In this article, we examine billionaire Rob Citrone’s portfolio management strategy and approach to investing in stocks. We also review billionaire Rob Citrone’s top 10 stock picks.
Hertz Global Holdings, Inc. (NASDAQ:HTZ), Amazon.com, Inc. (NASDAQ:AMZN), and T-Mobile US, Inc. (NASDAQ:TMUS) are among the favorite stock picks of billionaire money manager Rob Citrone as of March 31.
Billionaire Rob Citrone, the founder of Discovery Capital Management, has more than 30 years of experience in equities, currencies, credit markets, and fixed income. After completing his MBA from Darden School of Business, he worked for Fidelity and Julian Robertson’s Tiger Management, where he gained experience in emerging, credit, and currency markets, as well as portfolio management, shorting, and long strategies.
During the first five years following the inception of Discovery Capital in 1999, the tiger cub also remained in close contact with George Soros. In an interview with Capital Allocators, he attributed his close contact and working relationship with legendary investors to the incredible success of Discovery Capital. From inception through 2010, Rob Citrone racked up an annualized return of 17.3%, with only one losing year. He earned 57.26% in 2007 and 65% in 2009 by going long on emerging markets and shorting developed markets. The billionaire investor described his investment strategy as bottom-up and top-down on the basis of macroeconomics.
Best Shorts
The best shorts, according to Citrone, are securities with fundamental flaws and bankruptcy risks. He credits Julian Robertson for his shorting ability, which he refers to as a lost art today. The number of people shorting effectively has declined in recent years, according to him. He believes investors should be cautious when shorting because they can lose a lot of money if things move in the opposite direction. Moreover, short-selling securities require a high level of conviction from investors. Rob Citrone made the best short bet on Thai Bath with Robertson, which helped his firm make huge profits. Turkey, which is experiencing a significant level of inflation and currency devaluation, is the best short in his opinion right now. Normally, Discovery Capital Management’s portfolio includes around 20 to 25% net short positions.
Portfolio Management
As an expert in constructing portfolios across asset classes, Rob Citrone says he analyzes risk and macroeconomic conditions, as well as interest rates and the U.S dollar, before investing in a particular asset class. As an example, he is bearish about China due to its political leadership and relationships with Europe and the United States. However, he considers India to be one of the most promising emerging markets. In addition, he is bullish on the United States, Japan, and Brazil. Also, due to the energy crisis, he expects a recession in Europe within a couple of months and a major economic catastrophe within 12 to 18 months if the crisis does not resolve. For European manufacturing facilities, high energy prices are raising production costs, which has a significant impact on their competitiveness. Italian debt is the best security to short right now in the European region in his view. Discovery Capital Management invests in 10 different investing themes and each theme may have between 10 and 15 positions. The firm aims to hold 115 to 125 positions at any given time.
As of the end of March, Discovery Capital Management held $1.16 billion in its 13F securities portfolio. Billionaire Rob Citrone’s top 10 stock picks include CONX Corp. (NASDAQ:CONX), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Vontier Corporation (NYSE:VNT), América Móvil, S.A.B. de C.V. (NYSE:AMX) and Viatris Inc. (NASDAQ:VTRS).
Billionaire Rob Citrone
Our Methodology:
We made use of Discovery Capital Management’s latest 13F filing for this analysis. Below is the list of billionaire Rob Citrone’s top 10 stock picks.
Billionaire Rob Citrone’s Top 10 Stock Picks
10. CONX Corp. (NASDAQ:CONX)
Discovery Capital Management’s stake value: $22.6 million
Percentage of portfolio: 1.94%
Number of hedge fund holders: 53
Hertz Global Holdings, Inc., Amazon.com, Inc., and T-Mobile US, Inc. are some of Citrone’s favorite well-known stocks. Since early 2021, Citrone has also owned shares of lesser-known CONX Corp., and his firm left its stake in the company unchanged during the March quarter.
