In this article we’ll lay out the list of 5 Stocks Donald Yacktman is Selling in 2022. For our methodology and a more comprehensive list please see 10 Stocks Donald Yacktman is Selling in 2022.
5. Ingredion Incorporated (NYSE:INGR)
Value of Yacktman Asset Management‘s 13F Position: $208 million
Number of Hedge Fund Shareholders (as of March 31): 27
Value investing legend Donald Yacktman sold off 10% of his hedge fund’s stake in Ingredion Incorporated (NYSE:INGR) during the first quarter, leaving the fund with over 2.38 million shares. Hedge fund ownership of Ingredion has jumped by 35% over the past two quarters, with Israel Englander, Joel Greenblatt, and Lee Munder among the hedge fund managers taking new stakes in the company.
A supplier of corn-based products and ingredients, Ingredion Incorporated (NYSE:INGR) had a strong first quarter, earning $1.95 in adjusted EPS and $1.89 billion in revenue, both of which handily topped analyst estimates. The company grew net sales by 17% during the quarter.
Ingredion Incorporated (NYSE:INGR) was able to overcome higher corn input costs, which have risen by 25% this year, during the first quarter, thanks in part to hedges. However, the company will face a more challenging environment later this year and into 2023 once those hedges roll over, which could necessitate mid-teens price increases to offset input costs according to Robert Moskow. The Credit Suisse analyst downgraded Ingredion to ‘Neutral’ in April, while lowering his price target on the stock to $94 from $102.
4. First Hawaiian, Inc. (NASDAQ:FHB)
Value of Yacktman Asset Management‘s 13F Position: $60.72 million
Number of Hedge Fund Shareholders (as of March 31): 15
Yacktman’s fund also unloaded 10% of its stake in First Hawaiian, Inc. (NASDAQ:FHB) during the first quarter, leaving it with a holding of 2.18 million shares. The Honolulu-based bank holding company was owned by 15 hedge funds at the end of March, down from 23 at the end of September 2020.
First Hawaiian, Inc. (NASDAQ:FHB) earned $0.45 per share in the first quarter, beating estimates by $0.03. Total assets remained unchanged quarter-over-quarter at $25 billion, with total deposits growing by 2.1% to $22.3 billion. Total loans and leases fell by 0.5% to $12.9 billion, while net interest income declined by 2.5% to $133.9 million.
The recent decline in hedge fund ownership may be due to First Hawaiian, Inc. (NASDAQ:FHB) having recently played out one of its major catalysts, which was to reduce its excess liquidity. The company’s book value per share also took a hit during Q1, sliding by 14.2% to $17.90.
3. Oracle Corporation (NYSE:ORCL)
Value of Yacktman Asset Management‘s 13F Position: $118 million
Number of Hedge Fund Shareholders (as of March 31): 63
Donald Yacktman slashed his firm’s Oracle Corporation (NYSE:ORCL) position by 20% during the first quarter, reducing the number of shares it owns to 1.43 million. Hedge fund ownership of Oracle has been trending up ever so slightly over each of the past five quarters.
Oracle Corporation (NYSE:ORCL) had a surprisingly strong fiscal fourth quarter of 2022, growing revenue by 5% year-over-year and easily topping earnings estimates. The enterprise software giant hasn’t been able to grow its annual revenue by 5% for the last decade, so the quarterly results represented uncommonly solid growth.
Oracle Corporation (NYSE:ORCL)’s cloud license and on-premise license revenue was the star of the quarter, as it grew by 18% year-over-year and now accounts for 22% of the company’s sales. CEO Safra Catz believes the strong revenue growth shows that Oracle’s infrastructure business has entered a “hyper-growth phase”.
2. Cisco Systems, Inc. (NASDAQ:CSCO)
Value of Yacktman Asset Management‘s 13F Position: $84.36 million
Number of Hedge Fund Shareholders (as of March 31): 66
Yacktman also unloaded 27% of his fund’s position in Cisco Systems, Inc. (NASDAQ:CSCO) during Q1, cutting its share ownership of the networking giant down to 1.51 million shares. Hedge fund ownership of Cisco jumped by 14% in Q1, the biggest quarterly spike in three years.
Cisco Systems, Inc. (NASDAQ:CSCO) shares have crumbled by 14% since May 17 following surprisingly weak fiscal Q3 results and even weaker fiscal Q4 guidance. While Cisco’s $0.87 in adjusted EPS beat estimates, its $12.8 billion in revenue was well off estimates of $13.34 billion. And while analysts were guiding for 6% revenue growth for the company during its fiscal Q4, Cisco shocked investors by announcing revenue could instead decline by as much as 5.5% during the quarter.
Hayden Capital pondered why Cisco Systems, Inc. (NASDAQ:CSCO)’s stock was so anemic for so long in the fund’s first quarter 2022 investor letter:
“During the height of the tech bubble, Cisco’s stock peaked at ~$80 in March 2000, reaching up to a $500BN+ valuation (~26x Price / Sales, with ~17% operating margins or 156x operating profits). However, by the time it bottomed in September 2002, shares were trading at just ~$8.60 per share (~3.2x Price / Sales, ~21x operating profits). A little over a year later, the share price had doubled to ~$20, but then continued to trade around those levels in a range for the next 10 years.
So why were Amazon and Mercado Libre able to recover so quickly from their large draw-downs, while Cisco’s stock price remained anemic?
It seems the answer is in their differing growth profiles in the years afterwards. For example, Cisco revenues were $18.9BN in 2000, $22.3BN in 2001, $18.9BN in 2002, $18.9BN in 2003, and $22.0BN in 2004. By contrast, Amazon was able to grow its business by ~120% in the 3 years after the stock bottomed, and Mercado Libre grew by ~118% in the following 3 years. For Cisco, it wasn’t until 2012 (11 years later) that revenues managed to double (to $46BN) from its original peak. Compare this to Amazon, who during those same 11 years, managed to grow its business 22x.”
1. Huntsman Corporation (NYSE:HUN)
Former Value of Yacktman Asset Management‘s 13F Position: $203 million
Number of Hedge Fund Shareholders (as of March 31): 37
Closing out the list of ten stocks that Donald Yacktman is selling in 2022 is Huntsman Corporation (NYSE:HUN). Yacktman’s fund unloaded 97% of its Huntsman holding during Q1, leaving it with just 216,000 shares.
Hedge fund ownership of Huntsman Corporation (NYSE:HUN) is up by 37% over the past two quarters, due in part to the activist campaign that was launched against the company in Q3 by Jeffrey Smith’s Starboard Value. That campaign failed to overhaul the company’s board in late-March however, as shareholders voted instead to support the company’s entire slate of nominees.
Huntsman Corporation (NYSE:HUN) has significantly underperformed the market for several years, but has taken numerous steps to improve the state of its business during that time. Among other things, it’s worked to deleverage its balance sheet and made major changes to its product portfolio. Most shareholders appear to be satisfied with those changes for now and are willing to wait out the results. Yacktman on the other hand is headed for the exits.
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out Jim Cramer Doesn’t Like These 10 Stocks and Cathie Wood Is Selling These 10 Stocks in 2022.
Disclosure: None.
