In this article, we discuss the 4 stocks that Japanese billionaire Masayoshi Son is dumping. If you want to read our discussion on the recent losses incurred by Mr. Son and other stocks he is selling, go to “Defensive Mode”: Japanese Billionaire Masayoshi Son is Dumping These 8 Stocks.
4. Opendoor Technologies Inc. (NASDAQ:OPEN)
Number of Hedge Fund Holders: 39
Opendoor Technologies Inc. (NASDAQ:OPEN) is a California-based company that is involved in buying and selling residential real estate properties through its digital platform.
Opendoor Technologies Inc. (NASDAQ:OPEN) raised $400 million from Softbank’s Vision Fund in September 2018 and made the Japanese investment firm a minority stakeholder in the company. The stock was a bet on the North American online real estate market. Opendoor Technologies Inc. (NASDAQ:OPEN) is exposed to multiple real estate markets and intends to get a significant portion of the $2.3 trillion transaction value of the residential housing segment at the end of 2021. Presently, the contribution of digital platforms stands at only 1% of the total transaction value. However, rising interest rates and inflation have caused a significant dip in real estate transactions, which is not playing in favor of Opendoor Technologies Inc. (NASDAQ:OPEN).
Baron Funds shared its outlook on Opendoor Technologies Inc. (NASDAQ:OPEN) in its Q4 2021 investor letter. Here’s what the firm said:
“The Fund invests in secular growth and innovative businesses across all market capitalizations, with the bulk of the portfolio landing in the large-cap zone. The Fund is categorized as US Large Growth by Morningstar. As of the end of the fourth quarter, the largest market cap holding in the Fund was $2.5 trillion and the smallest was $791 million. The median market cap of the Fund was $27.5 billion. The Fund had $1.7 billion of assets under management. The Fund had investments in 63 securities. The Fund’s top 10 positions accounted for 45.4% of net assets. Fund inflows were positive for 2021.We sold Opendoor Technologies Inc. because we identified issues relating to our long-term theses in the company, and we decided to exit the positions to fund other purchases.”
As of Q2 2022, 39 hedge funds held a cumulative stake worth over $861 million in Opendoor Technologies Inc. (NASDAQ:OPEN).
3. T-Mobile US, Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 96
T-Mobile US, Inc. (NASDAQ:TMUS) is a Bellevue, Washington-based wireless network operator in the US with a headcount of over 75,000 employees.
T-Mobile US, Inc. (NASDAQ:TMUS) has been forced to reduce its employee headcount in the engineering and network divisions in a move to restructure its operations following the merger with Sprint, which closed in April 2020. The acquisition with Sprint gave Softbank a 27% stake in the merged entity. On the other hand, the stake of the parent Deutsche Telekom diluted from 62% to around 42%. However, the positive outcome of the merger and the strong performance of T-Mobile US, Inc. (NASDAQ:TMUS) has made the parent company increase its stake to more than 50% again.
During Q2 2022, Softbank reduced its stake in T-Mobile US, Inc. (NASDAQ:TMUS) by 34%, or 21.15 million shares, to 39.77 million shares only. Meanwhile, Deutsche Telekom has been able to increase its stake to 48.4% at the end of Q2 2022.
In its Q4 2021 investor letter, ClearBridge Investments shared its stance on T-Mobile US, Inc. (NASDAQ:TMUS):
“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.”
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) is an Hangzhou, China-based diversified technology.
The company has seen the ownership of Softbank fall to 14.6% during Q2 2022.
However, the decline in ownership would bring into use complex financial instruments known as “prepaid forward contracts,” which are considered a form of derivative contract. This move will dilute the ownership of Softbank without actually selling the shares. The contract will also save Softbank from putting 242 million shares in the public market and instead give these shares to financial institutions in return for the prepaid forward contracts. The deal is expected to generate $34 billion for the Japanese diversified giant.
Here’s what was said about Alibaba Group Holding Limited (NYSE:BABA) in Alger Capital’s Q2 2022 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) is a leading e-commerce and cloud computing company in China. It also serves the big data analytics, digital media and entertainment markets. Alibaba’s shares have previously suffered from concerns about heightened regulatory oversight of the Chinese internet sector by the Chinese Communist Party. additionally, many investors became concerned about the potential for U.S. exchange listed Chinese ADRs to be delisted if they failed to meet U.S financial reporting standards by 2024. The shares have since outperformed in response to statements by the Chinese government supporting stable markets and overseas listings. The Chinese government also stated that its intensified regulatory efforts aimed at tech companies may end soon. Alibaba’s first quarter earnings and revenues exceeded estimates as determined by a consensus of analysts at financial services firms and provided by FactSet. The quarterly results benefited from better direct sales and increasing marketing efficiency.”
1. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 129
Uber Technologies, Inc. (NYSE:UBER) is a San Francisco, California-based ride-hailing company that Softbank bought with an expectation that the company would pivot more towards autonomous driving. However, this did not come to fruition as Uber Technologies, Inc. (NYSE:UBER) abandoned its plans of coming up with an autonomous driving vehicle in December 2020.
Softbank initiated a position in Uber Technologies, Inc. (NYSE:UBER) in 2018 and again in 2019 to become one of the biggest shareholders in the company. In the same year, the Japanese conglomerate offloaded one-third of its stake in Uber Technologies, Inc. (NYSE:UBER). Softbank has sold the stake in Uber Technologies, Inc. (NYSE:UBER) at an average share price of $41.47. Meanwhile, the shares were bought at an average price of $34.50, resulting in Softbank generating a profit on the overall investment.
ClearBridge Investments shared its outlook on Uber Technologies, Inc. (NYSE:UBER) in its Q3 2021 investor letter:
“We have also been looking for multiyear secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber will also be a key player in the transition from internal combustion engines to EVs.”
The number of hedge funds holding a stake in Uber Technologies, Inc. (NYSE:UBER) declined from 144 in Q1 2022 to 129 in Q2 2022.
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