CONX Corp. is a blank cheque public company with no significant operations. CONX Corp. is focused on effecting a merger, stock purchase, capital stock exchange, asset acquisition, or similar business combination. CONX Corp. is founded by Chairman Charles Ergen, who is the co-founder of DISH. After the dissolution of Bill Ackman’s multi-billion-dollar Pershing Square Tontine, concerns are growing over the future of other popular SPACs like CONX Corp., as Ackman blamed adverse regulatory requirements for the SPAC merger transactions. Meanwhile, the deadline for CONX Corp. to make a deal is Nov. 3.
As of the end of March, 53 hedge funds were bullish about CONX Corp. compared to 55 in the previous quarter. Jericho Capital Asset Management and Fort Baker Capital Management were among the leading stakeholders in CONX Corp.
9. Grupo Financiero Galicia S.A. (NASDAQ:GGAL)
Discovery Capital Management’s stake value: $26.6 million
Percentage of portfolio: 2.28%
Number of hedge fund holders: 7
Discovery Capital Management increased its stake in Grupo Financiero Galicia S.A. by 105% during the March quarter to encompass 2.28% of its 13F portfolio. Grupo Financiero Galicia S.A. is an Argentina-based financial services holding company engaged in offering a range of products such as deposit accounts, personal loans, mortgage loans, credit card loans, and online banking services.
The stock price of Grupo Financiero Galicia S.A. has outperformed the S&P 500 index so far in 2022, thanks to its solid growth projection. Grupo Financiero Galicia S.A. expects to generate mid-single-digit revenue growth in 2022 and double-digit growth the following year. Its dividend yield of around 4% also makes Grupo Financiero Galicia S.A. a good financial stock to hold for the long-term. Moreover, shares of Grupo Financiero Galicia S.A. are trading at attractive valuations considering their forward price-to-earnings ratio of 3.7x compared to the industry average of 10x.
Of the 912 hedge funds tracked by Insider Monkey, 7 were bullish about Grupo Financiero Galicia S.A. as of the end of March. Discovery Capital Management and Autonomy Capital were the leading stakeholders in the company.
8. Vontier Corporation (NYSE:VNT)
Discovery Capital Management’s stake value: $33 million
Percentage of portfolio: 2.83%
Number of hedge fund holders: 29
Billionaire Rob Citrone is showing confidence in Vontier Corporation, as his firm raised its stake in the company by 72% to account for 2.83% of the value of its 13F portfolio. Like CONX Corp. and Grupo Financiero Galicia S.A., Vontier Corporation is a small-cap company. Vontier Corporation is engaged in electronic products and services for the mobility infrastructure industry worldwide.
Shares of Vontier Corporation have been under pressure over the last year due to challenging market conditions. However, the company’s financial numbers appear sound enough to back the upside momentum. In the first quarter, Vontier Corporation posted revenue growth of over 5% from the past year period, while earnings per share of $1.50 topped analysts’ expectations by $0.94 per share.
In its Q1 2022 investor letter, Sound Shore Management, an investment management firm, mentioned a few stocks including Vontier Corporation. Here is what the firm stated about Vontier Corporation:
“Detractors for the period included two of our technology names which sold off along with the sector. Mobility technology supplier Vontier was lower despite earnings that beat estimates as investor debate focused on the longer term earnings power for Vontier’s division that sells equipment to convenience stores. The company offers environmental sensors, fueling equipment, field payment hardware, remote management and workflow software, vehicle tracking, and fleet management software solutions. Led by a strong management team with a track record of continuous improvement, we believe Vontier will steadily expand margins and grow market share. Attractively valued at 8 times earnings, we added to our position and Vontier remains a holding.”
