In this article, we will look at 10 stocks you should sell in 2022 according to billionaire Dan Loeb. If you want to skip reading about Dan Loeb’s view on the current market situation and his hedge fund’s performance, you can go directly to 5 Stocks You Should Sell in 2022 According to Billionaire Dan Loeb.
Dan Loeb founded his hedge fund, Third Point, back in 1995 with a borrowed $3.3 million from his friends and family. He rose to prominence after his activist shareholder strategies paid off and he successfully executed numerous corporate takeovers over the years of his career. As of June 2022, the activist investor is worth $4.2 billion according to data from Forbes. As of March 31, 2022, Dan Loeb manages over $7.68 billion in 13F securities through his hedge fund.
Dan Loeb is also fond of collecting art and is well-known for his art collection. In a 2011 article, Business Insider ranked Dan Loeb among its “Wall Street’s 25 Most Serious Art Collectors” list and noted that the billionaire is just as quick to take profits from art as he is from stocks. On May 6 the billionaire, in his first quarter 2022 letter to investors, drew an analogy between the current market situation and a 1982 documentary “Koyaanisqatsi”. Koyaanisqatsi means “life out of balance”, much like the current stock market situation is according to billionaire Dan Loeb. Mr. Loeb further elaborated on why, according to him, investors face challenges in tightening economic environments and said that he believes investors stick to their school of thought and do not change their ways to suit better to current market trends. The billionaire wrote:
I have said before that they don’t ring a bell when the rules of the game are changing, but if you listen closely, you can hear a dog whistle.
Third Point’s Returns and Most Recent Portfolio
Looking at Third Point’s quarter-on-quarter performance, the New York-based hedge fund returned 26.04% in the first quarter of 2020, compared to Q4 2019. In the first quarter of 2021, Third Point reported a quarter-on-quarter return of 3.99%. As of the first quarter of 2022, Third Point’s returns have sunk to a negative 22.62% from Q4 2021.
According to Dan Loeb’s most recent investor letter, Third Point’s offshore fund dipped to a negative 11.5% in the first quarter of 2022, as measured from the beginning of the year. However, the fund’s median annualized returns still sit at 14.3% since inception, outperforming the S&P 500’s comparable returns of 9.3% and the MSCI World Index’s median annual returns of 7.7% over the same period.
In the first quarter of 2022, Third Point completely discarded 26 of its positions, reduced stakes in 22 companies, added 9 new stocks to its portfolio and raised its stakes in 5 of its previous holdings. Some of Dan Loeb’s top disposals were Comcast Corporation (NASDAQ:CMCSA), The Walt Disney Company (NYSE:DIS), and Alphabet Inc. (NASDAQ:GOOG).
Dan Loeb of Third Point
Our Methodology
To determine the 10 stocks you should sell in 2022 according to billionaire Dan Loeb, we reviewed Third Point’s first-quarter 2022 investment portfolio and picked companies the billionaire completely exited. We mentioned the analyst and investor sentiment for each stock.
The stocks are ranked in increasing order of hedge fund holders, which were sourced from Insider Monkey’s database of approximately 900 elite hedge funds.
Stocks You Should Sell in 2022 According to Billionaire Dan Loeb
10. The AES Corporation (NYSE:AES)
Number of Hedge Fund Holders: 37
The AES Corporation (NYSE:AES) operates as a power generation and utility company in the United States, Puerto Rico, El Salvador, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe, and Asia. At the close of Q4 2022, Third Point held stakes worth $139.72 million in the utility company, and in the first quarter of 2022, the fund dumped its stakes completely, selling its previously owned 5.75 million shares.
On May 5, The AES Corporation (NYSE:AES) announced that it has signed two renewable energy power purchase agreements with Amazon.com, Inc. (NASDAQ:AMZN). Under the terms of the agreement, the utility company will be providing Amazon.com, Inc. (NASDAQ:AMZN) with 450 megawatts of solar energy. The AES Corporation (NYSE:AES) has signed a supply agreement with Fluence Energy to deliver energy solutions for one of Amazon.com, Inc.’s (NASDAQ:AMZN) projects.
As of May 10, Susquehanna analyst Biju Perincheril has a $30 price target and a Positive rating on The AES Corporation (NYSE:AES).
