In this article, we discuss the 10 stocks that Jim Cramer recommends selling in August. If you want to read about some more stocks that Jim Cramer recommends selling, go directly to Jim Cramer Recommends Selling These 5 Stocks in August.
Jim Cramer, the former hedge fund manager and present host of Mad Money on news platform CNBC, had come under fire over the past few weeks after he predicted in May that investors should take “peak inflation” into account when making decisions at the market. Cramer pointed towards bloated inventories to drive his point home, inviting ridicule from news outlets such as the Financial Times, which noted that financial indicators at that point did not back his views. However, in the weeks since, the increase in US consumer prices has started slowing down.
Prominent growth stocks that had been battered due to the rising inflation, like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), are starting to rally as well. However, the market is not out of the woods just yet. Cramer, during his recent show, has hailed peak inflation as “nirvana for stocks” like fast-growing tech plays or the financials or the consumer discretionary names. He added that “peaking inflation could help lift stocks even during an economic slowdown”.
Cramer has discussed the performance of some COVID-winners at the market as well, which have, in his view, shown their “strength and resilience” in the face of tough conditions and recommended that investors stick with these stocks. The journalist investor has also highlighted the stocks he thinks will not benefit from the new developments. Cramer thinks that “inflation is not yet tame, but it is tamer” and this can break the old pattern of the market tumbling the day after any rally” as the confidence comes back.
Our Methodology
These were picked keeping in mind the latest calls that Cramer made on these equities on his Mad Money show aired by news platform CNBC. An extensive database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the popularity of each stock among hedge funds.
Jim Cramer Recommends Selling These Stocks in August
10. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 100
Alibaba Group Holding Limited (NYSE:BABA) is a diversified technology company. During the Lightning Round of his show on August 9, in response to a viewer question about his views on Alibaba Group Holding Limited (NYSE:BABA), Cramer explicitly underlined that he was not recommending any Chinese stocks in the present market environment. Cramer even went as far as to say that he had “had it” with Chinese stocks because “they break your heart too many times”. The comments served to highlight his bearish call on the stock.
On August 8, Deutsche Bank analyst Leo Chiang maintained a Buy rating on Alibaba Group Holding Limited (NYSE:BABA) stock and raised the price target to $160 from $155, noting that a faster than expected narrowing of losses in new initiatives helped the firm with an earnings beat.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA), with 14.4 million shares worth more than $1.5 billion.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), Alibaba Group Holding Limited (NYSE:BABA) is one of the stocks that elite investors are monitoring.
In its Q1 2022 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“We took advantage of price volatility to add to three of our most heavily discounted European businesses, including new purchases in 4Q 2021 and we reinitiated a position in Alibaba Group Holding Limited (NYSE:BABA), as the shares became even more heavily discounted amid broad China volatility in the period.”
9. Dropbox, Inc. (NASDAQ:DBX)
Number of Hedge Fund Holders: 44
Dropbox, Inc. (NASDAQ:DBX) owns and runs a content collaboration platform. Cramer gave the stock a Sell recommendation during the Lightning Round of his show on August 9. In response to a viewer question about the content platform, the journalist investor claimed that “nothing happens to the stock” and quickly clarified that it was not a good thing and he would recommend that investors “pass” the option of buying the shares.
In late May, Jefferies analyst Brent Thill maintained a Buy rating on Dropbox, Inc. (NASDAQ:DBX) stock and lowered the price target to $30 from $35, noting that the firm was facing macro headwinds along with the rest of the software sector.
At the end of the first quarter of 2022, 44 hedge funds in the database of Insider Monkey held stakes worth $814 million in Dropbox, Inc. (NASDAQ:DBX), the same as in the preceding quarter worth $843 million.
