In this article, we will take a look at the Jim Cramer recommends selling these 5 stocks. To see more such companies, go directly to Jim Cramer Recommends Selling These 10 Stocks.
5. Iridium Communications Inc.(NASDAQ:IRDM)
Number of Hedge Fund Holders: 34
Last month, Jim Cramer said in his program on CNBC that previously Iridium Communications Inc. (NASDAQ:IRDM) was making money but the stock is now turning out to be a money loser. Cramer has repeatedly said in his program that he is not recommending stocks that are not making money. He repeated the same mantra about Iridium Communications Inc. (NASDAQ:IRDM). Iridium Communications Inc. (NASDAQ:IRDM) stock recently fell after Qualcomm and Iridium ended their satellite feature deal. Iridium Communications Inc. (NASDAQ:IRDM) also posted weak Q3 results in October, missing estimates on both revenue and earnings.
GAAP EPS in the quarter came in at -$0.01, missing estimates by $0.04. Revenue in the quarter jumped 7.4% year over year to $197.6 million, missing estimates by $2.64 million. Operational EBITDA for the third quarter came in at $121.3 million, as compared to $107.8 million for the prior-year period.
Iridium Communications Inc. (NASDAQ:IRDM) talked about its future expectations in Q3 earnings call and said:
“While down from 2022, we expect 2023 equipment sales to remain above normalized historical levels and now expect this year to be the second highest on record. Going forward, we expect equipment sales to moderate to be more in line with historical averages. This is consistent with our comments at our recent Investor Day. Engineering and support revenue was $25.2 million in the third quarter as compared to $17.1 million in the prior year period. The increase reflects ongoing work for the U.S. government related to the Space Development Agency contract that we won last year. We continue to expect engineering revenue will be up significantly this year, but will fluctuate from quarter to quarter based upon execution and milestone achievements. Based upon our results through the third quarter and trends we’re seeing into October, we’re updating our full year guidance for service revenue growth to approximately 10% in 2023 and operational EBIDTA to between $460 million and $465 million.”
Read the full earnings call transcript here.
Here is what Baron Focused Growth Fund has to say about Iridium Communications Inc. (NASDAQ:IRDM) in its Q1 2023 investor letter:
“Iridium, a leading mobile voice and data communications services vendor offering global coverage via satellite, increased 20.8% and added 99 bps to performance in the quarter. The stock outperformed as the company’s revenue growth accelerated, leading to strong profitability and cash flow, which the company used to buy back its stock. The company continues to benefit from its $3 billion investment in its satellite constellation, which is a technologically and capital-intensive effort and a strong barrier to entry. Iridium continues to generate consistent and growing revenue and cash flow, which should lead to a return of capital to shareholders for at least the next 10 years. That is since its satellites last longer than its competitors’ satellites, and they offer stronger broadband given their low-Earth orbit positioning.”
2. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Number of Hedge Fund Holders: 33
Jim Cramer in October made bearish comments about Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR). Cramer said that Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) has “run too much for me, even though it sells at six times earnings.”
Earlier this month Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) posted Q3 results. Net income in the quarter came in at $5.46 billion. Revenue in the period fell 21.2% year over year to $25.55 billion, missing estimates by $410 million.
3. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 53
In September 2023, while answering a call during his Lighting Round segment on CNBC, Jim Cramer said that Verizon Communications Inc. (NYSE:VZ) is “dead money.” In August Cramer had said that Verizon Communications Inc. (NYSE:VZ) stock was going “nowhere.”
“Verizon to me has lost its way, I don’t think its management is very crisp anymore, and I don’t care where you bought it, I care where it’s going, and I think it’s going nowhere.”
As of the end of the second quarter of 2023, 53 hedge funds tracked by Insider Monkey had stakes in Verizon. The biggest stakeholder of the company was Ric Dillon’s Diamond Hill Capital which owns a $250 million stake in the company.
