In this article, we discuss 10 stocks to sell according to Jinghua Yan’s TwinBeech Capital. If you want to skip our detailed analysis of Yan’s history, investment philosophy, and hedge fund performance, go directly to 5 Stocks to Sell According to Jinghua Yan’s TwinBeech Capital.
TwinBeech Capital, formed in September 2018 by Jinghua Yan, is a New York-based hedge fund that pursues positive, attractive absolute, and risk-adjusted returns through a research intensive, data-driven systematic trading and investing program. The hedge fund makes and manages investments across a wide variety of instruments, involving both long and short investment positions, using statistical quantitative approaches and analysis, computer software systems, and technology. It deals in various assets, instruments, and securities, including publicly traded stocks, equity swaps, listed futures, equity options and options on futures, cleared swaps, and other derivatives.
The hedge fund’s investment portfolio is centered on the communications, consumer discretionary, materials, consumer staples, energy, finance, healthcare, information technology, materials, transports, and utilities and telecommunications sectors, with a top 10 holdings concentration of 12.54%. In Q1 2022, Jinghua Yan’s TwinBeech Capital bought 304 new stocks, sold out 367 equities, reduced stakes in 61 companies, and made additional purchases in 103 equities. Some of the significant stocks that TwinBeech Capital sold in the first quarter of 2022 include Meta Platforms, Inc. (NASDAQ:FB), Analog Devices, Inc. (NASDAQ:ADI), and Citigroup Inc. (NYSE:C). The portfolio value of the hedge fund increased by about $516.16 million during the period.
Securities filings reveal that TwinBeech Capital held 3,927 shares of Meta Platforms, Inc. (NASDAQ:FB) in the fourth quarter of the last year. However, the fund sold off all the company’s stocks in the first quarter of 2022. On May 25, Microsoft Corporation (NASDAQ:MSFT) announced an expansion of its continuing partnership with Meta Platforms, Inc. (NASDAQ:FB), saying that Meta has chosen Azure as a critical cloud provider to help accelerate AI research and development. In addition, Meta Platforms, Inc. (NASDAQ:FB) and Microsoft Corporation (NASDAQ:MSFT) will promote PyTorch’s use on Azure and assist developers in moving from experimental to production more quickly.
Photo by Yiorgos Ntrahas on Unsplash
Jinghua Yan’s TwinBeech Capital first bought a stake in Analog Devices, Inc. (NASDAQ:ADI) in the fourth quarter of 2019 and the fund completely sold off Analog Devices, Inc. (NASDAQ:ADI) in the first quarter of 2022. On May 19, Truist analyst William Stein maintained a Buy rating on Analog Devices, Inc. (NASDAQ:ADI) and boosted his price objective to $203 from $194.
The fund also had a significant stake in Citigroup Inc. (NYSE:C) which it sold off entirely during the first quarter of 2022. On May 3, Oppenheimer analyst Chris Kotowski decreased Citigroup Inc. (NYSE:C)’s price objective from $100 to $93 while maintaining an Outperform rating. Banks benefit from loan growth and rising interest rates. Even if the economy were to enter recession, Kotowski told investors in a research note that the banking industry would weather it better than any previous recession.
Our Methodology
Let’s start our list of 10 stocks to sell according to Jinghua Yan’s TwinBeech Capital. We picked these stocks from the Q1 portfolio of Yan’s hedge fund. Insider Monkey’s database of 912 hedge funds was used to measure hedge fund sentiment on each stock.
Stocks to Sell According to Jinghua Yan’s TwinBeech Capital
10. Edison International (NYSE:EIX)
Number of Hedge Fund Holders: 22
Percentage Decrease in Stake in Q1: 100%
Edison International (NYSE:EIX) is a renewable energy firm that generates and distributes electricity through its subsidiaries and invests in energy services and technology. Edison International (NYSE:EIX) was downgraded to Neutral from Buy by Mizuho analyst Paul Fremont on May 10, with a price objective of $72, down from $82. The impact of increased borrowing rates on Southern California Edison, the company’s utility arm, worried the analyst. According to one of Fremont’s studies, every 1% increase in borrowing rates impacts Edison’s income per share by 11 cents.
Edison International (NYSE:EIX) has featured on Jinghua Yan’s portfolio since the second quarter of 2020. However, it is one of the stocks sold by Jinghua Yan’s TwinBeech Capital entirely in the first quarter of 2022. Out of the hedge funds being tracked by Insider Monkey, Pzena Investment Management is a prominent shareholder of Edison International (NYSE:EIX), with 14.67 million shares worth more than $1.03 billion.
