In this article, we discuss the 15 stocks Australian billionaire Kerr Neilson is selling.
Kerr Neilson is a billionaire investor who co-founded Platinum Asset Management with Andrew Clifford nearly 28 years ago. Prior to this, he left Bankers Trust in 1993 after guiding investors through the Black Monday debacle and the subsequent market crash of 1987. The investment firm has been termed as one of the best money managers and currently has an asset under management (AUM) of $18 billion. Mr. Neilson is considered the pioneer in bringing the scope of international investments into the Australian financial markets. His investment philosophy and stock-picking skills have caused many experts to draw comparisons of him with the Oracle of Omaha, Warren Buffett.
On August 25, Mr. Neilson announced that he would vacate his non-executive director seat on the Board of Platinum Asset Management following the annual general meeting on November 16. However, it must be noted that he will continue to own 126 million shares or over 21% of the company. The 72-year-old veteran has been slowly transitioning towards his retirement as he stepped down from his position of Chief Investment Officer (CIO) in May 2013 and then left the position of CEO in February 2018. Mr. Clifford succeeded him in both positions. Mr. Neilson is known for exploring the unknown in the investment community. His curiosity made him the first international investor in the world to invest in the Peruvian stock market. Mr. Neilson is now investing in asset classes that were not under the mandate of his investment firm previously and are drawn by themes related to artificial intelligence (AI), data storage, and quantum computing. In line with the global economic conditions, Mr. Neilson liquidated his position in multiple stocks, including International Business Machines Corporation (NYSE:IBM), DISH Network Corporation (NASDAQ:DISH), Lumen Technologies, Inc. (NYSE:LUMN) during Q2 2022.
Kerr Neilson of Platinum Asset Management
Our Methodology
We have discussed 15 stocks that Australian billionaire Kerr Neilson’s Platinum Asset Management has completely liquidated their position in as of Q2 2022.
Australian Billionaire Kerr Neilson is Selling These 15 Stocks
15. Magenta Therapeutics, Inc. (NASDAQ:MGTA)
Number of Hedge Fund Holders: 6
Magenta Therapeutics, Inc. (NASDAQ:MGTA) is a Cambridge, Massachusetts-based clinical-stage biotech company working on creating medicines that bring into use stem-cell transplants for patients suffering from autoimmune diseases, blood cancers, and genetic diseases.
On August 24, Madhu Kumar at Goldman Sachs downgraded Magenta Therapeutics, Inc. stock from a Buy to a Neutral rating and reiterated a target price of $2. Kumar highlighted the lack of clarity regarding the dose of MGTA-117 to be used in hematopoietic stem cell transplantation and an absence of a clear clinical path in the transplant setting. The analyst prefers to remain on the sideline given the lack of clinical-generating events for Magenta Therapeutics, Inc. in the near future.
As of Q2 2022, 6 hedge funds reported owning a stake in Magenta Therapeutics, Inc..
14. MYT Netherlands Parent B.V. (NYSE:MYTE)
Number of Hedge Fund Holders: 6
MYT Netherlands Parent B.V. (NYSE:MYTE) is a Munich, Germany-based parent company of luxury fashion e-commerce entity Mytheresa Group GmbH.
Experts believe that MYT Netherlands Parent B.V. could be forced to face the impact of weak consumer sentiment due to the challenging macroeconomic outlook in Europe. MYT Netherlands Parent B.V. has high-quality customers with strong relationships with brands and is considered one of the best in providing the greatest customer experience. However, the rise in inflation and the benchmark interest rate could act as an overhang on MYT Netherlands Parent B.V. stock in the short and medium term, given the company’s exposure to the discretionary side of consumer spending.
13. OneConnect Financial Technology Co., Ltd. (NYSE:OCFT)
Number of Hedge Fund Holders: 8
OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) is a China-based provider of technology-as-a-service and is involved in four key technologies, namely AI, big data analytics, blockchain, and financial cloud.
In a note issued to investors on August 18, Carson Lo at HSBC resumed coverage on OneConnect Financial Technology Co., Ltd. stock with a Hold rating and slashed the target price from $1.50 to $1.20. The analyst believes that the growth outlook for OneConnect Financial Technology Co., Ltd. during the second half of this year is unclear, and the expansion in the margin will be slower than prior forecasts. The analyst anticipates the company to achieve full-year breakeven in 2025.