7. América Móvil, S.A.B. de C.V. (NYSE:AMX)
Discovery Capital Management’s stake value: $33.093 million
Percentage of portfolio: 2.83%
Number of hedge fund holders: 14
Unlike Grupo Financiero Galicia S.A. and Vontier Corporation, Rob Citrone’s Discovery Capital Management slashed its stake in América Móvil, S.A.B. de C.V. by 53% during the March quarter. Despite the stake sale, América Móvil, S.A.B. de C.V. ranked seventh on the list of billionaire Rob Citrone’s top 10 stock picks.
América Móvil, S.A.B. de C.V. is engaged in providing telecommunication services in North America. On an annual basis, the company continues to grow solidly. In the second quarter, América Móvil, S.A.B. de C.V. generated EBITDA growth of 4% from the previous year’s quarter.
As of the end of March, América Móvil, S.A.B. de C.V. was in 14 hedge funds’ portfolios compared to 10 in the previous quarter. Many prominent hedge funds such as Renaissance Technologies, AQR Capital Management, and Millennium Management were among the leading stakeholders in América Móvil, S.A.B. de C.V..
6. Viatris Inc. (NASDAQ:VTRS)
Discovery Capital Management’s stake value: $47.2 million
Percentage of portfolio: 4.05%
Number of hedge fund holders: 55
Rob Citrone’s Discovery Capital Management increased its stake in Viatris Inc. by 72% during the first quarter, when its shares collapsed sharply following a deal to sell its biosimilar assets to Biocon Biologics. Viatris Inc. was established in 2020 as a combination of Upjohn and generics drugmaker Mylan. Shares of Viatris Inc. are down 31% year-to-date.
Like CONX Corp., Grupo Financiero Galicia S.A., Vontier Corporation, and América Móvil, S.A.B. de C.V., Viatris Inc. is one of the best stocks to buy according to billionaire Rob Citrone. The recent plunge in Viatris Inc. shares could be a good buying opportunity for new investors. The company expects adjusted EBITDA in the range of $5.8 billion to $6.2 billion and free cash flow between $2.5 billion and $2.9 billion. Dividend investors can also consider Viatris Inc., as it offers a dividend yield of around 2.48%. Viatris Inc. is also seeking to buy back $1 billion worth of its common stock. As of the end of March, Viatris Inc. was in 55 hedge funds’ portfolios.
In its Q4 2021 investor letter, Davis Funds, an investment management firm, highlighted a few stocks including Viatris Inc.. Here is what Davis Funds stated about Viatris Inc.:
“Davis Global Fund added several new positions over the past year, including the pharmaceutical Viatris. Viatris is an unloved global pharmaceutical manufacturer created through the merger of Mylan and Upjohn (Pfizer’s off-patent drugs business). The company is highly diversified, with leading positions across a wide span of generic and specialty/partnered drugs in many countries around the world. While growth for the portfolio overall is moderated by pricing pressures in traditional generics, Viatris has an attractive pipeline of complex drugs (e.g., inhaled drugs, injectables, etc.) and biosimilars, the latter of which are poised to see growth in the years ahead after a long period of regulatory and legal deadlock in the U.S.
Near-term, Viatris is committed to using free cash flow to pay down debt, but we believe its extremely cheap valuation (4–5x owner earnings) and growing cash generation offers a compelling risk/reward proposition that should eventually be recognized by the market.”
Hertz Global Holdings, Inc., Amazon.com, Inc., and T-Mobile US, Inc. rank within Citrone’s top 5 stock picks. See where they end up by following the link below.
5. T-Mobile US, Inc. (NASDAQ:TMUS)
Discovery Capital Management’s stake value: $49.3 million
Percentage of portfolio: 4.23%
Number of hedge fund holders: 92
Rob Citrone’s Discovery Capital Management initiated a new stake in T-Mobile US, Inc. during the first quarter of this year. The firm’s strategy of buying a stake in the communications company appears to be working, as TMUS shares have appreciated by more than 24% year-to-date. The company also looks to be in a sound financial position to support returns for shareholders. In the June quarter, its revenue came in at $19.7 billion, thanks to 6% growth in services revenue. The company added 1.8 million net new customers, with the total customer count jumping to a record-high of 110 million.
