In this article, we discuss 10 stocks to sell now according to billionaire Ken Fisher.
Ken Fisher is an American billionaire, hedge fund manager, author, and financial advisor. Fisher is the son of a renowned stock investor and author of Common Stocks and Uncommon Profits, Philip A. Fisher.
Investment Philosophy and Strategy
Ken Fisher’s investment philosophy revolves around a fundamental belief in capitalism. He firmly believes that the supply and demand of securities solely determine pricing. Furthermore, his philosophy is also based on distinctiveness. A hedge fund manager should prefer seeking out either unique information or interpreting widely known information in a unique manner.
For retirees, Fisher advises to “be diversified, but not too diversified,” and “review your asset allocation regularly”. Moreover, Fisher advises staying away from annuities as they are complicated to understand.
Finally, he emphasizes understanding and managing social security benefits.
Fisher Asset Management
Ken Fisher founded Fisher Asset Management in 1979 with $250 and as of the second quarter of 2022, the company had $208.9 billion in assets under management. The firm follows the investment philosophy of Ken Fisher himself. Fisher Asset Management’s clients are based in the U.S., Europe, Canada, Asia, Australia, and the Middle East. Since 2013, Fisher Asset Management’s portfolio has shown a 46.18% growth, and its annualized average returns in the past three years have been around 5.05%.
In the second quarter of 2022, Fisher Asset Management managed 13F securities valued at $141.3 billion, down from $169.49 billion in the previous quarter. In Q2, the firm made 94 new stock purchases and increased holdings in 481 stocks. Furthermore, the firm sold out 109 stocks and reduced its position in 315 stocks.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD), General Motors Company (NYSE:GM), and The Charles Schwab Corporation (NYSE:SCHW) are some of the major stocks that Fisher Asset Management has sold out entirely.
Our Methodology
After a careful assessment of the Fisher Asset Management portfolio, we picked the 10 most significant stocks that the firm has sold in Q2 2022. The hedge fund sentiment around each stock has been taken from the 895 elite hedge funds tracked by Insider Monkey in the second quarter of 2022.
Stocks to Sell Now According to Billionaire Ken Fisher
10. Baxter International Inc. (NYSE:BAX)
Number of Hedge Fund Holders: 37
The American health care and medical company, Baxter International Inc. (NYSE:BAX) was added to Fisher Asset Management’s portfolio in Q1 2022 with shares worth $251,000. The stock was sold out entirely in the second quarter.
Baxter International Inc. (NYSE:BAX) acquired the medical technology company, Hill-Rom, at the end of December 2021 for $12.5 billion. With the acquisition, the company expects to generate $250 million in annualized pre-tax cost synergies. However, the acquisition of Hill-Rom has left Baxter International Inc. (NYSE:BAX) with quite a significant debt load. Right after the acquisition, the company’s net debt to adjusted EBITDA ratio was 4.2x, which the company is looking to bring down to 2.75x by December 2023.
On July 29, Raymond James analyst Jayson Bedford maintained an Outperform rating on Baxter International Inc. (NYSE:BAX) shares and lowered the price target to $66 from $85. Bedford added that the company’s earning results and guidance were “messy”. The analyst believes that even with strong demand, lagging customer orders due to supply issues have turned out to be a significant problem for the company.
Baxter International Inc. (NYSE:BAX) is one of the major stocks to sell according to Ken Fisher along with CrowdStrike Holdings, Inc. (NASDAQ:CRWD), General Motors Company (NYSE:GM), and The Charles Schwab Corporation (NYSE:SCHW).
Here is what Cooper Investors had to say about Baxter International Inc. in its Q3 2021 investor letter:
“During the quarter we exited our position in Baxter, having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.
They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter.
Firstly, optimising the cost structure. Baxter were successful here – they were able to effectively double operating margins from low single digits to mid-to-high teens over a relatively short four-year period. Secondly, accelerating sales growth through a more focused R&D effort. This is inherently more difficult than cost optimisation and on this front success has been muted with only moderate impact to revenues from new product introductions. Finally, capital deployment through Baxter’s significantly under-levered balance sheet. Several smaller bolt-on acquisitions were nicely complementary to the existing portfolio, but in early September the company announced the acquisition of Hil-Rom Holdings, a medical device company with leading positions in bed systems and patient monitoring. The deal is significant at US$12.5bn in size, and exhausts all balance sheet latency in one fell swoop.
Whilst it is “EPS accretive” we believe the high single digit ROIC management are targeting over five years is most reflective of the financial merits of the deal. Put another way, despite visions of providing digital and connected healthcare (think a Baxter IV pump combined with a Hil-Rom smart bed), ultimately the combined entity will likely remain a low-to-mid-single digit grower. Baxter look like they are getting bigger but not necessarily better.