Millennium Management lowered its stake in OneConnect Financial Technology Co., Ltd. by over 90% during Q2 2022.
12. Itaú Unibanco Holding S.A. (NYSE:ITUB)
Number of Hedge Fund Holders: 11
Itaú Unibanco Holding S.A. (NYSE:ITUB) is a Sao Paulo, Brazil-based bank that has the distinction of being the biggest private sector bank in Brazil.
The stock became a part of Platinum Asset Management’s portfolio in Q1 2020 and saw a decline in the number of hedge fund holders by eight on a sequential basis during Q2 2022. Itaú Unibanco Holding S.A. is one of the 23 financial institutions under investigation by the Brazilian government for issuing unrequested credit cards to customers who signed up for payroll loans and also charged them undisclosed fees. Following this development, Itaú Unibanco Holding S.A. has decided to restructure its credit card division.
11. Cognyte Software Ltd. (NASDAQ:CGNT)
Number of Hedge Fund Holders: 16
Cognyte Software Ltd. (NASDAQ:CGNT) is a Herzliya, Israel-based provider of investigative analytics software to governments and corporations.
Cognyte Software Ltd. is facing challenges related to delivering software orders to customers due to supply chain constraints. Furthermore, the company is facing a slowdown in growth due to the uncertain macroeconomic and geopolitical environment. There has also been a reduction in the investigative agency’s budget. This has caused Cognyte Software Ltd. to slash its headcount by 5% and suspension of financial guidance due to a wide range of possible outcomes. All these developments have shaken investor confidence in Cognyte Software Ltd. stock and thus caused Platinum Asset Management to liquidate its position in the company.
10. BioAtla, Inc. (NASDAQ:BCAB)
Number of Hedge Fund Holders: 18
BioAtla, Inc. (NASDAQ:BCAB) is a San Diego, California-based biotech company that is working on developing monoclonal antibody and cell-based therapeutics using its proprietary platforms.
In the last three years, BioAtla, Inc. stock has lost nearly 75% of its value. Experts blame the company’s management for not maintaining open lines of communication with the investors. Furthermore, BioAtla, Inc. has a trend of postponing timelines related to clinical data. Although the company has delivered promising results in some of its studies, research needs to be done on a greater number of patients to create wider investor confidence. BioAtla, Inc. stock offers the risk of shareholding dilution as well.
9. Liberty Global plc (NASDAQ:LBTYA)
Number of Hedge Fund Holders: 28
Liberty Global plc (NASDAQ:LBTYA) is a London, UK-based telecommunications company with a presence in six countries across Europe. The company is in a 50-50 joint venture with Telefonica in Virgin Media O2, which is the biggest mobile network and third biggest broadband provider in the UK.
Liberty Global plc (NASDAQ:LBTYA) is expected to have a tough outlook as it may be forced to increase its charges by as much as 26% next year to combat the impact of inflation in the UK. However, the UK government is discouraging companies from increasing their prices as it would have a significant impact on the cost of living. In a research note issued on September 16, Maurice Patrick at Barclays lowered the price target on Liberty Global plc (NASDAQ:LBTYA) from $28 to $25 and reiterated an Equal Weight rating on the stock.
Liberty Global plc (NASDAQ:LBTYA) was discussed in the Q3 2021 investor letter of Weitz Investment Management. Here’s what the firm said:
“Liberty Global shares also rallied as investors cheered management’s sale of the company’s operations in Poland as well as its commitment to repurchase 10% of shares outstanding annually through 2023.”
Of the 895 hedge funds in Insider Monkey’s database, 28 funds held a stake in Liberty Global plc (NASDAQ:LBTYA) as of Q2 2022.
8. Syneos Health, Inc. (NASDAQ:SYNH)
Number of Hedge Fund Holders: 28
Syneos Health, Inc. (NASDAQ:SYNH) is a Morrisville, North Carolina-based contract research organization that aids pharmaceutical companies in late-stage clinical trials.