At the close of Q1 2022, 37 hedge funds were long The AES Corporation (NYSE:AES) with stakes worth $1.48 billion. This is compared to 41 positions a quarter ago with stakes worth $1.55 billion. The hedge fund sentiment around the stock is negative.
The AES Corporation (NYSE:AES) is a stock you should sell in 2022 according to billionaire activist Dan Loeb. Other stocks that Third Point disposed of in Q1 2022 include Comcast Corporation (NASDAQ:CMCSA), The Walt Disney Company (NYSE:DIS), and Alphabet Inc. (NASDAQ:GOOG).
9. Align Technology, Inc. (NASDAQ:ALGN)
Number of Hedge Fund Holders: 45
Align Technology, Inc. (NASDAQ:ALGN) operates as a medical device company and has operations in the United States, Switzerland, China, and internationally. The company operates through two business segments: Clear Aligner, and Scanners & Services. In the first quarter of 2022, billionaire Dan Loeb exited Align Technology, Inc. (NASDAQ:ALGN) after dumping his Q4 2021 stakes of $197.15 million.
On May 4 Joseph Hogan, CEO of Align Technology, Inc. (NASDAQ:ALGN) purchased 6,700 shares of the company’s common stock for a transaction of $2.0 million. On the same day, Credit Suisse analyst Matt Miksic trimmed his price target on Align Technology, Inc. (NASDAQ:ALGN) to $418 from $722 and reiterated an Outperform rating on the shares.
At the close of Q1 2022, 45 hedge funds held stakes in Align Technology, Inc. (NASDAQ:ALGN). The total value of these stakes came in at $1.20 billion, down from $2.43 billion in the preceding quarter with 51 positions. The hedge fund sentiment for Align Technology, Inc. (NASDAQ:ALGN) is negative.
Billionaire Dan Loeb may be bearish on Align Technology, Inc. (NYSE:AES) but Artko Capital, an asset management firm, thinks it’s a “great investment pick”. Here is what the firm said in its recently published Q1 2022 investor letter:
“Align Technology (NASDAQ:ALGN), the leading global provider of clear aligners (“invisible braces”) and dental scanning equipment, warned that rising Omicron cases would suppress first-quarter growth, leading the market to question its guidance for annual topline growth of 20-30%, even though we think its growth will be plenty durable. Align remains among the fastest growing and most innovative companies in consumer health.”
8. Coupa Software Incorporated (NASDAQ:COUP)
Number of Hedge Fund Holders: 46
Coupa Software Incorporated (NASDAQ:COUP) operates as a software company specializing in cloud-based solutions for business spend management. It is one of the stocks billionaire Dan Loeb discarded in the first quarter of 2022 after selling his fund’s stakes of $102.73 million in the company.
On June 7, Coupa Software Incorporated (NASDAQ:COUP) released earnings for the fiscal first quarter of 2023. The company registered an EPS of $0.08 and beat expectations by $0.03. Moreover, the company’s revenue for the quarter amounted to $196.37 million, up 17.64% year over year, and outperformed market consensus by $5.69 million.
Shortly after the company’s earnings release, Evercore ISI analyst Peter Levine lowered his price target on Coupa Software Incorporated (NASDAQ:COUP) to $115 from $140 but reiterated an Outperform rating on the shares.
At the end of Q1 2022, 46 hedge funds disclosed ownership of stakes in Coupa Software Incorporated (NASDAQ:COUP). These funds held collective stakes of $1.71 billion in the company, down from $3.08 billion a quarter ago with 59 positions. The hedge fund sentiment for the stock is negative.
Here is what Aristotle Capital Management had to say about Coupa Software Incorporated (NASDAQ:COUP) in its “Aristotle Large Cap Growth Fund” first-quarter 2022 investor letter:
“We sold our position in Coupa Software following the company’s fourth quarter 2021 earnings results. The company reported earnings that were disappointing relative to the growth trajectory of both pre-COVID and prior quarters over the past fiscal year. We are concerned that the company is seeing slowing traction in the enterprise sector and felt that the weak topline and billings guidance along with margin compression from increased sales and marketing costs creates too many headwinds for us to be comfortable with. The weak fiscal year 2023 billings guidance when combined with management’s qualitative comments about a strong pipeline is concerning to us, and we believe management has done a disappointing job in providing more transparency around the growth drivers for the business.”
7. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Holders: 63
At the close of Q4 2021, Third Point owned 1.25 million shares of the company, which amounted to a stake of $518.18 million. Accenture Plc (NYSE:ACN) is another stock that billionaire Dan Loeb discarded in the first quarter of 2022.
Shortly after the company’s Q3 earnings beat, Barclays analyst Ramsey El-Assal trimmed his price target on Accenture Plc (NYSE:ACN) to $370 from $455 but maintained an Overweight rating on the shares.
Insider Monkey found 63 hedge funds that held stakes in Accenture Plc (NYSE:ACN) at the end of Q1 2022. The total value of these stakes amounted to $3.95 billion, down from $5.11 billion a quarter ago with 50 positions.
Polen Capital, an investment management firm, shared its insights on Accenture Plc (NYSE:ACN) in its “Polen Global Growth Fund” first-quarter 2022 investor letter. Here is what the firm said:
“Accenture’s business is firing on all cylinders and continue to enjoy an acceleration in their respective fundamentals because of the increase in digitization around the world. Nearly every company today is searching for ways to become more digital, and Accenture is positioned to provide many of the solutions these companies seek. This inflection in fundamentals was not lost on the market, and each business’s stock performed exceptionally well in 2021. In fact, they represented two of the three top absolute performers for the Global Growth Portfolio last year. As a result, its stock is currently more fully priced. As such, we lowered Accenture to an average weight. We maintain high conviction in the business and plan to own it for many years, but recognize the increase in their prices.”
6. Apollo Global Management, Inc. (NYSE:APO)
Number of Hedge Fund Holders: 64
Apollo Global Management, Inc. (NYSE:APO) operates as a private equity firm that specializes in investments in credit, private equity, and real estate markets. At the end of Q1 2022, 64 hedge funds held stakes in Apollo Global Management, Inc. (NYSE:APO) worth $2.08 billion. This is compared to 50 hedge funds in the previous quarter with stakes worth $2.13 billion.
On May 19, Deutsche Bank analyst Brian Bedell trimmed his price target on Apollo Global Management, Inc. (NYSE:APO) to $90 from $98 and reiterated a Buy rating on the shares.
Shares of Apollo Global Management, Inc. (NYSE:APO) have dipped 27.30% year-to-date as of June 24. In the first quarter of 2022, billionaire Dan Loeb sold his hedge fund’s position in the company and discarded its Q4 2021 stakes of $14.48 million.
Other stocks that billionaire Dan Loeb abandoned in the first quarter of 2022 include Comcast Corporation (NASDAQ:CMCSA), The Walt Disney Company (NYSE:DIS), and Alphabet Inc. (NASDAQ:GOOG).
Miller Value Partners, an investment management firm, published its “Miller Income Strategy” fourth quarter 2021 investor letter in which it mentioned Apollo Global Management, Inc. (NYSE:APO). Here is what the firm had to say:
“Apollo Global Management (APO) rose 18.4% during the quarter. The company reported Q3 distributable earnings (DE) of $1.71, well ahead of consensus of $1.10 and the quarterly dividend of $0.50/share (2.8% annualized yield). Fee-related earnings of $300M beat by 7% while realized net performance fees of $312M topped estimates by 23%. Total assets under management (AUM) of $481.1Bn and fee-earning AUM of $361.3Bn both rose +2% sequentially on the back of robust capital raising with $18.1Bn of inflows over the period. Additionally, Apollo hosted their 2021 Investor Day, outlining long-term financial targets including over $9/share in distributable earnings by 2026 (14% Compound Annual Growth Rate (CAGR) from $5.50 pro-forma 2022E) and fee-related earnings of $4.50-$4.75 (18% CAGR). Management expects to roughly double AUM by 2026 to $1trn from $481Bn currently with a 2.25x increase in fee-related revenues to $4.6Bn.”
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Disclosure: None. 10 Stocks You Should Sell in 2022 According to Billionaire Dan Loeb is originally published on Insider Monkey.