In its Q3 2021 investor letter, RGA Investment Advisors LLC, an asset management firm, highlighted a few stocks and Dropbox, Inc. (NASDAQ:DBX) was one of them. Here is what the fund said:
“Dropbox really let us down this quarter, not because they did anything wrong, but because during our entire tenure holding this stock, it outperformed in periods where long duration assets (aka higher growth) sold off. This time it did not. Despite people asserting this market bifurcation is about selling growth and buying value, Dropbox shares suffered one of their worst stock market quarters in recent years. It’s hard to identify a specific reason, though one story out there is how some investors thought the company could raise the bar on its 30% targeted operating margin upon achieving those levels. Along with the company’s earnings report, instead of raising the bar, they explained how there is more room to drive margin, but in the mean-time the preference at the company is for investing the potential excesses to drive further growth.
This year, the company will have repurchased nearly 9% of its diluted shares outstanding (perhaps more given the Q4 route in shares) and will have delivered a free cash flow yield upwards of 7.5% on its year-end stock price, while growing upwards of 12%. This is a potent recipe for outstanding returns, yet in a market that’s theoretically seeking cash flow, the stock was punished. We think this is one of the most nonsensical moves of them all and find Dropbox to be an especially compelling opportunity heading into 2022. The top line is certainly growing, as the company continues to withstand competition from Microsoft, Google and Box. Plus management continues to make smart tuck-in acquisition, showing what may emerge as a scalable, repeatable recipe for deepening their relationship with existing customers, thus driving down churn and setting the stage for prolonged ARPU growth. This potential strategy started with HelloSign, and is further validated with the acquisition of DocSend…” (Click here to see the full text)
8. MannKind Corporation (NASDAQ:MNKD)
Number of Hedge Fund Holders: 19
MannKind Corporation (NASDAQ:MNKD) operates as a biopharmaceutical firm. On August 3, Cramer discussed his stance on the company during the Lighting Round of his show. While responding to a viewer question, the former hedge fund manager said that “no one ever likes me to say anything bad about MannKind” and questioned what would happen if the firm was “not a good company”. He added that it mattered to him and he would recommend selling the stock.
MannKind Corporation (NASDAQ:MNKD) posted earnings for the second quarter of 2022 on August 9, reporting losses per share of $0.11, missing market estimates by $0.02. The revenue over the period was $18.8 million, down close to 19% year-on-year.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $61 million in MannKind Corporation (NASDAQ:MNKD), compared to 12 in the previous quarter worth $58 million.
7. Canoo Inc. (NASDAQ:GOEV)
Number of Hedge Fund Holders: 19
Canoo Inc. (NASDAQ:GOEV) is a California-based company that makes and sells consumer and commercial electric vehicles. Cramer gave the stock a Sell recommendation during the Lightning Round of his show in early August. In response to a viewer question about the firm, the former Goldman Sachs money manager said that electric vehicles stocks were just losing money, noting that Canoo was one of them and he was “just done with stocks that lose money”, especially in the present marketplace.
On August 9, Roth Capital analyst Craig Irwin downgraded Canoo Inc. (NASDAQ:GOEV) stock to Neutral from Buy and lowered the price target to $3.5 from $7, noting that the firm had posted a wider than expected loss in the second quarter.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $9 million in Canoo Inc. (NASDAQ:GOEV), compared to 18 in the previous quarter worth $29 million.
6. 23andMe Holding Co. (NASDAQ:ME)
Number of Hedge Fund Holders: 19
23andMe Holding Co. (NASDAQ:ME) is a consumer genetics testing company. During the Lightning Round of his show on August 9, Cramer outlined his bearish outlook on the stock in response to a viewer question about the firm. Cramer noted that he even had the CEO of the company on his show and he told him the same thing, that the stock “had no mojo”. He clarified that this was a tactical term used in the finance world for stocks that were going absolutely nowhere.
In late May, Citi analyst Daniel Grosslight maintained a Neutral rating on 23andMe Holding Co. (NASDAQ:ME) stock and lowered the price target to $3 from $6, noting that the firm was in a tough spot as it had no way to monetize a unique asset.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $71 million in 23andMe Holding Co. (NASDAQ:ME), compared to 13 in the previous quarter worth $32 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), 23andMe Holding Co. (NASDAQ:ME) is one of the stocks that hedge funds are keeping a close eye on.
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Disclosure. None. Jim Cramer Recommends Selling These 10 Stocks in August is originally published on Insider Monkey.