Ariel Global Fund made the following comment about Verizon Communications Inc. (NYSE:VZ) in its Q2 2023 investor letter:
“Global communications and technology leader, Verizon Communications Inc. (NYSE:VZ), also weighed on performance in the period on mixed earnings results. Consolidated revenues came in slightly below expectations, EBITDA was in-line and management reiterated full year 2023 guidance. Although share price action has been weak, we find the company valuation to be compelling and the approximately 7% dividend yield to be both stable and secure. We view Verizon as one of the best positioned telecoms in the world. Looking forward, we expect the free cash flow to grow significantly in the years ahead as Verizon moves past the secular peak in 5G capital spending.”
2. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 56
In August, during his program on CNBC, Jim Cramer said that he believes AT&T Inc. (NYSE:T) is a “horrendous” stock. He reiterated these extremely bearish views on AT&T Inc. (NYSE:T) in a latest program when he said:
“I don’t like AT&T…The answer is no thank you.”
AT&T Inc. (NYSE:T) shares have lost about 16% year to date through November 11.
As of the end of the second quarter of 2023, 56 hedge funds tracked by Insider Monkey had stakes in AT&T Inc. (NYSE:T). The most significant stakeholder of AT&T Inc. (NYSE:T) during this period was D. E. Shaw which had a $256 million stake in the company.
Miller Value Income Strategy made the following comment about AT&T Inc. (NYSE:T) in its Q3 2023 investor letter:
“Our third-largest holding at quarter end was AT&T Inc. (NYSE:T), a leading provider of communications and connectivity services in the US. At $15/share, the stock trades at the same price it did almost thirty years ago. The share price is much less interesting to us in relation to where it has traded in the past than in relation to how much cash the company generates and what management is doing with it. At just over 6x earnings, the stock trades near its lowest price-to-earnings (P/E) multiple ever, also representing close to its largest-ever P/E discount to the stock market. The business converts most of its earnings to free cash flow, implying a forward free cash flow yield north of 15%. Just under half of free cash flow is going toward the dividend (7.5% yield), while much of the balance is going to debt paydown. In other words, if the stock does not fall below its lowest-ever valuation, investors clip a rock-solid 7.5% in cash, while owning a growing portion of a very steady business as management reduces debt outstanding. A discounted cash flow model will suggest that intrinsic value for shares begins with a “2,” suggesting the stock is undervalued on an absolute basis. The lack of volatility in the underlying fundamentals also makes it unique when compared to many other things we own, which reduces the probability of permanent capital impairment and argues for a significant weight in the portfolio.
AT&T looks particularly attractive when compared to some of the larger names dominating the S&P 500. Compare the stock to Apple, for instance, whose revenues and profits are likely to shrink this year, even as it trades at 29x this year’s earnings estimate. The ongoing return to rationality and capital accountability, along with extreme valuations in the megacap tech stocks, have us more excited about our portfolio’s prospects than we can remember for quite some time. As always, we remain the largest investors and welcome any questions or comments.”
1. Seagen Inc. (NASDAQ:SGEN)
Number of Hedge Fund Holders: 66
Jim Cramer on November 3 categorically recommended his viewers to sell biotech company Seagen Inc. (NASDAQ:SGEN)’s stock. Here’s is what Cramer had said:
“I want you to sell the stock on Monday. I don’t trust the FTC, and you’ve made all the big money already.”
Cramer was referring to Pfizer’s $43 billion planned acquisition of Seagen Inc. (NASDAQ:SGEN) which is still under scrutiny by the FTC.
Earlier this month Seagen Inc. (NASDAQ:SGEN) posted Q3 results. GAAP EPS in the quarter came in at -$1.15, missing estimates by $0.37. Revenue in the period jumped 11.9% year over year to $571 million, missing estimates by $64.1 million.
Carillon Eagle Mid Cap Growth Fund made the following comment about Seagen Inc. (NASDAQ:SGEN) in its Q1 2023 investor letter:
“Seagen Inc. (NASDAQ:SGEN) is a biotechnology company that develops and commercializes monoclonal antibody-based therapies to treat cancer. During the quarter, a major pharmaceutical company announced plans to buy Seagen for a sizeable premium. The transaction is expected to close late this year or early next year.”
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