In its first-quarter investor letter, ClearBridge Investments, an investment management firm, mentioned a few stocks including T-Mobile US. Here is what the firm stated:
“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile. Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Discovery Capital Management’s stake value: $51 million
Percentage of portfolio: 4.38%
Number of hedge fund holders: 274
Discovery Capital lifted its stake in Amazon.com, Inc. (NASDAQ:AMZN) by 169% during the first quarter to 4.38% of its overall portfolio concentration. Shares of the world’s largest online retailer have been under pressure over the past six months due to concerns over slowing growth and lofty valuations. Its shares are down more than 20% year-to-date. In the second quarter, Amazon’s net sales grew by just 7% year-over-year to $121.2 billion compared to high double-digit growth during years past. Its operating income also fell to $3.3 billion in the second quarter and its net loss came in at $2 billion.
In its second-quarter investor letter, Oakmark Funds, an investment management firm, anticipated solid growth ahead for Amazon. Here is what Oakmark Funds stated:
“Amazon is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
3. Denbury Inc. (NYSE:DEN)
Discovery Capital Management’s stake value: $117 million
Percentage of portfolio: 10.8%
Number of hedge fund holders: 29
Discovery Capital Management has been holding a stake in Denbury Inc. (NYSE:DEN) since the beginning of 2021. With a forward price-to-earnings ratio of 9x, the company’s shares are still trading at attractive valuations. Denbury is an energy company focusing on oil production from mature fields like the Rocky Mountain and Gulf Coast regions. The company generated earnings per share of $1.69 in the first quarter and anticipates healthy profits for the following quarters.
As of the end of the March quarter, Denbury was in 29 hedge funds’ portfolios compared to 32 positions in the previous quarter. Silver Point Capital and Hein Park Capital were the leading stakeholders in the company.
2. Hertz Global Holdings, Inc. (NASDAQ:HTZ)
Discovery Capital Management’s stake value: $140.2 million
Percentage of portfolio: 12.03%
Number of hedge fund holders: 72
Rob Citrone’s firm slashed its stake in Hertz Global Holdings, Inc. by 14% in the March quarter, with it accounting for 12.03% of the firm’s 13F portfolio value. Despite that, Hertz ranks second on the list of billionaire Rob Citrone’s top 10 stock picks. The company generated 25% revenue growth for the June quarter and announced that it will repurchase $2 billion worth of shares. The company’s strong free cash flow generation ability enables it to spend a huge amount on buybacks and investments in growth opportunities. In the June quarter, the company generated $484 million in free cash flow.
Hedge funds are also showing confidence in Hertz. As of the end of March, 72 hedge funds were bullish about the company compared to 69 positions in the previous quarter.
1. Compass, Inc. (NYSE:COMP)
Discovery Capital Management’s stake value: $155.3 million
Percentage of portfolio: 13.32%
Number of hedge fund holders: 28
Compass, Inc. (NYSE:COMP) lost around 70% of its value in the last 12 months, and Rob Citrone’s hedge fund may be losing patience, as it slashed its stake in the company by 26% during the first quarter. Despite the stake sale, Discovery Capital Management is the leading stakeholder in the company, according to data tracked by Insider Monkey, and the stock remains Citrone’s top pick.
Compass is a cloud-based platform engaged in providing an integrated suite of software for marketing, customer relationship management, and other operations. It is also engaged in offering brokerage services in the real estate industry. The significant growth in mortgage rates over the last couple of months along with declining demand has negatively impacted COMP’s share price.
Of the 912 hedge funds tracked by Insider Monkey, 28 were bullish about the company. Like Discovery Capital, Thrive Capital and Immersion Capital were also among the leading stakeholders in the company.
You can also take a look at Jim Cramer’s Recession Portfolio: Top 10 Stock Picks and 10 Best High Risk High Reward Stocks to Buy Now.
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This article is originally published at Insider Monkey.