This combination of uncertainty around the merits of the Hil-Rom acquisition and the underwhelming performance on the product development side of the business led us to conclude that the investment proposition today is less attractive relative to other opportunities.”
9. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 41
The Kraft Heinz Company (NASDAQ:KHC) is one of the largest food companies in the world. On June 19, the company announced that it completed an 85% acquisition of a Germany-based food company, Just Spices. Fisher Asset Management sold off its stake in The Kraft Heinz Company (NASDAQ:KHC) during Q2 2022.
On August 8, The Kraft Heinz Company (NASDAQ:KHC) and the UK retailer Tesco settled their dispute regarding price hikes. In late June, the British retail store called the price hike from The Kraft Heinz Company (NASDAQ:KHC) “unjustifiable” and resisted increasing costs of goods during the current inflation. Tesco took The Kraft Heinz Company (NASDAQ:KHC)’s products off its shelves. The terms of the recent agreement between the companies are unknown, however, Heinz products are returning to Tesco.
Out of the 895 elite hedge funds tracked by Insider Monkey, 41 had a stake in The Kraft Heinz Company (NASDAQ:KHC) at the end of Q2 2022, compared to 35 in the previous quarter. Berkshire Hathaway remained the most prominent stakeholder in the company in Q2 with 325.63 million shares worth $12.42 billion.
8. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 42
Archer-Daniels-Midland Company (NYSE:ADM) is an Illinois-based food processing and commodities trading company. In Q1 2022, Fisher Asset Management added the stock to its portfolio with 2,532 shares worth $229,000, and dumped all of the stake in the June quarter.
Archer-Daniels-Midland Company (NYSE:ADM) reported its Q2 earnings on July 26. The company recorded an EPS of $2.15, which is almost 1.6x the EPS in the same quarter of 2021. The revenue of $27.28 billion represented 19.0% YoY growth and outperformed the estimates by $2.31 billion. Archer-Daniels-Midland Company (NYSE:ADM) exited the quarter with cash and cash equivalents of $906 million and used $675 million in cash for operating activities.
The hedge fund sentiment for Archer-Daniels-Midland Company (NYSE:ADM) remained unchanged between Q1 and Q2 with 42 investment portfolios holding bullish positions in the company. In Q2 2022, Markel Gayner Asset Management was the most prominent stakeholder in the company, with 1.46 million shares worth $113.55 million.
On August 11, Wolfe Research analyst Sam Margolin initiated coverage on Archer-Daniels-Midland Company (NYSE:ADM) with an Outperform rating and a $117 price target. The analyst noted that the company offers “highly competitive dividend growth” through its nutrition segment alone.
Here is what Diamond Hill Capital had to say about Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
7. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 43
Ecolab Inc. (NYSE:ECL) is an American company that offers food and water safety services. Bill & Melinda Gates Foundation held the most significant position in the company in Q2, with a stake value of $770.9 million. Furthermore, the fund has added $34.4 million worth of Ecolab Inc. (NYSE:ECL) stock to its portfolio in the last two weeks.
In the second quarter, Ecolab Inc. (NYSE:ECL) posted an EPS of $1.10, which was down almost 10% from the same quarter in 2021, while the revenue showed a 13.2% YoY growth to $3.58 billion. Furthermore, the company’s gross margin also went down by 345 basis points to 38.2%. At the end of the June quarter, Ecolab Inc. (NYSE:ECL) had cash and cash equivalents of $124.9 million and total debt of $8.79 billion.
Fisher Asset Management sold out of its position in Ecolab Inc. (NYSE:ECL) completely in the June quarter. In the previous quarter, the firm owned 1,259 company shares, valued at $222,000.
Here is what Baron Funds had to say about Ecolab Inc. (NYSE:ECL) in its Q1 2022 investor letter:
“Lastly, we added to our position in the leading water, hygiene and infection prevention company, Ecolab Inc. (NYSE:ECL), as the stock sold off on concerns over rising raw material costs. We believe the sell-off is overdone as Ecolab’s strong competitive positioning and proven pricing power would enable it to offset the rising costs (though with a lag). We think that the company will continue benefiting from the secular growth trends towards sustainability, while still having a long runway for growth with only an 8% share of its estimated $147 billion addressable market.”
6. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 49
Delta Air Lines, Inc. (NYSE:DAL) is one of the world’s oldest airlines, headquartered in Atlanta, Georgia. According to Insider Monkey’s Q2 database, 49 hedge funds had long positions in the company, with combined stakes worth $887.318 million. In the previous quarter, 55 hedge funds were bullish on the company with a collective stake value of $1.275 billion.
