In this article, we discuss 10 stocks you should sell according to Motley Fool. If you want to see some more stocks that were sold by the hedge fund, check out 5 Stocks You Should Sell According to Motley Fool.
Motley Fool Asset Management is a private investment adviser that manages a $1.5 billion portfolio for investors as of Q4 2021. The hedge fund is known for its six major exchange traded funds – Motley Fool 100 Index, Motley Fool Small Cap Growth ETF, Motley Fool Global Opportunities ETF, Motley Fool Mid Cap Growth ETF, Motley Fool Next Index ETF, and Motley Fool Capital Efficiency 100 Index ETF.
Bryan Hinmon was appointed as the chief investment officer of Motley Fool in 2017, and he serves as the senior portfolio manager as well. He also works as an analyst at Motley Fool Wealth Management, where he identifies and researches investments for the firm’s separately managed accounts. Prior to joining Motley Fool, he worked at Bulwark Capital Management as a portfolio manager, which is a hedge fund focused on long-term equity investing, option income, and special situations. Before that, Bryan Hinmon was a research analyst for an asset manager in Naples, operating a covered-call hedge fund.
Motley Fool invests primarily in the information technology, industrials, finance, healthcare, consumer discretionary, and communications sectors. Some of the most notable securities in the hedge fund’s Q4 portfolio were Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN). However, in this article our focus would be on the stocks which the fund either trimmed its stakes in or completely exited in the fourth quarter of 2021.
Our Methodology
We used Motley Fool’s Q4 2021 portfolio and selected the firms in which the fund trimmed or completely sold off a previously held position.
Stocks You Should Sell According to Motley Fool
10. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 72
Percentage Decrease in Stake in Q4: 100%
Intel Corporation (NASDAQ:INTC) is an American multinational technology corporation that specializes in semiconductors, computer hardware, autonomous cars, automation, and artificial intelligence.
Motley Fool held 99,991 shares of Intel Corporation (NASDAQ:INTC) in the third quarter of 2021, worth $5.3 million, representing 0.34% of the total 13F securities. In Q4 2021, Motley Fool discarded its Intel Corporation (NASDAQ:INTC) stake entirely.
On April 14, Intel Corporation (NASDAQ:INTC) declared a quarterly dividend of $0.365 per share, in line with previous. The dividend is payable on June 1, to shareholders of the company as of May 7. On April 27, Intel Corporation (NASDAQ:INTC) delivered a dividend yield of 3.20%.
Citi analyst Christopher Danely on April 13 reiterated a Neutral rating on Intel Corporation (NASDAQ:INTC) with a $55 price target. The analyst observed that Q1 notebook shipments were down 20% quarter-over-quarter, below Citi’s expectation of down 18%, due to ongoing component supply tightness, logistics constraints, and slow Chromebook demand. He views this as “another yellow flag” and believes PC sales could “cool off” in the second half of 2022 given a reversion to the mean after two consecutive years of double digit growth.
According to Insider Monkey’s Q4 data, 72 hedge funds were bullish on Intel Corporation (NASDAQ:INTC), compared to 66 funds in the third quarter. Seth Klarman’s Baupost Group is the leading stakeholder of the company, with more than 18 million shares worth approximately $929 million.
Motley Fool completely sold out of Intel Corporation (NASDAQ:INTC) during the December quarter, but the hedge fund held significant stakes in Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN).
Here is what O’Keefe Stevens Advisory has to say about Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:
“Intel announced they are removing stock-based compensation from non-GAAP earnings in 2022 to report results aligning with semiconductor peers. This may seem like a reasonable thing to do as comparability between peers becomes easier. On the other hand, what exactly is the point of adjusted earnings? It is not to conform to some industry norm or because the management teams need to make performance metrics. The point of adjusting earnings is to present results in a light that more closely reflects the actual underlying performance of the business. That is, backing out expenses that might be one-time in nature, such as legal or fire expenses. First off, share-based compensation is an actual expense. Decreasing my ownership stake in a company without receiving any compensation is not free. If a company paid its employees in all stock, would they add back the entire SBC? What a margin profile that would be. Second, should a company be worried about reporting results similar to other companies? Every company is unique. Management should not waste time determining what expenses should be excluded. Run the business, don’t worry about adjusting the numbers.”
9. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 79
Percentage Decrease in Stake in Q4: 100%
S&P Global Inc. (NYSE:SPGI) is a New York-based company that provides credit ratings, benchmarks, data analytics, and workflow solutions to the global capital and commodity markets. The company has six main segments – S&P Global Ratings, S&P Dow Jones Indices, S&P Global Commodity Insights, S&P Global Market Intelligence, S&P Global Mobility, and S&P Global Engineering Solutions.
In the third quarter of 2021, Motley Fool acquired 6,191 shares of S&P Global Inc. (NYSE:SPGI), worth $2.63 million, representing 0.17% of the total 13F portfolio. Motley Fool discarded 100% of its stake in S&P Global Inc. (NYSE:SPGI) in the December quarter.
On April 7, Raymond James analyst Patrick O’Shaughnessy lowered the firm’s price target on S&P Global Inc. (NYSE:SPGI) to $475 from $497 and maintained an Outperform rating on the shares ahead of Q1 results. The analyst believes an aggressive share repurchase program during 2022 should support S&P Global Inc. (NYSE:SPGI) shares and anticipates solid execution as the company integrates with IHS Markit.
Among the hedge funds tracked by Insider Monkey, 79 funds held long positions in S&P Global Inc. (NYSE:SPGI) at the end of December 2021, with collective stakes worth $7.82 billion. Chris Hohn’s TCI Fund Management is the largest position holder in the company, with 3.7 million shares worth $1.76 billion.
Here is what Cooper Investors Global Equities Fund has to say about S&P Global Inc. (NYSE:SPGI) in its Q1 2022 investor letter:
“This quarter, S&P Global announced the successful completion of its acquisition of IHS Markit. The deal makes S&P a global leader across the information services industry. The Fund has been long term shareholders of S&P, building a position back in 2015 when the organization was still named McGraw-Hill Financial. We saw the initial opportunity as it refocused the business from a publishing and financial conglomerate towards its core data and financial assets. S&P’s credit ratings, benchmarks and analytics businesses in global capital and commodity markets carry leading positions, defensible offerings, consistent growth and high margins – as true today as it was seven years ago. With the increased focus management have applied over a lengthy period we see improved revenue growth, margins and cash flows…” (Click here to see the full text)
8. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 53
Percentage Decrease in Stake in Q4: 100%
Texas Instruments Incorporated (NASDAQ:TXN) was founded in 1930 and is headquartered in Dallas, Texas. The company designs and sells semiconductors to electronics designers and manufacturers around the world. Motley Fool entirely discarded its $4.3 million Texas Instruments Incorporated (NASDAQ:TXN) stake in the fourth quarter of 2021.
On April 26, Texas Instruments Incorporated (NASDAQ:TXN) reported its Q1 results, posting earnings per share of $2.42, beating consensus estimates by $0.22. Revenue for the period grew 14.36% year-over-year to $4.91 billion, surpassing analysts’ predictions by $173.06 million.
Truist analyst William Stein lowered the firm’s price target on Texas Instruments Incorporated (NASDAQ:TXN) to $172 from $189 and maintained a Hold rating on the shares on April 27. The analyst noted that Texas Instruments Incorporated (NASDAQ:TXN) reported a “strong” Q1 but guided Q2 “well below consensus”, citing supply chain challenges from pandemic-driven lockdowns in China.
According to the fourth quarter database of Insider Monkey, 53 hedge funds were bullish on Texas Instruments Incorporated (NASDAQ:TXN), up from 40 funds in the earlier quarter. The total stakes held in Q4 2021 amounted to $2.9 billion. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest position holder in the company, with 3.3 million shares worth $625.2 million.
