5 Stocks to Sell in 2023 According to Billionaire Steve Cohen

In this article, we discuss 5 stocks to sell in 2023 according to billionaire Steve Cohen. If you want to see more stocks in this selection, check out 10 Stocks to Sell in 2023 According to Billionaire Steve Cohen. 

5. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 83

Union Pacific Corporation (NYSE:UNP) operates in the railroad business in the United States. In Q4 2022, billionaire Steve Cohen owned 269,699 shares of the company worth $55.8 million. However, in the first quarter of 2023, Cohen discarded his entire stake in Union Pacific Corporation (NYSE:UNP).

On April 21, RBC Capital analyst Walter Spracklin lowered the firm’s price target on Union Pacific Corporation (NYSE:UNP) to $184 from $191 and keeps a Sector Perform rating on the shares after its Q1 results. While Union Pacific’s adjusted Q1 earnings per share (EPS) of $2.53 fell short of expectations, the analyst suggests that there is a possibility that the stock price may actually increase as the company’s financial performance worsens. This is because the market is factoring in a higher likelihood of Union Pacific hiring an executive with expertise in Precision Scheduled Railroading.

According to Insider Monkey’s Q4 database, 83 hedge funds were long Union Pacific Corporation (NYSE:UNP), compared to 74 funds in the prior quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the largest stakeholder of the company.

Matrix Asset Advisors made the following comment about Union Pacific Corporation (NYSE:UNP) in its Q1 2023 investor letter:

“During the quarter we added a new position in Union Pacific Corporation (NYSE:UNP). Union Pacific (UNP) is the 2nd largest railroad network in the United States just behind Burlington Northern Santa Fe. The firm operates in the Western, Midwestern, and Southern portions of the United States. 90% of UNP sales come from the US and 10% from Mexico. Over the past decade, railroads gained market share from the trucking industry because it costs 10-40% less to ship via rails than trucks. The company has a long history of consistent operating growth and profitability. The shares fell from a high of $278 in May of 2022 after the firm experienced operating challenges due to a slower macro environment and higher expenses.”

4. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 91

At present, no car manufacturer in North America processes lithium themselves. However, Tesla, Inc. (NASDAQ:TSLA) announced on May 9 that it is planning to alter this situation by constructing a refining plant in Corpus Christi, Texas, at a cost of $375 million. By doing so, Tesla, Inc. (NASDAQ:TSLA) aims to improve its supply chain and fulfill its ambitious EV sales objectives, while also branching out from its primary business of car production into raw materials. In Q1 2023, Steve Cohen disposed of his entire Tesla stake, consisting of 877,800 shares worth over $108 million. 

On May 12, Wedbush maintained an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) with a price target of $215 following Elon Musk’s announcement that a new Twitter CEO would replace him. The analyst informed investors that the news should eliminate some of the distraction risk around the Tesla narrative and have a beneficial impact on the stock. Wedbush is convinced that Tesla, Inc. (NASDAQ:TSLA)’s share price will start to “finally remove this lingering albatross from the story.”

According to Insider Monkey’s fourth quarter database, 91 hedge funds were long Tesla, Inc. (NASDAQ:TSLA), compared to 88 funds in the earlier quarter. Ken Griffin’s Citadel Investment Group is a significant position holder in the company, with 7.5 million shares worth $926.2 million.  

Baron Opportunity Fund made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2023 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.”

3. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 99

The Walt Disney Company (NYSE:DIS) on May 10 reported a FQ2 non-GAAP EPS of $0.93, missing Wall Street estimates by $0.01. Revenue over the period increased 13.4% year-over-year to $21.82 billion, in-line with market consensus. The average monthly revenue generated per paid subscriber of Disney+ in the domestic market rose from $5.95 to $7.14, attributed to a surge in average retail pricing. In the first quarter of 2023, Steve Cohen dumped his entire stake in The Walt Disney Company (NYSE:DIS), which was worth $1.3 million. 

On May 12, Wolfe Research analyst Peter Supino downgraded The Walt Disney Company (NYSE:DIS) to Peer Perform from Outperform without a price target. The analyst informed investors that Disney’s direct-to-consumer subscriber and linear TV projections have been worsening. Wolfe Research believes that Disney’s plan for a larger subscriber base, higher prices, and lower costs appears to be contradictory. The firm also stated that the subscriber forecasts for Disney+ are now deemed risky, and the company’s linear TV outlook is deteriorating. Furthermore, the $2.5 billion cost reductions are already factored into consensus estimates, the analyst told investors.

According to Insider Monkey’s fourth quarter database, 99 hedge funds were bullish on The Walt Disney Company (NYSE:DIS), compared to 112 funds in the earlier quarter. Nelson Peltz’s Trian Partners is a significant position holder in the company, with 9 million shares worth $784.5 million. 

VGI Partners made the following comment about The Walt Disney Company (NYSE:DIS) in its 2022 annual investor letter:

“The Walt Disney Company (NYSE:DIS) is a diversified media conglomerate operating media networks, theme parks, film and TV studios and direct-to-consumer streaming services. It is the global leader in theme parks with hotels and cruise lines aimed at families. Key assets within Disney are the instantly recognisable entertainment franchises that have multiple avenues of monetisation such as Mickey Mouse, Star Wars, ABC and Marvel’s Avengers.

