stake value of $81 million.
RPM International Inc. (NYSE:RPM) is only one name on the list of stocks recently sold by Chilton Investment Company, alongside big names like The Clorox Company (NYSE:CLX), Air Products & Chemicals, Inc. (NYSE:APD), and United Parcel Service, Inc. (NYSE:UPS).
9. Vroom, Inc. (NASDAQ:VRM)
Number of Hedge Fund Holders: 23
Vroom, Inc. (NASDAQ:VRM), an e-commerce platform for the sale and purchase of new and used cars in the US, lost its position in Chilton Investment Company’s portfolio as well. It is now among the stocks to sell according to billionaire Richard Chilton, whose fund sold its 27,539 shares in the company by the third quarter.
KeyBanc holds an Overweight rating on Vroom, Inc. (NASDAQ:VRM) as of January 2021.
The company’s fiscal third quarter of 2021 report shows an EPS of -$0.70, beating estimates by $0.03. Its revenue was $896.76 million, also beating estimates by $8.78 million.
Out of 867 hedge funds, 23 hedge funds were long Vroom, Inc. (NASDAQ:VRM) in the third quarter, with a total stake value of $119 million.
ClearBridge Investments, an investment management firm, mentioned Vroom, Inc. (NASDAQ:VRM) in its third-quarter 2021 investor letter. Here’s what they said:
“A handful of our rapid growers hit tough earnings comparisons in the summer reporting period after experiencing a surge in demand in the second quarter of 2020 as companies moved to remote work and consumers were confined to their homes. E-commerce platforms such as Vroom have also faced headwinds as consumers become more active outside the home.”
8. Adaptive Biotechnologies Corporation (NASDAQ:ADPT)
Number of Hedge Fund Holders: 25
Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is a commercial-stage company that develops an immune medicine platform to diagnose and treat various diseases. Ever since Chilton Investment Company pulled out of its stake worth $874,000 in the stock, it has become one of the stocks to sell according to billionaire Richard Chilton.
As of January 2021, analyst Mark Massaro from BTIG holds a Buy rating on Adaptive Biotechnologies Corporation (NASDAQ:ADPT) shares.
The fiscal third quarter of 2021 report for Adaptive Biotechnologies Corporation (NASDAQ:ADPT) showed an EPS of -$0.40 and revenue of $39.47 million. Both beat estimates by $0.03 and $2.84 million respectively.
Our data shows 25 hedge funds long Adaptive Biotechnologies Corporation (NASDAQ:ADPT) in the third quarter, with Viking Global being its largest stakeholder. This hedge fund holds 29,993,708 shares in the company, worth $1.01 billion. The total stake value of all shareholders in the company is $1.8 billion.
Adaptive Biotechnologies Corporation (NASDAQ:ADPT) removal from Chilton Investment Company’s portfolio in the third quarter, like the removals of The Clorox Company (NYSE:CLX), Air Products & Chemicals, Inc. (NYSE:APD), and United Parcel Service, Inc. (NYSE:UPS), came about despite optimistic analyst opinions on the stock.
7. Air Products & Chemicals, Inc. (NYSE:APD)
Number of Hedge Fund Holders: 32
Air Products & Chemicals, Inc. (NYSE:APD) is an industrial gases company providing atmospheric gases, process and specialty gases, equipment, and services across the globe. It is one of the stocks to sell according to billionaire Richard Chilton, whose fund has reduced the stock’s percentage in its portfolio entirely as of the third quarter of 2021.
Vertical Research analyst Kevin McCarthy holds a Buy rating on Air Products & Chemicals, Inc. (NYSE:APD) shares as of this January.
The company’s earnings history shows an EPS of $2.51, beating estimates by $0.02 for the fiscal fourth quarter of 2021. Its revenue was $2.84 billion, beating estimates by $170.7 million.
In the third quarter of 2021, 32 hedge funds held stakes in Air Products & Chemicals, Inc. (NYSE:APD), in comparison to 40 hedge funds in the previous quarter. Their total stake values were $528 million and $456 million respectively.
6. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 34
The Clorox Company (NYSE:CLX) is among the more renowned stocks to sell according to billionaire Richard Chilton. The company manufactures and markets consumer and professional products such as cleaning products, home care products, and disinfecting products.
Chilton Investment Company sold its 10,461 shares in the company in the third quarter. In the fiscal first quarter of 2022, The Clorox Company (NYSE:CLX) had an EPS of $1.21, beating estimates by $0.19. Additionally, its revenue was $1.81 billion, also beating estimates by $108.9 million.
Sciencast Management was the largest stakeholder in The Clorox Company (NYSE:CLX) in the third quarter, when 34 hedge funds held stakes in the company. The hedge fund holds 17,299 shares worth $3.03 million out of the total stake value of $971 million.
LRT Capital Management, an investment management firm, mentioned The Clorox Company (NYSE:CLX) in its first-quarter 2021 investor letter. Here’s what they said:
“For several months now, our largest position has been Clorox – the cleaning products company. Besides wipes, the company also manufactures bleach, charcoal, cat litter, plastic bags, and container products. Clorox benefited during the Covid-19 pandemic from an increased demand for cleaning products. Companies and consumers trust the Clorox brand – a source of the company’s huge competitive advantage.
United Airlines, for example, chose to partner with Clorox in its push to reassure consumers about the safety of air travel. The company is a typical “defensive” holding – subject to very small fluctuations in end market demand. Its branded consumer products remain in strong demand. Historically (pre-Covid), the company’s sales grew in line with GDP, while earnings-per-share grew slightly faster due to operational and financial leverage. We expect sales will decline slightly in the next few quarters as the Covid-19 pandemic comes to an end, but we believe this decline is more than accounted for by the company’s low valuation.
On February 4th, Clorox reported results for Q4 2020, with both earnings and sales beating estimates. Sales grew by +27% (vs. 20% estimate) from the prior year’s Q4, and EPS increased +39% ($2.03 vs. $1.75 expected). The company continues to see robust demand and raised its sales and EPS guidance for the rest of the year. Shares are down 4% year-to-date. We believe the shares are undervalued at 20x trailing and 24x forward earnings and currently represent an excellent opportunity.”
Click to continue reading and see the 5 Stocks to Sell According to Billionaire Richard Chilton.
Suggested articles:
- 10 Best Vanguard Stocks to Buy Now
- 30 Most Expensive Cities in the US
- 25 Countries That Have The Most Debt Per Capita
Disclosure: None. 10 Stocks to Sell According to Billionaire Richard Chilton is originally published on Insider Monkey.
