In this article, we discuss the 5 stocks that billionaire Stanley Druckenmiller is selling. If you want to read about some more stocks in the Stanley Druckenmiller portfolio, go directly to Billionaire Stanley Druckenmiller is Selling These 10 Stocks.
5. Zendesk, Inc. (NYSE:ZEN)
Number of Hedge Fund Holders: 63
Zendesk, Inc. (NYSE:ZEN) operates as a software development firm. The European Union has set a deadline of late September to rule on the planned purchase of Zendesk by Hellman & Friedman. Last month, the latter had purchased the former and filed with Chinese antitrust regulators in this regard. In late June, the firm had agreed on a deal to acquire the software company worth around $10.2 billion, equating to $77.50 per share. Hellman & Friedman is a private equity firm.
On July 28, William Blair analyst Arjun Bhatia downgraded Zendesk, Inc. (NYSE:ZEN) stock to Market Perform from Outperform without a price target, noting that the slowdown in the business of the firm was greater than expected.
At the end of the second quarter of 2022, 63 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Zendesk, Inc. (NYSE:ZEN), compared to 66 in the previous quarter worth $3.2 billion.
In its Q3 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Zendesk, Inc. (NYSE:ZEN) was one of them. Here is what the fund said:
“Zendesk, Inc. (NYSE:ZEN) provides customer support software solutions. After successfully navigating the early stages of the pandemic in 2020, the firm has seen its stock cool off on the threat of increased competition from low-cost alternatives. We do not believe that the competitive dynamics have been altered. In fact, the company’s annual revenue growth rate has accelerated in 2021 from the second half of 2020. The shares also currently trade at a deep discount to other cloud-based software vendors.”
4. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 65
Sea Limited (NYSE:SE) is a diversified technology company. The company has been featured in the Duquesne Capital portfolio consistently since the first quarter of 2019. Back in 2019, the holding consisted of around 22,000 shares purchased at an average price of $17.52 per share. The share price of the firm, as of September 8, is in excess of $58 per share. At the end of the first quarter of 2022, the firm owned nearly 48,000 shares in the company. Duquesne had been selling the stock since late 2020.
On August 18, Barclays analyst Jiong Shao maintained an Overweight rating on Sea Limited (NYSE:SE) stock and lowered the price target to $114 from $125, noting that many macro factors had become more uncertain in recent months for the firm.
At the end of the second quarter of 2022, 65 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in Sea Limited (NYSE:SE), compared to 77 in the previous quarter worth $5 billion.
In its Q1 2022 investor letter, Farrer Wealth Advisors, an asset management firm, highlighted a few stocks and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:
“Sea Limited (NYSE:SE) had been selling off since its peak in early November of ~$363/share. This was driven by both a general sell off in tech, especially non-profitable tech, and a general belief that its gaming arm (Garena) was experiencing a slowdown due to its flagship game Free Fire. Free Fire has experienced a slowdown for three reasons: it is a victim of its own success, and by the end of Q321, nearly 10% of the world’s population already played the game, and thus reaching new users was difficult; A return to normal with people traveling/going out more and spending less time playing games; and the Indian market imposed a ban on the game due to anti-Chinese sentiment (Tencent is a large shareholder in Sea Limited (NYSE:SE)). We believed that these issues, while worth considering, were a bit overblown, and some of the data we saw from 3rd party sources showed that though Free Fire usage was dipping, it wasn’t too drastic. Thus, we marginally added to the position throughout the quarter. This was a mistake. During Sea’s earnings report in early March, the company guidance for Garena (down nearly 35% yoy) showed that the slowdown was far worse than predicted. Secondly, Shopee (Sea’s ecommerce arm) has pulled out of certain markets (in Europe and India), which long-term is probably the right strategy, but short-term hampers the optionality of the business. After considering this information and the guidance from earnings, we decided to significantly trim the position. In our opinion, management does have a bit of egg on its face from an overly aggressive expansion or as one investor called it, “bull market hubris.” We think management’s moves were mostly logical, it’s just that their failures came during an unforgiving market. While we believe that Sea’s future is still bright (especially with regards to their e-commerce and financial services), it will take a few quarters of strong earnings for them to regain their momentum, and for now the capital can be better spent elsewhere.”
3. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 80
Expedia Group, Inc. (NASDAQ:EXPE) operates as an online travel firm. On August 4, the company posted earnings for the second quarter of 2022, reporting earnings per share of $1.96, beating market estimates by $0.40. The revenue over the period was $3.1 billion, up over 50% compared to the revenue over the same period last year and beating analyst expectations by $190 million. The company also revealed that lodging gross bookings were up 8% versus the second quarter 2019.