Here is what Davis Opportunity Fund has to say about Texas Instruments Incorporated (NASDAQ:TXN) in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
7. Zoetis Inc. (NYSE:ZTS)
Number of Hedge Fund Holders: 61
Percentage Decrease in Stake in Q4: 100%
Zoetis Inc. (NYSE:ZTS) is a New Jersey-based drug company that distributes animal health medicines, vaccines, and diagnostic products in the United States and internationally. Motley Fool reported discarding 100% of its Zoetis Inc. (NYSE:ZTS) stake in Q4 2021, which consisted of 11,886 shares worth $2.30 million.
Zoetis Inc. (NYSE:ZTS) reported earnings for Q4 2021 on February 15, posting an EPS of $1.00, above consensus estimates by $0.04. The $1.97 billion revenue jumped 8.85% year-over-year, surpassing analysts’ predictions by $35.05 million. On March 9, Citi analyst Navann Ty lowered the firm’s price target on Zoetis Inc. (NYSE:ZTS) to $208 from $232 and maintained a Neutral rating on the shares following the Q4 results.
According to Insider Monkey’s Q4 database, 61 hedge funds were long Zoetis Inc. (NYSE:ZTS), compared to 58 funds in the prior quarter. The total stakes owned in the fourth quarter amounted to $2.82 billion, up from $2.71 billion in the last quarter. William Von Mueffling’s Cantillon Capital Management is the biggest shareholder of Zoetis Inc. (NYSE:ZTS), with 1.82 million shares worth $445.6 million.
Here is what Polen Global Growth has to say about Zoetis Inc. (NYSE:ZTS) in its Q3 2021 investor letter:
“Finally, exiting our position in Zoetis was purely a function of valuation. With the business trading for up to 45x forward earnings, we felt we had more attractive alternatives. We maintain high conviction in the company and their competitive advantages and hope to be owners again, at a more attractive valuation. In short, we sold what we believe to be a high-quality business at relatively high valuations to fund the purchase of equally high-quality businesses trading at lower valuations and even better long-term earnings growth prospects. While we are certainly not tactical in approach, we do aim to make prudent adjustments over time.”
6. Atlassian Corporation Plc (NASDAQ:TEAM)
Number of Hedge Fund Holders: 69
Percentage Decrease in Stake in Q4: 26%
In the fourth quarter of 2021, Motley Fool slashed its Atlassian Corporation Plc (NASDAQ:TEAM) position by 26%, holding 94,000 shares of the company, worth $35.8 million. Atlassian Corporation Plc (NASDAQ:TEAM) is a developer of software products for workflow management, data analysis, and human capital management.
On April 8, Citi analyst Fatima Boolani was bullish on Atlassian Corporation Plc (NASDAQ:TEAM) after the company’s analyst day. The analyst reiterated a Buy recommendation on the stock with a $435 price target. She told investors that her rating stemmed from a combination of product announcements and advancements, robust operational metrics and data points, and Citi’s conversations with customers and partners that reinforce the thesis that Atlassian Corporation Plc (NASDAQ:TEAM) not only has “significant runway” in enhancing and scaling its platform, but the company should is set to witness pricing power in enterprise software. The analyst suggested buying any weakness in the shares.
According to Insider Monkey’s fourth quarter database, 69 hedge funds were long Atlassian Corporation Plc (NASDAQ:TEAM), compared to 60 funds in the prior quarter. Jim Simons’ Renaissance Technologies held the biggest stake in the company, with shares worth $1.10 billion.
Motley Fool was extremely bullish on Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN) in Q4 2021, but trimmed its Atlassian Corporation Plc (NASDAQ:TEAM) stake significantly.
Here is what ClearBridge Investments International Growth ADR Strategy has to say about Atlassian Corporation Plc (NASDAQ:TEAM) in its Q1 2022 investor letter:
“The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out. We also trimmed back workflow software maker Atlassian (NASDAQ:TEAM) after a strong runup in its shares in 2021. Most of our reductions in emerging growth have involved IT or related companies where innovation is a key to their business model. That said, we remain positive on the IT sector and have largely maintained holdings in our highest-conviction ideas.”
Click to continue reading and see 5 Stocks You Should Sell According to Motley Fool.
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Disclosure: None. 10 Stocks You Should Sell According to Motley Fool is originally published on Insider Monkey.