Disney’s share price declined due to a number of factors in 2022, presenting us the chance to purchase a long-admired business and its unique collection of valuable intellectual property assets at what we consider to be a very attractive valuation. Summarily, the EPS of Disney has declined from US$7 in 2018 to ~US$2.60 in 2022 but we believe that the earnings power of the assets has not diminished to anywhere near this extent.

Disney is currently undergoing a business transition within the Media and Entertainment Distribution division (DMED) from traditional media property distribution via third parties (i.e. cinemas and broadcast networks) to a Direct-To-Consumer (DTC) model via the Disney+ streaming service. A key element of our thesis is that the earnings power of the company is currently being masked by the marketing and content investments within Disney+ and that this will normalise over the next several years. To put this in perspective, Disney+ (DTC sub-segment) currently generates operating losses of over US$3.3bn (a negative 14% operating margin) compared to operating margins at its nearest streaming competitor, Netflix, of +15.5%…” (Click here to read the full text)

2. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 100

Bank of America Corporation (NYSE:BAC) offers financial and banking services and products to a diverse range of clients worldwide, including individual consumers, small to middle-sized businesses, institutional investors, large corporations, and governments. On April 26, Bank of America Corporation (NYSE:BAC) declared a quarterly dividend of $0.22 per share, in line with previous. The dividend is distributable on June 30, to shareholders of record on June 2. According to securities filings for Q1 2023, Steve Cohen discarded his entire stake in Bank of America Corporation (NYSE:BAC), which consisted of 151,970 shares worth $5 million.

On May 12, Evercore ISI analyst Glenn Schorr lowered the firm’s price target on Bank of America Corporation (NYSE:BAC) to $35 from $36 and maintained an Outperform rating on the shares. This came after the FDIC issued its Notice of Proposed Rulemaking regarding the calculation of a special assessment that banks must pay to replenish the deposit insurance fund in the aftermath of Signature Bank and SVB failures. After assessing the potential impacts of this special assessment, Evercore’s 2024 estimates have been adjusted downwards, and targets have been lowered for all banks except for Goldman Sachs and Morgan Stanley, which are expected to experience an insignificant EPS impact.

According to Insider Monkey’s Q4 data, 100 hedge funds were bullish on Bank of America Corporation (NYSE:BAC), compared to 97 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company. 

Oakmark Equity and Income Fund made the following comment about Bank of America Corporation (NYSE:BAC) in its Q1 2023 investor letter:

“The Oakmark Equity and Income Fund has 29% of its equity portfolio in financials. This made the March sell-off painful, but we do not believe that this has meaningfully changed the value of most of our financial equity holdings. In fact, we were adding to financial positions throughout March. We believe that one way to analyze our financial holdings is to look at them in different buckets given their various business models and risk profiles. Almost 30% of our financial exposure is in insurance companies and insurance brokers. Insurance companies have very stable liability profiles, so the main risk is a change in asset values. We are comfortable with their investment portfolios and think these stocks are quite attractive. Around 5% of our financials are asset managers. This leaves a little over 40% of the financials exposure in a varied group of banks and lenders. About 5% of that portfolio is in Bank of America Corporation (NYSE:BAC) and State Street. These two banks are designated as Systemically Important Financial Institutions and are held to higher regulatory standards. Our largest single financials holding is Bank of America, which has grown deposits during March, and we believe it is one of the best managed companies in the sector.”

1. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 135

In the first quarter of 2023, Steve Cohen sold all of his shares in Apple Inc. (NASDAQ:AAPL), amounting to $26.5 million. On May 4, Apple Inc. (NASDAQ:AAPL) declared a $0.24 per share quarterly dividend, a 4.3% increase from its prior dividend of $0.23. The dividend will be paid on May 18. The company also unveiled a new initiative to repurchase as much as $90 billion worth of its common stock. 

On May 5, T. Michael Walkley, an analyst at Canaccord, increased the firm’s price target on Apple Inc. (NASDAQ:AAPL) from $180 to $185 while maintaining a Buy rating on the stock. The analyst noted that Apple’s strong financial performance is indicative of its ability to capture a larger market share in the high-end segment, and its resilient consumer base during difficult macroeconomic conditions.

According to Insider Monkey’s fourth quarter database, 135 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL), compared to 140 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company. 

RiverPark Large Growth Fund made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q1 2023 investor letter:

“Apple Inc. (NASDAQ:AAPL): Apple shares were our final top contributor for the quarter. While the company reported a rare quarterly earnings miss, investors had expected slower sales due to macro headwinds. Services continue to be a bright spot for the company with an all-time high of $21 billion in quarterly revenue, a 6% year-over-year increase, and management expects iPhone revenue growth to re-accelerate in 2Q. Operating Cash Flow was $34 billion for the quarter, and the company returned $23 billion to shareholders in the last three months, including $4 billion in dividends and $19 billion in share repurchases.

With an installed base of 2 billion active devices and significant growth of the company’s recurring revenue Services segment (now 18% of revenue), we believe that Apple remains one of the most innovative, best-positioned and most profitable companies in the mobile technology industry.”

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