In this article, we discuss 10 stocks that billionaire Rob Citrone is selling. If you want to see more stocks on this list, check out Billionaire Rob Citrone Is Selling These 5 Stocks.
Rob Citrone established Discovery Capital Management in 1999, which is a hedge fund that invests in emerging markets. He is a Tiger Cub, having worked at Julian Robertson’s Tiger Management from January 1995 until March 1999. Previously, he also worked as a portfolio manager at Fidelity Investments. Rob Citrone, with a personal net worth of about $1.1 billion, focuses on global macro and long-short equity strategies at his hedge fund, employing a top-down view paired with bottom-up fundamental analysis. The billionaire seeks out investments in equities, credit investments, and currencies in emerging and developed markets both.
In November 2021, Rob Citrone told Bloomberg that long bets on the Hungarian, Czech, and Polish currencies against the Euro offer the best risk-reward, and he saw the Brazilian and Russian markets as quite risky, citing political uncertainty, higher energy prices, and rate hikes. Citrone’s hedge fund, as of Q1 2022, managed a 13F portfolio worth $1.16 billion, with investments focused in the healthcare, transports, utilities and telecommunications, information technology, finance, energy, and consumer discretionary sectors.
Rob Citrone’s Thoughts on China
Citrone said in an interview on July 11 that while the United States has always been an ideal place to invest capital, China rivalled it for some time. However, the current Chinese government is more focused on power than building up the economy, which concerns the billionaire about his exposure to the market, and the global supply chains as a whole. He said the current government staying in the long-term might make China completely un-investable, and the tons of global foreign equity stuck in the Asian country is a huge risk for investors.
Rob Citrone said that two of the biggest questions right now for emerging market investors are whether the Ukraine war will end anytime soon and if the Chinese government will remain the same moving forward. One of his biggest positions is shorting the Chinese Yuan, and he has some short Chinese equity bets since last year. The investor reiterated that he would not be bearish on China if the government and its advisors change and enforce positive economic reforms, but he forecasts only a 15% possibility of a regime change in the country.
Securities filings for the first quarter of 2022 reveal that Rob Citrone’s Discovery Capital Management purchased 40 new stocks, strengthened its hold on 13 existing equities, sold out of 38 firms, and reduced holdings in 11 companies. Some of the notable securities that Rob Citrone discarded in Q1 2022 included Bank of America Corporation (NYSE:BAC), NVIDIA Corporation (NASDAQ:NVDA), and JPMorgan Chase & Co. (NYSE:JPM).
Our Methodology
We used the Q1 2022 portfolio of billionaire Rob Citrone’s Discovery Capital Management for this analysis, selecting the most notable stocks that the hedge fund disposed of during the quarter.
Billionaire Rob Citrone Is Selling These Stocks
10. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
Rivian Automotive, Inc. (NASDAQ:RIVN) is based in San Jose, California, and it is a manufacturer of electric vehicles. The company’s Rivian Commercial Vehicle platform collaborates with Amazon.com, Inc. (NASDAQ:AMZN) to offer electrified delivery trucks. Rob Citrone’s Discovery Capital Management added Rivian Automotive, Inc. (NASDAQ:RIVN) to its portfolio in the fourth quarter of 2021 by purchasing 50,000 shares worth $5.18 million. The hedge fund dumped the entirety of its Rivian Automotive, Inc. (NASDAQ:RIVN) stake in the first quarter of 2022.
On July 18, Deutsche Bank analyst Emmanuel Rosner lowered the price target on Rivian Automotive, Inc. (NASDAQ:RIVN) to $46 from $69 and maintained a Buy rating on the shares. The analyst expects U.S. automakers to post “soft” Q2 results but generally reaffirm their guidance calling for robust improvement in the second half of the year.
Among the hedge funds tracked by Insider Monkey, Rivian Automotive, Inc. (NASDAQ:RIVN) was part of 29 hedge fund portfolios at the end of Q1 2022, down from 47 funds in the prior quarter. Philippe Laffont’s Coatue Management is the biggest position holder in the company, with 30.8 million shares worth $1.5 billion.
In addition to Bank of America Corporation (NYSE:BAC), NVIDIA Corporation (NASDAQ:NVDA), and JPMorgan Chase & Co. (NYSE:JPM), Rob Citrone dumped his Rivian Automotive, Inc. (NASDAQ:RIVN) stake in the March quarter.
Here is what Baron Global Advantage Fund has to say about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q1 2022 investor letter:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian continued its volatile trading following the stock’s IPO in late 2021, declining 52% in the first quarter as investors rotated out of fast-growing long-duration stocks and as industry wide supply-chain issues delayed Rivian’s production ramp. In addition, even while other automotive companies raised prices due to inflationary pressures, Rivian launched a price increase campaign that was not well communicated and, as a result, was met with dissatisfaction by existing reservation holders. While this was an unforced error, the company quickly corrected course, reversing its decision to raise prices for existing reservations, while maintaining the increase on new buyers (which has not caused a material impact to demand). We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and the company’s strong balance sheet, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
9. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 42
Macy’s, Inc. (NYSE:M) is a New York-based retail corporation that offers in-store and online shopping. The company sells apparel, cosmetics, home furnishings, and other consumer goods. Rob Citrone first invested in Macy’s, Inc. (NYSE:M) in Q1 2015, but he has been largely inconsistent with his stake over the years, holding the stock for a few quarters only. His latest investment in Macy’s, Inc. (NYSE:M) was during Q4 2021, when he purchased 80,900 shares worth over $2 million. The billionaire disposed of his Macy’s, Inc. (NYSE:M) position entirely in Q1 2022.
