At the end of July we identified 10 stocks that insiders were piling into and shared it with our subscribers. In this article we are going to revisit our July 2022 thesis in each stock and report each stock’s performance. These stocks outperformed the market by an average of 1 percentage point since then. Here is how we saw the investment landscape 3.5 months ago:
Record inflation and rising interest rates contributed to a 0.9% contraction in the United States (US) economy during the second quarter of 2022, per data recently released by the Department of Commerce. The advance estimate, made by the Bureau of Economic Analysis, is slightly below the 1.6% contraction in the economy registered in the first quarter of the year. However, the second straight quarter of decline indicates that the markets are already in a recession, per a technical definition of the word not followed by policymakers in the US.
Prominent stocks like Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA) are all trading lower as the market digests the news. Sal Guatieri, a senior economist at BMO Capital Markets, recently told investors in a research note that “four-decade high inflation, rapidly rising borrowing costs, and a general tightening in financial conditions” were the prime factors behind the slowing economy. Per the economist, the US economy was now “highly vulnerable to slipping into a recession”.
Mark Zandi, the chief economist at Moody’s Analytics, is of the view that the economy is slowing but not in a recession yet. In the US, the National Bureau of Economic Research declares if the economy is in a recession by relying on a determination by a group of researchers that weigh a broad range of factors. However, it may be months before the bureau makes a judgment on the April-June quarter of 2022. Insiders are using the panic at the markets, which has resulted in a broad correction in the value of equities, to identify buying opportunities.
Our Methodology
The companies that saw an increase in the number of hedge fund holders in the first quarter of 2022, compared to data for the fourth quarter of 2021, and witnessed a more than 20% drop in their share price year-to-date were selected for the list. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Source: pexels
Insiders Are Buying the Dip on These Stocks
10. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders in Q1 2022: 83
Number of Hedge Fund Holders in Q4 2021: 69
Decrease in Share Price Year-to-Date (through July 26th): 40.22%
Return since July 26th: -14.9%
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor firm. On July 27, the United States Senate passed the CHIPS Act, a bill that would give the chip industry in the country $52 billion in subsidies for domestic production and tax incentives of around $24 billion over the next ten years. The moves are part of a larger plan by the government to boost domestic chip firms to decrease reliance on Chinese companies. $200 billion for chip research are also included in the legislation.
On July 20, Deutsche Bank analyst Ross Seymore maintained a Hold rating on Advanced Micro Devices, Inc. (NASDAQ:AMD) stock and lowered the price target to $85 from $115, noting that investors were waiting for a widespread deck-clearing guide-down in semi stocks.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Advanced Micro Devices, Inc. (NASDAQ:AMD) with 15.2 million shares worth more than $1.6 billion.
Just like Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the stocks that hedge funds are buying.
In its Q4 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Advanced Micro Devices, Inc. (NASDAQ:AMD) was one of them. Here is what the fund said:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of Advanced Micro Devices, Inc. (NASDAQ:AMD) and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
9. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders in Q1 2022: 87
Number of Hedge Fund Holders in Q4 2021: 74
Decrease in Share Price Year-to-Date (through July 26th): 43.08%
Return since July 26th: 10.8%
Workday, Inc. (NASDAQ:WDAY) markets enterprise cloud applications and is headquartered in California. On July 13, the company announced that it had achieved FedRAMP Authorized status. The status, at the moderate security impact level, was granted by the Federal Risk and Authorization Management Program for the cloud services of the firm. The status will allow a range of government organizations in the US to address their workforce needs via Workday Cloud and keep pace with regulations.
On July 18, Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Workday, Inc. (NASDAQ:WDAY) stock and lowered the price target to $175 from $230, noting that software stocks were not all immune to recession fears.
At the end of the first quarter of 2022, 87 hedge funds in the database of Insider Monkey held stakes worth $7 billion in Workday, Inc. (NASDAQ:WDAY), up from 74 in the previous quarter worth $7.1 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Workday, Inc. (NASDAQ:WDAY) was one of them. Here is what the fund said:
“We believe the weakness created an opportunity for us to add to an exceptionally high-quality payments franchise with an attractive growth and free cash flow profile and little credit or interest rate exposure. It also supported our efforts to maintain diversified IT exposure in a narrowing market; additions to our software-as-aservice (SaaS) holding Workday, Inc. (NASDAQ:WDAY) during the quarter also bolstered this diversification, in which we seek to balance exposure to more widely owned mega cap names…”
8. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders in Q1 2022: 88
Number of Hedge Fund Holders in Q4 2021: 82
Decrease in Share Price Year-to-Date (through July 26th): 43.90%
Return since July 26th: 5.6%
Expedia Group, Inc. (NASDAQ:EXPE) operates as an online travel firm. The stock has been given a boost in the past few days after Li Keqiang, the Chinese premier, told the World Economic Forum that the country would continue to pursue reopening policies, including the resumption of international travel, after over a year of virus restrictions. Consumer spending numbers, despite inflationary concerns, also remain high, per Bank of America, with credit and debit card spending rising 11% in June.
