In this article, we discuss the 5 biggest losers in Gabriel Plotkin’s Melvin Capital portfolio. If you want to see more holdings that dropped in value and read about the hedge fund’s recent performance, click 10 Biggest Losers in Gabriel Plotkin’s Melvin Capital Portfolio.
5. Bill.com Holdings, Inc. (NYSE:BILL)
YTD Share Price Decline as of May 25: 52.82%
Number of Hedge Fund Holders: 58
Bill.com Holdings, Inc. (NYSE:BILL) is a California-based company that offers an AI-powered cloud software to simplify, digitize, and automate back-office financial operations for businesses worldwide. As of May 25, Bill.com Holdings, Inc. (NYSE:BILL) stock has tumbled about 53% year-to-date, making it one of the biggest losers in Gabriel Plotkin’s Melvin Capital portfolio. The hedge fund dumped 46% of its Bill.com Holdings, Inc. (NYSE:BILL) shares in Q1, owning 1.6 million units worth $367.8 million.
On May 24, Piper Sandler analyst Brent Bracelin cut the price target on Bill.com Holdings, Inc. (NYSE:BILL) to $205 from $300 and reiterated an Overweight rating on the shares. After meeting with company management, the analyst had a better appreciation for automation as a cost saver and back-office resiliency “that differs from front-office apps more tied to new company formations”.
According to Insider Monkey’s Q1 data, Bill.com Holdings, Inc. (NYSE:BILL) was part of 58 public hedge fund portfolios, down from 65 funds in the preceding quarter. Stephen Mandel’s Lone Pine Capital held a prominent stake in the company, consisting of 1.3 million shares worth $309.6 million.
Here is what Alger Mid Cap Focus Fund has to say about Bill.com Holdings, Inc. (NYSE:BILL) in its Q4 2021 investor letter:
“Bill.com Holdings, Inc., was among the top detractors from performance. Bill.com provides cloud-based software solutions that simplify, digitize, and automate complex back-office financial operations for small and medium size businesses. Its software helps customers to generate and process invoices, streamline approvals, send and receive payments, synchronize data with their accounting system and manage their cash.”
4. PagSeguro Digital Ltd. (NYSE:PAGS)
YTD Share Price Decline as of May 25: 52.24%
Number of Hedge Fund Holders: 27
PagSeguro Digital Ltd. (NYSE:PAGS) is a provider of financial technology solutions to consumers, small entrepreneurs, micro-merchants, and medium-sized companies in Brazil and internationally. The company was established in 2006 and is headquartered in São Paulo, Brazil. As of May 25, the stock has plunged over 52% and is one of the biggest losers in Gabriel Plotkin’s portfolio. The hedge fund slashed its stake in PagSeguro Digital Ltd. (NYSE:PAGS) by 71% in Q1, and the remaining position consists of 2.8 million shares worth $57.7 million.
New Street analyst Soomit Datta downgraded PagSeguro Digital Ltd. (NYSE:PAGS) on May 9 to Neutral from Buy with an $18 price target after slashing long-term market estimates to account for risks from debit volumes, the central bank’s instant payment system, installment profitability concerns, and Buy-Now-Pay-Later schemes in Brazil. The analyst was already concerned that PagSeguro Digital Ltd. (NYSE:PAGS)’s credit is slowing and said it is “hard to see a positive catalyst” currently.
According to Insider Monkey’s data, 27 hedge funds were long PagSeguro Digital Ltd. (NYSE:PAGS) at the end of March 2022, compared to 26 funds in the prior quarter. Daniel Patrick Gibson’s Sylebra Capital Management was the largest shareholder of the company as of Q1 2022, with a stake worth $198.30 million.
Here is what Artisan Mid Cap Fund has to say about PagSeguro Digital Ltd. (NYSE:PAGS) in its Q1 2021 investor letter:
“We also reduced our position in PagSeguro. PagSeguro is making good progress establishing a fast-growing digital bank and expanding its Brazilian payments business despite the pandemic. However, the company’s growth initiatives will require another year of heavy investment spending in 2021. This comes as Brazil’s progress combatting COVID-19 trails many major economies’, casting a cloud over the broader economic outlook. Given these potential headwinds, we trimmed our position to fund higher conviction holdings.”
3. Align Technology, Inc. (NASDAQ:ALGN)
YTD Share Price Decline as of May 25: 57.84%
Number of Hedge Fund Holders: 45
Align Technology, Inc. (NASDAQ:ALGN) is an Arizona-based medical device company that manufactures and sells products for restorative and aesthetic dentistry. Align Technology, Inc. (NASDAQ:ALGN) stock has plunged about 58% year-to-date as of May 25. Gabriel Plotkin’s Melvin Capital has dumped 75% of the shares it previously held in Q1 2022. The hedge fund now owns 161,112 Align Technology, Inc. (NASDAQ:ALGN) shares worth $70.2 million.
On April 27, Align Technology, Inc. (NASDAQ:ALGN) posted its Q1 financial results, announcing earnings per share of $2.13, missing estimates by $0.10. The $973.22 million revenue also fell short of analysts’ predictions by $26.37 million.
