In this article, we discuss the 5 stocks you should sell before recession. If you want to read about some stocks you should sell before a recession, go directly to 10 Stocks You Should Sell Before Recession.
5. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
Netflix, Inc. (NASDAQ:NFLX) owns and runs an entertainment platform. On April 19, the firm missed market estimates on revenue by $70 million. The shares have lost nearly 61% in value year-to-date, with over 20% of this loss coming in a single day on April 19 as the company revealed that it had lost 200,000 subscribers on a net basis in the fourth quarter, falling way short of expectations of an increase of 2.5 million subscribers. The firm expects to lose another 2 million subscribers in the second quarter.
On April 21, Citi analyst Jason Bazinet kept a Buy rating on Netflix, Inc. (NASDAQ:NFLX) stock and lowered the price target to $295 from $450. The price target was cut merely a few hours after the company posted disappointing first quarter results.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in Netflix, Inc. (NASDAQ:NFLX) with 4.1 million shares worth more than $2.4 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Netflix, Inc. (NASDAQ:NFLX) was one of them. Here is what the fund said:
“We were quite active during the quarter, leveraging volatility to add 10 new names to the portfolio while exiting seven others. Among our new purchases was Netflix in the communication services sector. Netflix, Inc. (NASDAQ:NFLX) is the global leader in the production and distribution of streaming entertainment, operating a high-quality subscription business with room for continued growth in a large addressable market. The stock has faced headwinds due to concerns around subscriber growth. We attribute this recent weakness to COVID-related production delays that have slowed the pace of new shows premiering on the platform and believe Netflix, Inc. (NASDAQ:NFLX) has a strategic advantage in scaling its business given its large content library and lead versus peers in establishing local content studios and partnerships.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL) makes and sells consumer electronics. Although the company beat market estimates on earnings per share and revenue for the second fiscal quarter, Tim Cook, the CEO of the firm, said during the earnings call that Apple was not immune to the “challenges caused by the war in Ukraine and COVID-related disruptions in China”. A senior Apple executive also revealed that the earnings of the firm would be impacted by “supply constraints, silicon shortages, with the value of the constraints between $4 billion and $8 billion”.
On April 29, Deutsche Bank analyst Sidney Ho kept a Buy rating on Apple Inc. (NASDAQ:AAPL) stock and lowered the price target to $200 from $210, noting that the firm faces “increased supply-chain and demand uncertainty from China looking forward”.
At the end of the fourth quarter of 2021, 134 hedge funds in the database of Insider Monkey held stakes worth $186 billion in Apple Inc. (NASDAQ:AAPL), up from 120 in the previous quarter worth $146 billion.
In its Q4 2021 investor letter, Berkshire Hathaway highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple Inc. (NASDAQ:AAPL) shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple Inc. (NASDAQ:AAPL) products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 158
Alphabet Inc. (NASDAQ:GOOG) is a technology company based in California. On April 26, the company posted earnings for the first quarter of 2022, missing market estimates on earnings per share by $1.14. YouTube growth also showed signs of slowing as ad revenue grew at only 14%. The net income also dipped to $16.44 billion, down from $17.93 billion over the same period last year. Ruth Porat, the CFO of the firm, has said that the slowdown in growth had come as a result of the “industry wide advertising hiccups” due to the Russia-Ukraine war.
On April 27, Guggenheim analyst Michael Morris kept a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $3,000 from $3,350, identifying tough comps, Russia impact, and unfavorable foreign exchange impacts as some of the headwinds for the firm.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $8.5 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc. (NASDAQ:GOOG), performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (NASDAQ:GOOG) (Google) again with a margin of safety.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is a tech firm that owns and runs social media platforms. Privacy concerns were already weighing heavily on the firm when the twin threat of inflation and rising interest rates decreased investor confidence in the stock further over the past few months. Online advertising revenue for the firm has been affected this year due to multiple factors that include the impact of the Ukraine war, soft brand ad spend, and likely impact from declining consumer spend in Europe that is driven by inflation and oil prices.
On April 28, MKM Partners analyst Rohit Kulkarni maintained a Buy rating on Meta Platforms, Inc. (NASDAQ:FB) stock but lowered the price target to $295 from $315, noting that the first quarter results of the firm were mixed and forward guidance soft.
At the end of the fourth quarter of 2021, 224 hedge funds in the database of Insider Monkey held stakes worth $31.8 billion in Meta Platforms, Inc. (NASDAQ:FB), compared to 248 in the preceding quarter worth $38.5 billion.
In its Q4 2021 investor letter, Boyar Value Group, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (NASDAQ:FB) (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 279
Amazon.com, Inc. (NASDAQ:AMZN) is a diversified tech firm with core interests in ecommerce. On April 29, the share price of the company slid by nearly 16%, the worst single day of decline for the company in nearly eight years. On April 28, the company had missed market estimates on earnings per share by a whopping $15.78 and posted a revenue of $116 billion, roughly in line with market expectations. The net sales for the second quarter were guided below consensus estimates as well.
On April 29, Truist analyst Youssef Squali kept a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock and lowered the price target to $3,500 from $4,000, noting that ecommerce demand was normalizing and cost pressures were rising for the firm.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 4.1 million shares worth more than $13 billion.
In its Q4 2021 investor letter, Mercator International, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Transformative technologies often generate euphoria. People are excited by the big new thing that is changing the world. We saw this pattern with the boom of westward canal transportation at the dawn of the nineteenth century. Railway stocks similarly attracted large numbers of eager investors a few decades later. Then came the electrification of America, the telephone, and the automobile industry, to name just a few transformative technologies.
The initial euphoric phase always ends with a reality check. Valuations come back to earth. At the end of the cycle, only a few companies remain standing. A shakeout has a way of clarifying the field of opportunities.
For example, readers may recall that when the internet bubble burst two decades ago, Amazon.com, Inc. (NASDAQ:AMZN) stock suffered greatly but pet.com was gone. For those investors who had stayed on the sidelines, this was an excellent time to buy Amazon.com, Inc. (NASDAQ:AMZN). The company’s business model had shown its merits and competition was rapidly shrinking. The stock price was now also much more attractive.”
You can also take a peek at 10 High-Yield Dividend Stocks with Payout Ratio Less than 55% and 10 Stocks to Buy Today According to British Billionaire David Harding.
