In this article, we discuss the 5 biggest losers in Warren Buffett’s latest portfolio. If you want to see more underperforming stocks in the billionaire’s portfolio, click 10 Biggest Losers in Warren Buffett’s Latest Portfolio.
5. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 90
Year-to-Date Loss as of May 20: 42.13%
General Motors Company (NYSE:GM) is a Michigan-based automobile manufacturer that designs and sells trucks, crossovers, cars, and automobile parts and accessories in North America, the Asia Pacific, the Middle East, Africa, South America, the United States, and China. General Motors Company (NYSE:GM) stock is down 42.13% year-to-date as of May 20.
Warren Buffett is a long-term shareholder of General Motors Company (NYSE:GM), initially investing in the company back in Q1 2012. The billionaire, as of Q1 2022, held 62 billion shares of General Motors Company (NYSE:GM), worth $2.7 billion. It is one of the biggest losers in the Berkshire portfolio.
On May 11, Wells Fargo analyst Colin Langan double downgraded General Motors Company (NYSE:GM) to Underweight from Overweight, slashing the price target to $33 from $74. According to the analyst, battery electric vehicle costs have “massively risen” and raw material supply is tight, yet difficult regulations in the US possibly require higher BEV sales, the analyst told investors. In addition to that, the analyst sees headwinds from price normalization, inflationary costs, and the 2023 UAW contract negotiations.
According to Insider Monkey’s Q4 data, 90 hedge funds were bullish on General Motors Company (NYSE:GM), up from 77 funds in the preceding quarter. Harris Associates is a significant position holder in the company, with 41 million shares worth $1.79 billion.
Here is what Oakmark Global Fund has to say about General Motors Company (NYSE:GM) in its Q1 2022 investor letter:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
4. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 28
Year-to-Date Loss as of May 20: 61.82%
Nu Holdings Ltd. (NYSE:NU) is a Brazilian digital financial services and technology company, offering card-based and mobile payment solutions. Berkshire Hathaway added Nu Holdings Ltd. (NYSE:NU) to its Q4 portfolio by purchasing 107.1 million shares worth more than $1 billion. In the first quarter of 2022, the stake is valued at almost $827 million.
On May 13, Susquehanna analyst James Friedman lowered the price target on Nu Holdings Ltd. (NYSE:NU) to $10 from $14 and maintained a Positive rating on the shares. The analyst observed that despite margin headwinds, Nu Holdings Ltd. (NYSE:NU) seems the most well positioned to survive a deterioration in credit quality, compared to industry peers.
According to Insider Monkey’s Q4 data, 28 hedge funds reported owning bullish positions in Nu Holdings Ltd. (NYSE:NU), with combined stakes worth $4.6 billion.
3. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 35
Year-to-Date Loss as of May 20: 51.71%
StoneCo Ltd. (NASDAQ:STNE) offers financial technology solutions to businesses and vendors to conduct electronic commerce across in-store, online, and mobile channels in Brazil. Berkshire Hathaway first invested in StoneCo Ltd. (NASDAQ:STNE) in the fourth quarter of 2018, and in Q1 2022, the hedge fund owned a $125 million position in the company. As of May 20, the share price has dropped 51.71% year-to-date.
Cantor Fitzgerald analyst Josh Siegler initiated coverage of StoneCo Ltd. (NASDAQ:STNE) on April 8 with an Overweight rating and a $15 price target. While the analyst believes that Brazilian inflation will remain high in 2022, he thinks the stock has overcorrected. The market may be overlooking StoneCo Ltd. (NASDAQ:STNE)’s ability to limit the financial expense impact via increased prepayment fees, the analyst added.
According to Insider Monkey’s Q4 data, 35 hedge funds were long StoneCo Ltd. (NASDAQ:STNE), with collective stakes worth $892.5 million, compared to 37 funds in the last quarter, holding stakes in the company amounting to $2.2 billion. D E Shaw, in the first quarter of 2022, reported a $64.2 million stake in StoneCo Ltd. (NASDAQ:STNE).