22 out of 912 hedge funds held stakes Edison International (NYSE:EIX) in the first quarter of 2022, worth $1.36 billion, compared to 25 funds in the preceding quarter, holding stakes in Edison International (NYSE:EIX) valued at $1.34 billion.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Analog Devices, Inc. (NASDAQ:ADI), and Citigroup Inc. (NYSE:C), Jinghua Yan sold out of Edison International (NYSE:EIX).
In its Q4 2021 investor letter, ClearBridge Investments, mentioned Edison International (NYSE:EIX). Here is what the fund said:
“Defensive sectors such as utilities underperformed the broader market, with our California-based utilities, Edison International, generating modestly below-sector returns on continuing wildfire concerns, despite significantly improved financial exposure due to the 2019 legislation AB 1054. The legislation was a major positive step toward reducing wildfire risk to California public utilities, which we expect to be reflected in improved valuations over time.”
9. Emergent BioSolutions Inc. (NYSE:EBS)
Number of Hedge Fund Holders: 17
Percentage Decrease in Stake in Q1: 100%
Emergent BioSolutions Inc. (NYSE:EBS) is a specialized biopharmaceutical business based in the United States that develops vaccines and antibody therapies for infectious illnesses, opioid overdoses, and biodefense medical devices. Insider Monkey’s data shows that 17 hedge funds held stakes in the company at the end of the first quarter, up from 15 funds a quarter earlier.
Following reports of monkeypox cases in Europe, the United Kingdom, Canada, and the United States, shares of biotech companies with product offerings in the smallpox vaccine or treatment areas, such as Emergent BioSolutions Inc. (NYSE:EBS), SIGA Technologies, Inc. (NASDAQ:SIGA), and Chimerix, Inc. (NASDAQ:CMRX) rose, according to benchmark analyst Robert Wasserman. Therefore, he maintained a Buy rating and a $55 price objective on Emergent BioSolutions Inc. (NYSE:EBS) shares.
TwinBeech Capital also booted Emergent BioSolutions Inc. (NYSE:EBS) from its portfolio in the first quarter of 2022. The hedge fund held 46,271 shares of Emergent BioSolutions Inc. (NYSE:EBS) in the fourth quarter of 2021.
In its Q2 2021 investor letter, Carillon Tower Advisers mentioned Emergent BioSolutions Inc. (NYSE:EBS) and discussed its stance on the firm. Here is what the fund said:
“Emergent BioSolutions is a manufacturer of vaccines, therapeutics, and devices that are used to address public health threats. The firm’s main growth engine is its contract development and manufacturing organization (CDMO), which enabled the company to reach manufacturing agreements with some major players in the COVID-19 vaccination rollout. Unfortunately, considerable issues surrounding the manufacturing of the Johnson & Johnson vaccine at one of the firm’s facilities calls into question the future growth trajectory of their CDMO business and subsequently caused a selloff of their shares. We no longer hold the stock.”
8. Entegris, Inc. (NASDAQ:ENTG)
Number of Hedge Fund Holders: 33
Percentage Decrease in Stake in Q1: 100%
Entegris, Inc. (NASDAQ:ENTG), a specialized materials developer, manufacturer, and supplier for the microelectronics sector, was also sold altogether by Jinghua Yan’s TwinBeech Capital in the first quarter of 2022. The hedge fund held 2,604 shares of Entegris, Inc. (NASDAQ:ENTG) in the fourth quarter of 2021, worth over $361,000.
Overall, hedge funds are loading up on Entegris, Inc. (NASDAQ:ENTG), as 33 out of the 912 funds tracked by Insider Monkey held stakes in the company, up from 31 funds a quarter earlier. Robert Joseph Caruso’s Select Equity Group is the most prominent stakeholder of the company, with 8.09 million shares worth $1.06 billion as of the first quarter of 2022.
On April 27, KeyBanc analyst Aleksey Yefremov trimmed his price target on Entegris, Inc. (NASDAQ:ENTG) to $150 from $183 and maintained an Overweight rating on the shares. According to the analyst, management increased its 2022 sales prediction by 3% due to concerns about declining demand in particular parts of China’s semi-industry and trade restrictions.
In its Q3 2021 investor letter, Artisan Partners mentioned Entegris, Inc. (NASDAQ:ENTG). Here is what the hedge fund stated:
“Entegris is one of the largest suppliers of advanced materials (high purity gases/chemicals) and filtration systems used in semiconductor manufacturing. The industry’s incredibly complex production environment is getting increasingly onerous—more process steps, greater purity requirements—which is driving higher demand for Entegris’ products and systems. Furthermore, rising chip content across a broad swath of industries (industrial, auto, communications, consumer) to enable new technological advances (5G, AI/ML, cloud, EVs, autonomous vehicles) has driven semiconductor wafer production growth to ~6% annually. The company’s recently reported results were thesis affirming, and we believe the demand drivers for its products are firmly in place. 70% of the company’s revenues are tied to semiconductor factory utilization, and the broader industry shortages do not appear to be abating anytime soon. The other 30% of revenue is tied to capex which we expect to be flat to slightly up over the next couple of years. Given our building confidence around the near-to-medium term demand environment, we added to our position, bringing it to the top of the GardenSM.”
