In this article, we discuss 10 stocks that Cliff Asness is selling. If you want to skip our detailed analysis of Asness’ history, hedge fund performance, and investment philosophy, go directly to Cliff Asness Is Selling These 5 Stocks.
Cliff Asness co-founded AQR Capital Management in 1998, which is a Connecticut-based hedge fund that manages money for institutional investors and financial advisors, investing in both traditional and alternative assets. The Q4 portfolio of AQR Capital Management is worth over $55 billion, up from roughly $54 billion in the prior quarter.
After graduating from the University of Pennsylvania with a bachelor’s in computer science and finance in 1988, Asness went on to complete his PhD in finance at the University of Chicago in 1994. Cliff Asness worked at Goldman Sachs Asset Management while pursuing his PhD, before starting his own hedge fund in 1998, alongside David Kabiller, John Liew, and Robert Krail.
AQR Capital Management is a quantitative hedge fund that invests mainly in the information technology, industrials, healthcare, finance, consumer staples, consumer discretionary, and communications sectors, with a top ten holdings concentration of 17.05%.
The hedge fund’s top buys for Q4 2021 were Tesla, Inc. (NASDAQ:TSLA), Pfizer Inc. (NYSE:PFE), and Chevron Corporation (NYSE:CVX), whereas, AQR Capital Management reduced holdings in Meta Platforms, Inc. (NASDAQ:FB), Target Corporation (NYSE:TGT), and Verizon Communications Inc. (NYSE:VZ).
The most notable stocks in the fourth quarter portfolio of Cliff Asness’ AQR Capital Management included Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), among others discussed in detail below.
Our Methodology
We used the Q4 2021 portfolio of Cliff Asness’ AQR Capital Management for this analysis, selecting the 10 most popular stocks that the hedge fund discarded in the period. We have ranked the securities according to the hedge fund sentiment around the holdings.
Cliff Asness of AQR Capital Management
Cliff Asness Is Selling These Stocks
10. Workhorse Group Inc. (NASDAQ:WKHS)
Number of Hedge Fund Holders: 11
Workhorse Group Inc. (NASDAQ:WKHS) is an Ohio-based company that manufactures equipment, technology, electric vehicles, and delivery drones for the transportation, automotive, and aerospace industries.
Cliff Asness’ fund purchased a stake in Workhorse Group Inc. (NASDAQ:WKHS) in Q3 2020, and by the third quarter of 2021, AQR Capital Management held 76,874 shares of the company, worth $588,000. The hedge fund sold out of its Workhorse Group Inc. (NASDAQ:WKHS) stake completely in Q4 2021.
On February 8, B. Riley analyst Christopher Souther lowered the price target on Workhorse Group Inc. (NASDAQ:WKHS) to $7 from $13 and kept a Buy rating on the shares. The analyst recommends taking advantage of the weakness around “short-term disruptions” for individual sustainable energy companies or the sector overall, “provided the volatility hasn’t impacted the longer-term growth thesis”. However, the lowered price targets across the sector reflect multiple compression.
According to the Q3 database of Insider Monkey, 11 hedge funds were bullish on Workhorse Group Inc. (NASDAQ:WKHS), down from 13 funds in the quarter earlier. Sculptor Capital held a prominent stake in Workhorse Group Inc. (NASDAQ:WKHS) in Q3 2021, with 784,200 shares worth roughly $6 million.
Cliff Asness held significant stakes in Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), but he chose to unload shares of Workhorse Group Inc. (NASDAQ:WKHS) in Q4 2021.
9. TAL Education Group (NYSE:TAL)
Number of Hedge Fund Holders: 16
Based in Beijing, China, TAL Education Group (NYSE:TAL) offers after-school tutoring, educational consultancy, and standardized preparatory tests. AQR Capital Management started building its position in TAL Education Group (NYSE:TAL) in Q1 2017, and by the third quarter of 2021, the hedge fund held 34,233 shares worth $133,000. After dumping shares of TAL Education Group (NYSE:TAL) steadily over time, the fund discarded its stake entirely in Q4 2021.
Morgan Stanley analyst Sheng Zhong on January 9 downgraded TAL Education Group (NYSE:TAL) to Underweight from Equal Weight with a price target of $3.50, down from $5.40. In view of the risk regarding Chinese companies listed in the United States, the analyst applies a 20% discount to TAL Education Group (NYSE:TAL)’s sum-of-the-parts value, and expects regulation in China to remain an overhang on senior academic tutoring and test prep vocational tutoring in 2022.
Among the hedge funds monitored by Insider Monkey in the third quarter of 2021, 16 funds were bullish on TAL Education Group (NYSE:TAL), with stakes worth $201.1 million, as compared to 27 funds in the prior quarter, holding stakes in TAL Education Group (NYSE:TAL) worth $606.6 million. Yiheng Capital is the leading TAL Education Group (NYSE:TAL) stakeholder as of Q3 2021, with 14.3 million shares worth $69.47 million.
Here is what Tao Value has to say about TAL Education Group (NYSE:TAL) in its Q3 2021 investor letter:
“On the other hand, TAL Education (TAL)’s value is largely destroyed by the policy officially released on 7/24/2021, which essentially outlawed for-profit curriculum-related after school tutoring (which is TAL’s main business). It is a hard lesson learned here that government related risk is a substantial one, especially for Chinese businesses.”
8. Leggett & Platt, Incorporated (NYSE:LEG)
Number of Hedge Fund Holders: 16
Leggett & Platt, Incorporated (NYSE:LEG) is a manufacturer of residential bedding, furniture, automotive seating, and industrial materials for businesses and wholesalers.
