Below is the list of billionaire Rob Citrone’s top 5 stock picks. For a detailed discussion about Rob Citrone’s investment philosophy and portfolio management strategy please see Billionaire Rob Citrone’s Top 10 Stock Picks.
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. (NASDAQ:TMUS) 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 (NASDAQ:AMZN) 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. (NASDAQ:HTZ) 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.