On July 14, Truist analyst Naved Khan maintained a Buy rating on Expedia Group, Inc. (NASDAQ: EXPE) stock and lowered the price target to $185 from $240, noting that the near term outlook for the industry was strong despite stronger dollar values.
At the end of the first quarter of 2022, 88 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Expedia Group, Inc. (NASDAQ:EXPE), up from 82 in the previous quarter worth $7.4 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.”
7. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders in Q1 2022: 97
Number of Hedge Fund Holders in Q4 2021: 79
Decrease in Share Price Year-to-Date (through July 26th): 21.73%
Return since July 26th: 0.0%
S&P Global Inc. (NYSE:SPGI) provides credit ratings, benchmarks, and analytics. The company has an impressive divideind profile, stretching back close to five decades. In the past seventeen years, these payouts have registered consistent growth. The sector median for both these numbers is 13 years and 2 years, attesting to the quality business model of S&P Global. On June 23, the company declared a quarterly dividend of $0.85 per share, in line with previous. The forward yield was 1.05%. The dividend is payable to shareholders by mid-September.
On July 12, Raymond James analyst Patrick O’Shaughnessy maintained an Outperform rating on S&P Global Inc. (NYSE:SPGI) stock and lowered the price target to $417 from $462, predicting that the equity market declines would weigh on the indices revenue of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Cantillon Capital Management is a leading shareholder in S&P Global Inc. (NYSE:SPGI) with 2.1 million shares worth more than $879 million.
In its Q1 2022 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and S&P Global Inc. (NYSE:SPGI) was one of them. Here is what the fund said:
“This quarter, S&P Global Inc. (NYSE:SPGI) announced the successful completion of its acquisition of IHS Markit. The deal makes S&P a global leader across the information services industry. The Fund has been long term shareholders of S&P Global Inc. (NYSE:SPGI), building a position back in 2015 when the organisation was still named McGraw-Hill Financial. We saw the initial opportunity as it refocused the business from a publishing and financial conglomerate towards its core data and financial assets. S&P’s credit ratings, benchmarks and analytics businesses in global capital and commodity markets carry leading positions, defensible offerings, consistent growth and high margins – as true today as it was seven years ago. With the increased focus management have applied over a lengthy period we see improved revenue growth, margins and cash flows…” (Click here to see the full text)
6. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders in Q1 2022: 99
Number of Hedge Fund Holders in Q4 2021: 92
Decrease in Share Price Year-to-Date (through July 26th): 23.72%
Return since July 26th: 12.5%
Booking Holdings Inc. (NASDAQ:BKNG) provides online reservation services. In early May, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $3.90 and a revenue of $2.7 billion. The revenue was up more than 136% compared to the revenue over the same period last year and beat analyst expectations by $170 million. The firm revealed that room nights booked in the first quarter of 2022 had more than doubled from the same period last year.
On July 14, Truist analyst Naved Khan maintained a Buy rating on Booking Holdings Inc. (NASDAQ:BKNG) stock and lowered the price target to $2,600 from $3,000, noting that the travel sector faced risks in the coming months from recession fears.
At the end of the first quarter of 2022, 99 hedge funds in the database of Insider Monkey held stakes worth $7.5 billion in Booking Holdings Inc. (NASDAQ:BKNG), compared to 92 in the previous quarter worth $7.7 billion.
Along with Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), Booking Holdings Inc. (NASDAQ:BKNG) is one of the stocks that elite investors have on their radar.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Booking Holdings Inc. (NASDAQ:BKNG) was one of them. Here is what the fund said:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year, for example, in positioning the portfolio to benefit from a flush consumer eager to return to spending and traveling. New positions included Booking Holdings Inc. (NASDAQ:BKNG), an online travel agency with industry-leading margins and a dominant footprint in Europe.”
Click to continue reading and see Insiders Are Buying the Dip on These 5 Stocks.
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Disclosure. None. Insiders Are Buying the Dip on These 10 Stocks is originally published on Insider Monkey.
