5 Best Affordable Stocks to Buy Under $5

3. Opendoor Technologies Inc. (NASDAQ:OPEN) 

Share Price as of December 17: $1.2600
Number of Hedge Fund Holders: 41

Opendoor Technologies Inc. (NASDAQ:OPEN) provides a digital residential real estate platform allowing users to purchase and sell their property online. The “iBuying” company offers cash to homeowners in exchange for their homes, which it resells on the market. The stock, which went public in late 2020, has decreased by more than 60% in the last year.

Opendoor Technologies Inc. (NASDAQ:OPEN) is in a difficult situation due to declining real estate demand and slowing housing prices. Home prices have skyrocketed since the coronavirus pandemic broke out due to a lack of inventory, historically low loan rates, and tremendous demand for real estate. The Federal Reserve has raised interest rates to curb rising inflation and unsustainable expansion in the housing market. And it seems to be effective. When interest rates are increasing, the iBuyer business model is ineffective. However, the good news is that investors can get Opendoor Technologies Inc. (NASDAQ:OPEN) for a very low price and wait for the long-term growth catalysts to kick in.

In its Q4 2021 investor letter, Baron Funds mentioned Opendoor Technologies Inc. (NASDAQ:OPEN). Here is what the fund said:

“The Fund invests in secular growth and innovative businesses across all market capitalizations, with the bulk of the portfolio landing in the large-cap zone. The Fund is categorized as US Large Growth by Morningstar. As of the end of the fourth quarter, the largest market cap holding in the Fund was $2.5 trillion and the smallest was $791 million. The median market cap of the Fund was $27.5 billion.

The Fund had $1.7 billion of assets under management. The Fund had investments in 63 securities. The Fund’s top 10 positions accounted for 45.4% of net assets. Fund inflows were positive for 2021. We sold Opendoor Technologies Inc. (NASDAQ:OPEN) because we identified issues relating to our long-term theses in the company, and we decided to exit the positions to fund other purchases.”

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