AQR Capital Management is a long-time shareholder of Leggett & Platt, Incorporated (NYSE:LEG), first buying shares of the company in Q4 2010. The hedge fund sold out of its position in Leggett & Platt, Incorporated (NYSE:LEG) once in Q2 2018, before buying back shares in Q4 2019. In the third quarter of 2021, Cliff Asness’ fund owned 6,664 shares of the company, worth $299,000, which it discarded entirely in Q4 2021.
In its Q4 earnings report, published on February 7, Leggett & Platt, Incorporated (NYSE:LEG) posted an EPS of $0.77, beating estimates by $0.04. Revenue over the period jumped 12.77% year-over-year to $1.33 billion, outperforming estimates by $47.39 million.
Raymond James analyst Bobby Griffin on February 9 lowered the price target on Leggett & Platt, Incorporated (NYSE:LEG) to $50 from $55 and kept an Outperform rating on the shares, reflecting lower near-term earnings driven by volume pressure in the bedding and automotive businesses.
On November 9, Leggett & Platt, Incorporated (NYSE:LEG) declared a $0.42 per share quarterly dividend, a 5% increase from its prior dividend of $0.40, which was paid on January 14.
A total of 16 hedge funds held long positions in Leggett & Platt, Incorporated (NYSE:LEG) in Q3 2021, up from 14 funds in the quarter earlier. Balyasny Asset Management is the largest Leggett & Platt, Incorporated (NYSE:LEG) shareholder, with a $10.3 million position in the company as of September 2021.
7. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 17
Bed Bath & Beyond Inc. (NASDAQ:BBBY) is a New Jersey-based retail chain that sells home furnishings and domestic merchandise, serving customers across the United States, Mexico, Canada, and Puerto Rico.
Cliff Asness has held a stake in Bed Bath & Beyond Inc. (NASDAQ:BBBY) since Q4 2010, and in the third quarter of 2021, the billionaire owned 35,200 shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY), worth $608,000. After gradually decreasing his stake in the company for the last few quarters, Cliff Asness disposed of the stock entirely in Q4 2021.
Argus analyst Chris Graja on January 11 kept a Hold rating and also lowered his FY22 EPS view on Bed Bath & Beyond Inc. (NASDAQ:BBBY) after the company’s Q3 earnings miss and lowered guidance. According to the analyst, while Bed Bath & Beyond Inc. (NASDAQ:BBBY)’s performance improved in November, the quarter was weaker than hoped.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 17 funds were bullish on Bed Bath & Beyond Inc. (NASDAQ:BBBY), with stakes worth $122.1 million, as compared to 21 funds in the quarter earlier, holding stakes in Bed Bath & Beyond Inc. (NASDAQ:BBBY) worth $363.6 million. Arrowstreet Capital held a $46.3 million position in the company in the third quarter, and is one of the prominent stakeholders of the company.
Here is what Miller Value Partners has to say about Bed Bath & Beyond Inc. (NASDAQ:BBBY) in its Q3 2021 investor letter:
“Our largest laggard during the quarter was Bed Bath & Beyond (BBBY). As we have highlighted previously, not all transformations are linear and there is always the potential for a short-term pullback in executing the plan. We expect the operational pause will lead to marketplace skepticism and question the success of the long-term plan. The company has had some near-term challenges from weaker store traffic related to Covid-19 delta variant’s impact along with rising supply chain and transportation costs. However, we disagree with the marketplace view that these headwinds will continue to overwhelm the significant ongoing improvements that management is making to the core operations. We very much like the new CEO and his additions to his management team – strong executives with significant transformation experience. As the new initiatives further rollout over the coming quarters, we expect to see further improvement in future operating trends. Management is in the process of rolling out 8-10 owned brands, which should drive margin expansion and dramatically enhance the overall business model. Store brands are 1,000 basis points higher gross margin than national brands, and as they move from 10% to 30% of sales, they should become a significant positive profit contributor and help management achieve their long-term gross margin target of 38%. Bed Bath also continues to have a very strong balance sheet ($10/share in cash), and has been using non-core asset sales to complete a very accretive share buyback program (likely greater than 20% of the float by year-end). With the recent pullback, we see some similarities to GameStop early in their turnaround as the company aggressively reduced their shares outstanding (>30%) ahead of revenue stability and profit improvement. We believe success on Bed Bath’s transformation plan should see profits double over the next couple of years and should lead to significantly higher normalized earnings and free cash flow per share. At an enterprise value to revenue under .2x, we believe Bed Bath remains at a significant discount to its intrinsic value.”
6. Groupon, Inc. (NASDAQ:GRPN)
Number of Hedge Fund Holders: 18
Groupon, Inc. (NASDAQ:GRPN) is a Chicago-based global e-commerce marketplace that connects users with local vendors by offering coupons, vouchers, and fun activities. Cliff Asness purchased a stake in Groupon, Inc. (NASDAQ:GRPN) in Q2 2020, and in Q3 2021, he owned 9,103 shares of the company, worth $208,000. Asness sold out of his position entirely in Q4 2021.
On December 23, Ascendiant analyst Edward Woo lowered the price target on Groupon, Inc. (NASDAQ:GRPN) to $35 from $40 and kept a Buy rating on the shares. The company reported strong Q3 earnings but “mixed” new 2021 guidance, the analyst told investors in a research note. He sees a favorable risk/reward at current share levels.
According to the third quarter database of Insider Monkey, 18 hedge funds were long Groupon, Inc. (NASDAQ:GRPN), down from 28 funds in the preceding quarter. The largest Groupon, Inc. (NASDAQ:GRPN) stakeholder as of Q3 2021 is PAR Capital Management, with 2.78 million shares worth $63.4 million.
Cliff Asness was bearish on Groupon, Inc. (NASDAQ:GRPN) in Q4 2021, but he held long positions in Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
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Disclosure: None. Cliff Asness Is Selling These 10 Stocks is originally published on Insider Monkey.