Here is what ClearBridge Investments Global Growth Strategy has to say about StoneCo Ltd. (NASDAQ:STNE) in its Q4 2021 investor letter:
“We also sold and trimmed several names in the emerging market and emerging growth areas, to manage risk and pursue growth companies with a better long-term risk/reward. These included Brazilian payments provider StoneCo. Having expected a rebound in their performance post a profit warning earlier in the year, rising interest rates in Brazil and investments in newly acquired companies increased operating costs and depressed earnings.”
2. VeriSign, Inc. (NASDAQ:VRSN)
Number of Hedge Fund Holders: 34
Year-to-Date Loss as of May 20: 34.33%
VeriSign, Inc. (NASDAQ:VRSN) is a Virginia-based company that provides domain registry services. Berkshire Hathaway has consistently held its VeriSign, Inc. (NASDAQ:VRSN) stake since Q4 2012. In the first fiscal quarter of 2022, the hedge fund reported owning 12.8 million VeriSign, Inc. (NASDAQ:VRSN) shares, worth $2.85 billion.
Baird analyst Rob Oliver on April 29 downgraded VeriSign, Inc. (NASDAQ:VRSN) to Neutral from Outperform with a price target of $210, down from $260. He slashed fiscal 2022 estimates given a lower domain outlook amid a softening of demand after the pandemic-driven surge, as well as incremental weakness in the macro environment, the analyst told investors, who also expects the “sudden domain uncertainty could weigh on shares”.
Among the hedge funds tracked by Insider Monkey, 34 funds were bullish on VeriSign, Inc. (NASDAQ:VRSN) at the end of Q4 2021, down from 40 funds in the last quarter. Jim Simons’ Renaissance Technologies held a significant position in the company at the end of the first quarter of 2022, with more than 4 million shares worth $893.5 million.
Here is what Baron Asset Fund has to say about VeriSign, Inc. (NASDAQ:VRSN) in its Q4 2021 investor letter:
“Verisign, Inc. provides internet infrastructure services worldwide and is best known for its exclusive role managing the .com and .net domains, for which it receives annual fees from all those domain owners. Shares of Verisign gained after reporting strong revenue growth and operating margins that exceeded Wall Street forecasts. We continue to be positive on Verisign’s business, based on its strong competitive position, capacity for global growth in domain names, and its ongoing ability to generate substantial free cash flow.”
1. RH (NYSE:RH)
Number of Hedge Fund Holders: 58
Year-to-Date Loss as of May 20: 50.10%
RH (NYSE:RH) is a California-based company that offers home furnishings such as furniture, lighting, textiles, bathware, decor, and outdoor and garden fittings. Warren Buffett added RH (NYSE:RH) to his portfolio in Q3 2019, by purchasing 1.20 million shares priced at $142.38 each. In Q1 2022, Berkshire Hathaway boosted its RH (NYSE:RH) stake by 20%, holding 2.17 million shares worth $707.6 million. Year to date, RH (NYSE:RH) stock has declined by 50.10%, making it one of the biggest losers in Warren Buffett’s latest portfolio.
On May 16, Morgan Stanley analyst Simeon Gutman initiated coverage of RH (NYSE:RH) with an Equal Weight rating and a $400 price target. The analyst views RH (NYSE:RH) as a “transcendent brand with the most long-term upside potential” in his coverage. However, a 12-month view gives him “pause” with a “category reversion and potential recession” looming.
According to Insider Monkey’s Q4 data, 57 hedge funds were long RH (NYSE:RH), with combined stakes worth $4.8 billion. In Q1 2022, Stephen Mandel’s Lone Pine Capital was a significant shareholder of the company, with 1.70 million shares worth $557.35 million.
Here is what Polen Global SMID Company Growth Fund has to say about RH (NYSE:RH) in its Q4 2021 investor letter:
“Our most significant detractors from performance over the fourth quarter includes RH. Upscale home-furnishings company RH underperformed over the quarter and the year amid rising costs that weighed on expectations and heightened concerns of reduced discretionary spending amid the ongoing pandemic. We expect the company to grow revenues as it rolls out additional galleries across the globe and thoughtfully expands into adjacencies like guest homes and design services. Along with steady margin growth through fixed cost leverage, which the company has consistently shown it can achieve, we believe this expansion should lead to favorable cash earnings growth going forward.”
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