7. EPAM Systems, Inc. (NYSE:EPAM)
Number of Hedge Fund Holders: 38
Percentage Decrease in Stake in Q1: 100%
Jinghua Yan’s fund began investing in EPAM Systems, Inc. (NYSE:EPAM) in the third quarter of 2020 but ended up selling all of its shares of the firm in the first quarter of 2022. Overall, 38 hedge funds monitored by Insider Monkey were bullish on EPAM Systems, Inc. (NYSE:EPAM) in the first quarter. The stakes of these funds are valued at $669 million.
EPAM Systems, Inc. (NYSE:EPAM) provides software product development and digital platform engineering services. In the first quarter earnings published on May 6 by EPAM Systems, Inc. (NYSE:EPAM), the EPS totaled $2.49, beating estimates by $0.72. In addition, the $1.17 billion revenue jumped 49.8% year-over-year, exceeding estimated revenue by $110 million.
Susquehanna analyst James Friedman raised EPAM Systems, Inc. (NYSE:EPAM) from Neutral to Positive with a price target of $370 on May 16. According to Friedman, the company has demonstrated how its particular approach can help it succeed away from home in Belarus and Russia since the war broke out.
In its Q1 2022 investor letter, Baron Funds mentioned EPAM Systems, Inc. (NYSE:EPAM). Here is what the fund said:
“EPAM Systems, Inc. is a leader in software-based digital platform transformation and engineering services to business customers. The stock fell 56% during the quarter as a result of a potential business disruption from Russia’s military invasion of Ukraine, where many of EPAM’s employees are based. EPAM is a U.S.-based company headquartered in Newtown, Pennsylvania with 53,000 employees, 24% of whom are based in Ukraine, 17% are based in Russia and 18% in Belarus. On February 17, 2022, the company reported strong financial results for calendar year 2021, releasing financial guidance for calendar year 2022 above expectations. On February 28, 2022, the company withdrew its guidance due to Russia’s invasion of Ukraine. The magnitude and duration of the business disruption is unknown at this time. We believe EPAM is a highly resilient organization that can adapt to operational challenges by moving people and workflows to different regions — the company has further updated via an 8-K filing on April 7 that it has begun the process of exiting its operations in Russia with already a “significant number of employees who have been relocated,” while
the company is also accelerating hiring in other regions. Early research from Gartner suggests that after years of delivering high-quality products, EPAM has built solid, trustful relationships with its clients, who are responding with a high level of support for the company. EPAM has demonstrated strong execution and the ability to successfully manage through prior crises. Still, the range of outcomes is extremely wide, and we have reduced our position as a result. We continue to monitor the situation closely and reassess it as facts emerge.”
6. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 79
Percentage Decrease in Stake in Q1: 100%
Pfizer Inc. (NYSE:PFE) is a global bio-pharmaceutical company that develops, produces, promotes, distributes, and sells bio-pharmaceutical drugs. Pfizer Inc. (NYSE:PFE) and Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) announced on May 10 that they had reached a formal deal in which Pfizer Inc. (NYSE:PFE) would acquire Biohaven, the manufacturer of NURTEC ODT, a dual-acting migraine medicine authorized for both acute treatment and episodic migraine prevention in adults.
Jinghua Yan’s TwinBeech Capital sold the whole stock of Pfizer Inc. (NYSE:PFE) in the first quarter of 2022. Pfizer’s price objective was trimmed to $55 from $60 on May 4 by Wells Fargo analyst Mohit Bansal, who maintained an Overweight rating on the stock. This year’s principal business, according to Bansal, has a challenging year-over-year comparison, but it is strategically increasing at a pace of roughly 5%.
The number of hedge funds tracked by Insider Monkey having stakes in Pfizer Inc. (NYSE:PFE) reduced to 79 in Q1 2022 from 83 in the preceding quarter. These funds hold a consolidated stake of $4.11 billion, down from $5.10 billion.
Like Meta Platforms, Inc. (NASDAQ:FB), Analog Devices, Inc. (NASDAQ:ADI), and Citigroup Inc. (NYSE:C), Jinghua Yan’s TwinBeech Capital sold Edison International (NYSE:EIX).
Here is what ClearBridge Investments has to say about Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks. …” (Click here to see the full text)
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Disclosure: None. 10 Stocks to Sell According to Jinghua Yan’s TwinBeech Capital is originally published on Insider Monkey.