BofA analyst Lorraine Hutchinson on July 7 lowered the price target on Macy’s, Inc. (NYSE:M) to $15 from $22 and reiterated an Underperform rating on the shares as she slashed her FY22 estimates by 16% on average for the department store space to reflect inflation weighing on consumption and gross margin constraints from surplus inventory. She revised targets in the retail group to account for lower multiples owing to the tough macro environment, the analyst added.
According to Insider Monkey’s data, 42 hedge funds were long Macy’s, Inc. (NYSE:M) at the conclusion of Q1 2022, compared to 43 funds in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the leading stakeholder of the company, with more than 10 million shares valued at $246.18 million.
Here is what ClearBridge Investments Small Cap Value Strategy has to say about Macy’s, Inc. (NYSE:M) in its Q3 2021 investor letter:
“Meanwhile, Macy’s, an omnichannel retail organization that operates stores, websites, and mobile applications under the Macy’s, Bloomingdale’s, and Bluemercury brands, also had a strong quarter (+21.5%). Macy’s delivered strong second-quarter earnings, beating on earnings and revenue and raising guidance as the retailer continues to pay down debt and grow its digital business.”
8. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 61
MongoDB, Inc. (NASDAQ:MDB) is a New York-based company that develops the source-available MongoDB platform, a NoSQL database. Rob Citrone’s Discovery Capital Management added MongoDB, Inc. (NASDAQ:MDB) to its portfolio in Q3 2021, buying 15,171 shares worth $7.15 million. In the first quarter of 2022, the hedge fund sold off its stake in the company completely.
Piper Sandler analyst Brent Bracelin on July 18 lowered the price target on MongoDB, Inc. (NASDAQ:MDB) to $375 from $430 and reaffirmed an Overweight rating on the shares. According to the analyst, software subscription models with more than 85% recurring revenue channels, considerable gross margins, and secular cloud and digital tailwinds might be better positioned to survive economic storms compared to cyclicals. However, these software models are not recession proof, added the analyst.
Among the hedge funds tracked by Insider Monkey, Alex Sacerdote’s Whale Rock Capital Management is a significant shareholder of the company, with 493,588 shares worth about $219 million. Overall, 61 hedge funds were bullish on MongoDB, Inc. (NASDAQ:MDB) at the end of Q1 2022, up from 56 funds in the last quarter.
Here is what Baron Opportunity Fund has to say about MongoDB, Inc. (NASDAQ:MDB) in its Q1 2022 investor letter:
“MongoDB, Inc. is the market leader in modern operational databases, with its differentiated document database model. Shares increased on strong fourth quarter results, with an acceleration across total revenue (up 56%), subscription revenue (up 58%), and Atlas cloud revenue, its database as a service or DBaaS offering, (up 85%), and improved profitability. Customer additions grew more than 30%. More importantly, customer spending was also strong, especially for customers spending above $1 million annually, demonstrating that the expansion aspect of MongoDB’s business strategy is resonating as more companies are standardizing on MongoDB’s application data platform.”
7. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Micron Technology, Inc. (NASDAQ:MU) is an American company that provides memory and storage products worldwide. The company operates through four segments – Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit. Rob Citrone discarded his entire Micron Technology, Inc. (NASDAQ:MU) stake in the first quarter of 2022. The stake consisted of 202,743 shares valued at $18.8 million.
On July 22, Morgan Stanley analyst Joseph Moore downgraded Micron Technology, Inc. (NASDAQ:MU) to Underweight from Equal Weight with a price target of $56. While Micron Technology, Inc. (NASDAQ:MU) likely guided conservatively relative to its outlook, the market continues to worsen in terms of both sales volume and pricing power, the analyst told investors in a research note. He said the stock has rallied while market conditions are deteriorating.
According to Insider Monkey’s data, 78 hedge funds were long Micron Technology, Inc. (NASDAQ:MU) at the end of March 2022, down from 83 funds in the last quarter. David Goel and Paul Ferri’s Matrix Capital Management is a prominent stakeholder of the company, with 4 million shares worth $311.5 million.
Here is what Hazelton Capital Partners has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:
“It’s hard to explain how shares of Micron Technology, manufacturer of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimated earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
6. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 79
Pfizer Inc. (NYSE:PFE) is a New York-based biopharmaceutical company. Rob Citrone’s Discovery Capital Management held 344,500 shares of Pfizer Inc. (NYSE:PFE) in Q4 2021, worth $20.3 million, representing 1.52% of the total 13F holdings. The billionaire discarded the stake in the first quarter of 2022.
Morgan Stanley analyst Terence Flynn lowered the firm’s price target on Pfizer Inc. (NYSE:PFE) to $49 from $52 and maintained an Equal Weight rating on the shares after adjusting estimates in light of the company’s upcoming Q2 results. He expects biopharma revenues to continue to be resilient even amid slow economic activity and thinks that the companies that can drive revenue growth in the second half of the decade are best positioned in the space.
According to Insider Monkey’s data, 79 hedge funds were bullish on Pfizer Inc. (NYSE:PFE) at the end of the first quarter of 2022, compared to 83 funds in the earlier quarter. Cliff Asness’ AQR Capital Management is a prominent shareholder of the company, with 10.70 million shares worth $554.12 million.
Like Bank of America Corporation (NYSE:BAC), NVIDIA Corporation (NASDAQ:NVDA), and JPMorgan Chase & Co. (NYSE:JPM), smart investors are monitoring Pfizer Inc. (NYSE:PFE) closely.
Here is what ClearBridge Investments Value Equity Strategy has to say about Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.”
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Disclosure: None. Billionaire Rob Citrone Is Selling These 10 Stocks is originally published on Insider Monkey.