For the second quarter of 2022, Delta Air Lines, Inc. (NYSE:DAL) was affected by labor shortages and higher fuel costs. The company posted an EPS of $1.44, compared to the $1.72 consensus. The revenue managed to grow by 93.5% on a YoY basis to $13.8 billion. Furthermore, the company had an operating margin of 11.7%. Despite missing the operating margin guidance range of 13% to 14%, the company had its first double-digit operating margins since 2019.
In the first quarter of 2022, Fisher Asset Management owned 5,374 shares of Delta Air Lines, Inc. (NYSE:DAL), valued at $213,000, and got rid of the holding in the quarter ending June 30.
On August 15, Melius Research analyst Conor Cunningham initiated coverage of Delta Air Lines, Inc. (NYSE:DAL) with a Buy rating and a $41 price target.
Delta Air Lines, Inc. (NYSE:DAL), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), General Motors Company (NYSE:GM), and The Charles Schwab Corporation (NYSE:SCHW) are some of the stocks Ken Fisher sold in Q2.
Here is what Miller Value Partners had to say about Delta Air Lines, Inc. in its Q4 2021 investor letter:
“We’ve healed greatly from the worst days of the pandemic, and we expect that to continue going forward. We see the greatest disconnects between current market expectations and 18-months-out fundamentals in names like Delta Airlines (DAL).
Delta is a quality airline with shareholder-friendly management. It was the only one not to issue equity during the pandemic. It was also the only profitable airline in the second half of 2021. It generated positive operating cash flow despite business and international travel weakness. When earnings finally normalize, which the company doesn’t expect until 2024, it should earn more than $7/share. After bouncing significantly off the lows, DAL currently trades at $41.99 or less than 6x those earnings.
We’ve believed for over a decade that the US airlines are better businesses than they’ve historically been. Consolidation led to a more rational industry. These companies shifted from growth at any cost to a return on capital mindset, the importance of which can’t be understated. We previously believed a recession would finally demonstrate the group’s improved resilience.
Unfortunately, a global pandemic did exactly the opposite. Buffett, who bought the airlines after being a critic of their historical capital destruction, sold his airlines early in the pandemic due to the risk. The government offered support to the industry due to their national strategic importance, which we believe offers protection against another worst-case scenario. We still believe Delta is a better business than the market gives it credit for and one whose prospects will be materially different 18 months from now. As patient investors, you can expect us to hold tight.”
5. Fiserv, Inc. (NASDAQ:FISV)
Number of Hedge Fund Holders: 59
Fiserv, Inc. (NASDAQ:FISV) is an American multinational company that provides financial technology. The company was added to Fisher Asset Management’s portfolio in the first quarter of 2022 with 7,414 shares worth $752,000. However, the firm dumped all of its Fiserv, Inc. (NASDAQ:FISV) stake in the next quarter.
Fiserv, Inc. (NASDAQ:FISV) has a long history of shareholder returns through stock repurchases. In 2019, the company bought back shares worth $394 million and repurchased stock worth $1.64 billion in 2020. Moreover, in the following year, the company bought back 23.3 million shares for $2.57 billion. However, Fiserv, Inc. (NASDAQ:FISV) is still severely burdened with debt. At the end of Q2 2022, the company had cash and cash equivalents of $883 million, while the long-term debt equaled $20.9 billion.
By the end of the quarter ending June 30, 59 hedge funds had a stake in Fiserv, Inc. (NASDAQ:FISV), valued at $3.69 billion. Harris Associates was the most prominent stakeholder of the company in Q2, with 23.17 million shares worth over $2 billion.
Here is what ClearBridge Investments had to say about Fiserv, Inc. (NASDAQ:FISV) in its Q4 2021 investor letter:
“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.”
4. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 66
The Connecticut-based Cigna Corporation (NYSE:CI) is a multinational managed healthcare and insurance company. By the end of Q1, Fisher Asset Management had added 947 shares of the company worth $227,000 to its portfolio. The firm sold off its entire position in Cigna Corporation (NYSE:CI) by the quarter ending on June 30.
Cigna Corporation (NYSE:CI)’s EPS in the second quarter surpassed analyst estimates by 73 cents and grew by 18.7% YoY to $6.22. The revenue recorded a 5.45% YoY growth to $45.48 billion. In light of the reports, the company raised its revenue guidance by $1 billion for FY22 to at least $178 billion. On top of that, the company expects its full-year EPS to be at least $22.90, which is $0.30 above the prior guidance.