Credit Suisse analyst Matt Miksic on May 4 trimmed the price target on Align Technology, Inc. (NASDAQ:ALGN) to $418 from $722 and kept an Outperform rating on the shares. The analyst noted that Align Technology, Inc. (NASDAQ:ALGN) experienced a decline in cases late in the March quarter, driven by economically sensitive behavior among patients. Due to the uncertainty around the magnitude and duration of this consumer behavior, management retracted guidance and the analyst lowered his expectations for Clear Aligner sales by $345 million. However, he continues to see Align Technology, Inc. (NASDAQ:ALGN) as a solid disruptive growth play.
Among the hedge funds tracked by Insider Monkey, 45 funds were long Align Technology, Inc. (NASDAQ:ALGN) at the end of March 2022, down from 51 funds in the earlier quarter. Fisher Asset Management is the biggest shareholder of the company, with 571,043 shares worth about $249 million.
Here is what Harding Loevner Global Equity Fund has to say about Align Technology, Inc. (NASDAQ:ALGN) in its Q4 2021 investor letter:
“Align Technology, which we wrote about a year ago, employs computer-aided design and manufacturing to make custom invisible orthodontics—an application of established technology to a new market. In an imaginative exploitation of the work from home phenomenon driven by COVID-19, Align dramatically expanded its digital marketing efforts last year, establishing a direct relationship with potential end-users who were seeing their smiles up close every day on video calls. The results of this very effective campaign to win new patients has endeared the company to its key customers, the family orthodontist or dentist.”
2. Atlassian Corporation Plc (NASDAQ:TEAM)
YTD Share Price Decline as of May 25: 51.34%
Number of Hedge Fund Holders: 65
Atlassian Corporation Plc (NASDAQ:TEAM) is an Australian company that offers software solutions like Jira, Confluence, Bamboo, Crucible, Trello, and Atlassian Marketplace for software developers and project managers. Melvin Capital dumped 47% of Atlassian Corporation Plc (NASDAQ:TEAM) shares previously held in the first quarter of 2022. The hedge fund owned a $234.5 million stake in the company. With a year-to-date decline of over 51% as of May 25, Atlassian Corporation Plc (NASDAQ:TEAM) is one of the biggest losers in Gabriel Plotkin’s portfolio.
On May 23, Jefferies analyst Brent Thill lowered the price target on Atlassian Corporation Plc (NASDAQ:TEAM) to $180 from $275 and maintained a Hold rating on the shares. The analyst trimmed his projections across 28 software companies due to stiffening economic conditions and the daunting risk of recession. He warned investors that his new price targets are 25% lower, though weak fundamentals could result in multiples shrinking further.
According to Insider Monkey’s Q1 data, Atlassian Corporation Plc (NASDAQ:TEAM) was found in 65 public hedge fund portfolios, down from 69 funds in the last quarter. Jim Simons’ Renaissance Technologies owned the largest stake in the company, with 2.6 million shares worth $776.8 million.
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.”
1. Coty Inc. (NYSE:COTY)
YTD Share Price Decline as of May 25: 41.65%
Number of Hedge Fund Holders: 30
Coty Inc. (NYSE:COTY) is an American company that markets and sells beauty products worldwide under Alexander McQueen, Burberry, Calvin Klein, Cavalli, Chloe, Davidoff, Gucci, Hugo Boss, Kylie Jenner, Lacoste, Marc Jacobs, Miu Miu, Nikos, Kim Kardashian West, and Tiffany & Co. brands.
Securities filings for Q1 2022 disclose that Gabriel Plotkin’s Melvin Capital slashed its Coty Inc. (NYSE:COTY) stake by 30%, holding 29.40 million shares of the company worth $264.3 million. Coty Inc. (NYSE:COTY) shares have declined about 42% year-to-date as of May 25, making it one of the top losers in the Melvin Capital portfolio.
On May 11, Barclays analyst Lauren Lieberman lowered the price target on Coty Inc. (NYSE:COTY) to $8 from $10 and reiterated an Equal Weight rating on the shares. The analyst noted that in an increasingly volatile macro environment, Coty Inc. (NYSE:COTY) surpassed Street estimates on the top and bottom line this quarter and reaffirmed its fiscal 2022 guidance, which “speaks to the growing resiliency the company has built since CEO Sue Nabi’s arrival”.
The Q1 database of Insider Monkey suggests that 30 hedge funds were bullish on Coty Inc. (NYSE:COTY), down from 36 funds in the earlier quarter. Steve Cohen’s Point72 Asset Management held a prominent position in the company, with more than 8 million shares worth $73.1 million.
Here is what ClearBridge Investments Value Equity Strategy has to say about Coty Inc. (NYSE:COTY) in its Q3 2021 investor letter:
“Coty is a global beauty company primarily made up of its market leading prestige fragrance business and a mass cosmetic business acquired from P&G that includes brands such as Covergirl. It is a turnaround story catalyzed by the new CEO, Sue Nabi, an experienced beauty expert who previously worked at L’Oreal and successfully executed turnarounds and the relaunch of its Lancome and L’Oreal Paris brands. Early signs are supportive of improving performance in Coty’s cosmetics business. The company should also benefit from an accelerating growth trend in its prestige fragrance business driven by purchases shifting online and the category’s emerging popularity.”
You can also take a look at 10 Favorite Stocks of Dan Loeb’s Third Point and 10 Best Stocks to Buy Now According to Billionaire David Harding.