On September 14, Sandy Draper at Guggenheim downgraded Syneos Health, Inc. stock from a Buy to Neutral rating without assigning a target price. The company posted its expected Q3 2022 bookings, which reflected a second consecutive quarter of YoY decline. The analyst highlighted that the two consecutive quarters of the lower booking will impact the revenue and earnings estimates of Syneos Health, Inc. during the second half of 2022 and early 2023. Draper also added that Syneos Health, Inc. is unable to execute its growth plan consistently, and there is no short-term catalyst in sight.
7. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Holders: 29
Cleveland-Cliffs Inc. (NYSE:CLF) is a Cleveland, Ohio-based biggest manufacturer of flat-rolled steel in North America.
The company is facing shrinking metal margins and declining shipments. The outlook of the auto industry is critical for Cleveland-Cliffs Inc. as it has become the biggest provider of steel to the industry following the acquisitions of AK Steel and ArcelorMittal USA. An average car uses 1 ton of steel. Some of the supply chain constraints related to the automobile and appliance end-market are still persistent. Any further increase in benchmark interest rates by the Federal Reserve will only dampen demand for automobiles and electronic appliances, which will not play in favor of Cleveland-Cliffs Inc..
D E Shaw lowered its stake in Cleveland-Cliffs Inc. by 55% during Q2 2022.
6. Opendoor Technologies Inc. (NASDAQ:OPEN)
Number of Hedge Fund Holders: 39
Opendoor Technologies Inc. (NASDAQ:OPEN) is a California-based digital platform for buying and selling residential real estate properties.
Experts anticipate housing prices to fall by as much as 20% during 2023 as the increase in benchmark interest rates by the Federal Reserve will result in a rise in mortgage rates. This will make housing unaffordable for millions of potential homeowners and will also cause many individuals to default on their mortgages. These developments can reduce liquidity in the real estate market. Experts believe that the Federal Reserve will take the benchmark interest rates to 4.25% by the end of 2022. Such an economic environment is unlikely to favor Opendoor Technologies Inc..
Baron Funds shared its stance on Opendoor Technologies Inc. in its Q4 2021 investor letter. Here’s what the firm said:
“The Fund invests in secular growth and innovative businesses across all market capitalizations, with the bulk of the portfolio landing in the large-cap zone. The Fund is categorized as US Large Growth by Morningstar. As of the end of the fourth quarter, the largest market cap holding in the Fund was $2.5 trillion and the smallest was $791 million. The median market cap of the Fund was $27.5 billion.
The Fund had $1.7 billion of assets under management. The Fund had investments in 63 securities. The Fund’s top 10 positions accounted for 45.4% of net assets. Fund inflows were positive for 2021.We sold Opendoor Technologies Inc. because we identified issues relating to our long-term theses in the company, and we decided to exit the positions to fund other purchases.”
In addition to Opendoor Technologies Inc., Mr. Neilson has also closed his position in International Business Machines Corporation, DISH Network Corporation, and Lumen Technologies, Inc. as of Q2 2022.
5. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
International Business Machines Corporation is an Armonk, New York-based technology company.
In an article published in Barron’s on September 17, senior writer Allen Root wrote that although International Business Machines Corporation is a cheap stock in terms of valuation, it does not deserve a place in the bargain bin. In the last 90 days, International Business Machines Corporation has seen 13 downward revisions in EPS estimates for Q3 2022, which is expected to be reported on October 19. Analysts anticipate the company to report revenue of $13.60 billion, which would signify a YoY decline of 22% from $17.62 billion during the same quarter last year.
St. James Investment Company shared its outlook on International Business Machines Corporation in its Q4 2021 investor letter. Here’s what the firm said:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of
time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
4. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 41
DISH Network Corporation is an Englewood, Colorado-based provider of wireless mobile service and TV provider through various mediums.
In a research note issued on August 4, Philip Cusick at JPMorgan slashed the price target on DISH Network Corporation by 20% from $30 to $24 and maintained a Neutral rating. The analyst anticipates the wireless mobile network segment to face big hurdles. According to Goldman Sachs, among the 11 major sectors, the tech, media, and telecom (TMT) sector, also known as the Communication Services (CS) sector, faced the biggest cut in EPS during the Q2 2022 earnings season. DISH Network Corporation does not pay a dividend, unlike the other major players in the same sector.
Eagle Capital Management held over 16.9 million shares in DISH Network Corporation as of Q2 2022.
3. Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 42
Lumen Technologies, Inc. is a Monroe, Louisiana-based provider of communication infrastructure with over 4.5 million broadband subscribers as of 2022.
On August 5, Philip Cusick at JPMorgan resumed coverage on Lumen Technologies, Inc. with an Underweight rating and a target price of $10. The analyst believes the company is fundamentally challenged in the short and medium term following the divestiture of Latin America and incumbent local exchange carrier (ILEC) assets. These developments are expected to hamper the legacy voice and copper revenue of the company. The analyst also anticipates Lumen Technologies, Inc.’s revenue and EBITDA to decline in 2023 as the complexity and size of the business will reduce.
Here’s what Longleaf Partners Fund said about Lumen Technologies, Inc. in its Q4 2021 investor letter:
“Lumen (39%, 4.22%; 3%, 0.38%), the global fiber company, was the top absolute and relative contributor for the year. CEO Jeff Storey took two actions this year to substantially increase the business’s value and address the stock’s enormous discount (it trades below 35% of our appraisal value). First, during the third quarter, Lumen sold its Latin American fiber for a good price (9x EBITDA) and the weaker half of its US consumer business for an encouraging 5.5x EBITDA. Both multiples came in above our appraisals and demonstrate how cheap the consolidated Lumen RemainCo is today at less than 6x P/FCF and EV/EBITDA. The majority of Lumen’s remaining EBITDA comes from its US Enterprise and SMB segments, which grow faster than Lumen’s disposed LatAm fiber and are worth higher multiples. The weakest segment of the new Lumen, the western half of Consumer, is superior to the assets the company just sold for 5.5x EBITDA. Second, Storey quickly repurchased 7% of Lumen’s shares, adding meaningfully to value per share and free cash flow per share. When the dispositions close, proceeds will reduce debt meaningfully, putting net debt right at the company’s leverage ratio target even though that target was based on the prior, inferior business mix. We are pleased that our engagement since filing an amended 13D helped the company begin to deliver positive corporate actions. The market has fixated on the potential for another dividend cut, but Lumen’s FCF is more than sufficient to cover the $1/share payout while investing aggressively into high-return, edge-out capex to grow revenues.”
2. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders: 45
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a Massachusetts-based biotech company that is pioneering the treatment of life-threatening genetic diseases like cystic fibrosis (CF).
According to experts, the size of the cystic fibrosis market stands at $9.8 billion as of 2022. Through its four approved cystic fibrosis transmembrane conductance regulators (CFTR), Vertex Pharmaceuticals Incorporated has been able to control nearly 80% of the market. However, Vertex Pharmaceuticals Incorporated is over-reliant on CF products and does not see the launch of a major drug that could result in revenue diversification in the next two years. Furthermore, the company does not have a deep pipeline of products in phase three trials like some of its competitors.
Here’s what Harding Loevner said about Vertex Pharmaceuticals Incorporated in its Q4 2021 investor letter:
“In Health Care, the disappointing share price performance of Wuxi AppTec and Wuxi Biologics was partially offset by the strong rebound in Vertex Pharmaceuticals’ share price. Vertex reported encouraging Phase 2 results for its drug candidate to treat a rare form of kidney disease, as well as positive pilot data for the first patient treated with its groundbreaking stem cell therapy for Type 1 diabetes. These studies’ results were all the more encouraging as they validated the company’s strategy to deploy its unique drug development approach beyond its cystic fibrosis franchise.”
Overall, 45 funds held a stake in Vertex Pharmaceuticals Incorporated as of Q2 2022.
1. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 55
Amgen Inc. (NASDAQ:AMGN) is a Thousand Oaks, California-based biotech company.
Since 2018, the bottom line of Amgen Inc. has stagnated, and there have been concerns related to the revenue growth of some of its leading drugs. Furthermore, experts believe that significant buybacks and increases in dividends are hurting the financial structure of Amgen Inc.. Concerns have also been raised regarding the company’s $4 billion cash acquisition of ChemoCentryx as its leading drug Enbrel is seeing a decline in YoY sales despite having patent protection for the next six to seven years. This is because Humira, which is a competitor product by AbbVie, is gaining market share.
Here’s what ClearBridge Sustainability Leaders Strategy said about Amgen Inc. in its Q3 2021 investor letter:
“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”
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