The Insider Monkey database reveals that 66 hedge fund portfolios had a stake in Cigna Corporation (NYSE:CI) in Q2 2022. Glenview Capital held the most significant position in the company, with over 2 million shares worth $547.117 million.
Here is what Davis Funds had to say about Cigna Corporation (NYSE:CI) in its Q4 2021 investor letter:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services, and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
3. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 68
The Charles Schwab Corporation (NYSE:SCHW) is a Texas-based financial services company. It is one of the largest banking institutions in the United States. Fisher Asset Management had a stake worth $254,000 in the company at the end of Q1 2022. The firm sold its entire position in Q2 2022.
On July 27, The Charles Schwab Corporation (NYSE:SCHW) declared a 10% increase in its quarterly dividend to $0.22, payable on August 26 to the shareholders of record on August 12. Additionally, the company authorized a $15 billion share repurchase program. The company had $1.8 billion of share repurchases remaining under the previous program. As of August 24, The Charles Schwab Corporation (NYSE:SCHW) has a dividend yield of 1.21%.
On August 19, after meeting with The Charles Schwab Corporation (NYSE:SCHW)’s management, Deutsche Bank analyst Brian Bedell reaffirmed a Buy rating on the shares and raised the price target to $95 from $90. According to Bedell, the company’s cash sorting is consistent with the management’s expectations and believes that it is highly unlikely that it will be any worse than the prior rate tightening cycle.
Here is what Baron Funds had to say about The Charles Schwab Corporation (NYSE:SCHW) in its Q1 2022 investor letter:
“Outperformance of the Fund’s investments in Communication Services, Financials, and Industrials and lower exposure to the lagging Consumer Discretionary sector added the most value. Within Financials, higher exposure to this outperforming sector and gains from online brokerage firm The Charles Schwab Corp (NYSE:SCHW) bolstered relative results. Schwab’s shares gained because of the positive impact higher interest rates will have on its future earnings.”
2. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 75
General Motors Company (NYSE:GM) is the USA’s largest automotive manufacturing company. In Q1 2022, Fisher Asset Management increased its holding in the company by 68% to 9,065 shares worth $397,000. However, the firm closed out the entirety of the stock in Q2 2022.
General Motors Company (NYSE:GM) had previously discontinued dividend payments. On August 19, the company announced the reinstatement of its quarterly dividend at $0.09, payable on September 15 to the shareholders of record on August 31. General Motors Company (NYSE:GM) further announced that it will increase its current share repurchase program to $5 billion from the previous $3.3 billion remaining under the program.
On July 27, Wedbush analyst Daniel Ives maintained an Outperform rating on General Motors Company (NYSE:GM) and lowered the price target to $42 from $50. The analyst added that the company’s Q2 results were mixed and faced tons of supply chain issues. However, Ives noted that the company has a strong EV vision towards the end of the decade.
Here is what Diamond Hill Capital had to say about General Motors Company (NYSE:GM) in its Q1 2022 investor letter:
“General Motors—and the auto industry in general—continues to face headwinds related to supply chain disruptions and raw material cost inflation. In addition, uncertainty surrounding global energy markets due to inflation and the conflict in Ukraine has created a greater economic burden on consumers, which tends to slow automotive sales.”
1. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a Texas-based cybersecurity company. In the second quarter of 2022, 77 hedge funds held a position in the company, with a combined stake value of $4.1 billion, compared to 80 hedge funds with combined stakes worth $5.56 billion in the previous quarter.
On August 17, Stifel analyst Brad Reback maintained a Buy rating on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and raised the price target to $220 from $205. Reback raised his price target owing to a survey he conducted which revealed that customers were highly satisfied with CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and are likely to increase their spending in the future.
Fisher Asset Management sold off its entire CrowdStrike Holdings, Inc. (NASDAQ:CRWD) position in the second quarter of 2022. In the previous quarter, the firm owned 903 shares of the company, valued at $205,000.
Here is what ClearBridge Investments had to say about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2022 investor letter:
“The severity of the current selloff, exacerbated by extreme negative investor sentiment, especially toward growth stocks, has compressed the multiples of a number of portfolio companies despite strong fundamentals and led us to add to several existing positions. One example is cybersecurity software provider, CrowdStrike (NASDAQ:CRWD), which continues to execute well against a robust demand environment for its endpoint security solutions with quarterly results and forward guidance outperforming expectations.”
You can also check out the 10 Stocks That Billionaire Rob Citrone Is Selling and 10 Stocks Analysts Are Downgrading After Weak Earnings Reports.
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Disclosure. None. 10 Stocks to Sell Now According to Billionaire Ken Fisher is originally published on Insider Monkey.