On August 19, UBS analyst Lloyd Walmsley maintained a Neutral rating on Expedia Group, Inc. (NASDAQ: EXPE) stock and raised the price target to $112 from $108, citing the marketing pivot of the firm as one of the reasons behind the target raise.
At the end of the second quarter of 2022, 80 hedge funds in the database of Insider Monkey held stakes worth $3 billion in Expedia Group, Inc. (NASDAQ:EXPE), compared to 88 in the previous quarter worth $6 billion.
In its Q1 2022 investor letter, Aristotle Capital Management, an asset management firm, highlighted a few stocks and Expedia Group, Inc. (NASDAQ:EXPE) was one of them. Here is what the fund said:
“Expedia Group, Inc. (NASDAQ:EXPE) outperformed in the first quarter following a better-than-expected earnings report for the company’s fourth quarter of 2021. During the pandemic, the company reduced expenses which has improved operating leverage as revenue recovers. Expectations for travel in 2022 have improved as COVID cases have declined.”
2. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 95
Netflix, Inc. (NASDAQ:NFLX) owns and runs an online streaming platform. As the subscriber growth of the firm hits a snag, the company has started pushing ahead with plans for advertisements in order to keep pace with competitors like Disney. Per reports, the company is considering limited targeting for advertisers. This would effectively let Netflix control which programming to advertise in. The initial rates are $60 to reach a thousand viewers and a minimum investment of $20 million.
On September 7, Jefferies analyst Andrew Uerkwitz maintained a Hold rating on Netflix, Inc. (NASDAQ:NFLX) stock and lowered the price target to $230 from $243, noting the firm had a near-term lack of growth and a lot to prove.
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 6.3 million shares worth more than $1.1 billion.
In its Q2 2022 investor letter, L1 Capital International, an asset management firm, highlighted a few stocks and Netflix, Inc. (NASDAQ:NFLX) was one of them. Here is what the fund said:
“While it seems an eternity ago, in April Netflix, Inc. (NASDAQ:NFLX) reported Q1 2022 results and gave forward guidance which flashed many red flags. Not only were subscription numbers (and forward guidance) well below expectations, but management also gave new disclosure on the massive extent of password sharing which raises concerns that Netflix is much more mature than we had previously considered, constraining future growth. Management also haphazardly announced it will introduce an advertising-supported subscription tier, albeit currently lacking the necessary capabilities to do so. Despite continuing to produce world-leading content, we have lost confidence in management’s ability to respond to increased competition and a more challenging operating environment. We sold our entire investment in Netflix immediately post Q1 2022 results. Currently we do not consider Netflix to meet our stringent quality criteria to be considered as a potential investment in the Fund.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) is a diversified technology firm with core interests in e-commerce. The company has featured in the Duquesne Capital portfolio intermittently since the fourth quarter of 2010. Back in 2010, the holding consisted of around 12 million shares purchased at an average price of $8.48 per share. The share price of the firm, as of September 8, is in excess of $128 per share. Amazon, already one of the largest conglomerates in the world, is preparing to enter the prescription drug sales market in Japan, per reports.
On August 29, Citi analyst Jason Bazinet maintained a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock with a price target of $152, noting that the firm would face regulatory risks with buying Electronic Arts.
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 66 million shares worth more than $7 billion.
In its Q2 2022 investor letter, L1 Capital 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:
“Amazon.com, Inc. (NASDAQ:AMZN) was the largest negative contributor to the Fund during the quarter. Q1 2022 results and Q2 2022 profit guidance were below market expectations. Amazon has been operating in an extraordinary environment since the start of the COVID-19 pandemic. Lockdowns led to an exceptionally rapid shift in retail activity online and Amazon benefitted from a dramatic increase in revenue. Management responded by doubling fulfilment and logistics capacities over a 2-year period – a response which has proven to be somewhat excessive.
Too much capacity, combined with elevated shipping and logistics costs, employee inefficiencies and a resetting of higher share-based compensation have pressured near-term profitability of Amazon’s retail (non-Amazon Web Services) operations. Management changes have exacerbated market uncertainty. We consider these issues to be real and negative to valuation, but somewhat transitory and more than reflected in Amazon’s current share price. Meanwhile Amazon Web Services (AWS) continues to deliver strong, profitable growth, ahead of our base case.
To describe our perspectives on Amazon we are reminded of the opening line in A Tale of Two Cities by Charles Dickens – “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…”. In our tale, one city is Amazon Web Services (AWS), while the other is everything else, which we will refer to as Retail and Other…” (Click here to read the full text)
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