In this article, we discuss the 10 stocks that Jim Cramer says you should sell. If you want to read about some more stocks that Cramer is bearish on, go directly to Jim Cramer Says You Should Sell These 5 Stocks.
The finance world is abuzz with news that Tesla, Inc. (NASDAQ:TSLA) founder Elon Musk has made a proposal to buy social networking platform Twitter, Inc. (NYSE:TWTR) in a deal that values the firm at around $43 billion. This equates to almost $54.20 per share for the firm, per a securities filing by Musk that he shared on his Twitter profile as well. On April 14, Jim Cramer, a former hedge fund manager and the host of Mad Money on CNBC shared his thoughts on the matter, noting that Musk had put the Twitter board in a position where they would reject the offer.
Cramer, who has built an impressive retail investor following in the past few years, was of the opinion that the board of directors at Twitter, Inc. (NYSE:TWTR) had “no choice” but to reject the Musk offer because if they accepted it, it would be akin to “phony” behavior. Cramer added that he thought that the board members were not phonies. Cramer also warned of a “personal liability” should the Twitter, Inc. (NYSE:TWTR) board accept the offer, noting that this was one of the instances where directors could be opened up for a level of lack of fiduciary that “crosses the line”.
Musk is the richest man in the world and one of the most controversial characters in the finance sector. On April 14, famous entrepreneur Mark Cuban tweeted that he thought that Musk was only offering to buy Twitter to drive up the share price and then sell his stake, something that he had done with other firms in the past. During his take on the issue, Cramer also stressed that accepting the Musk offer was not fair to Twitter, Inc. (NYSE:TWTR) shareholders. Cramer also blasted the use of the “best and final” term that was used with the offer to buy.
Apart from talking about Musk, Cramer also discussed the broader economic outlook during his show on April 14. He talked at length about sectors that were facing the worst of the storm as interest rates rose and investors exited growth firms for safer heavens. Some of the stocks that Cramer is bearish on include Meta Platforms, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), and AT&T Inc. (NYSE:T).
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 was used to identify the popularity of each stock among hedge funds.
Jim Cramer Says You Should Sell These Stocks
10. Green Brick Partners, Inc. (NYSE:GRBK)
Number of Hedge Fund Holders: 12
Green Brick Partners, Inc. (NYSE:GRBK) is a home building and land development firm. Jim Cramer discussed the stock during the Lightning Round of his show on April 14, giving it a negative mention. While answering a question related to the firm, Cramer said the stock was related to housing. He further noted that people did not want anything to do with housing equities in the present economic environment.
On March 10, JPMorgan analyst Michael Rehaut downgraded Green Brick Partners, Inc. (NYSE:GRBK) stock to Underweight from Neutral and lowered the price target to $20 from $26.50, noting that the relative valuation was “expensive” relative to his outlook for below average return on equity in 2022 and 2023.
At the end of the fourth quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $587 million in Green Brick Partners, Inc. (NYSE:GRBK), compared to 16 the preceding quarter worth $392 million.
Just like Meta Platforms, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), and AT&T Inc. (NYSE:T), Green Brick Partners, Inc. (NYSE:GRBK) is one of the stocks that hedge funds are monitoring.
In its Q1 2021 investor letter, Black Bear Value Partners, an asset management firm, highlighted a few stocks and Green Brick Partners, Inc. (NYSE:GRBK) was one of them. Here is what the fund said:
“Green Brick Partners, Inc. (NYSE:GRBK) is a residential land developer and homebuilder. Most of their operations are in Texas, Georgia, and Florida. Green Brick Partners, Inc. (NYSE:GRBK) was formerly a private partnership between Jim Brickman and entities related to Greenlight Capital (managed by David Einhorn). David is currently the Chairman of the Board.
As discussed earlier, there is a long-term fundamental supply/demand imbalance in housing inventory. This is a direct result of underproduction of new homes amid a challenging mortgage financing environment over the last 10+ years since the Great Financial Crisis. Looking forward we should have increased housing demand from millennials as they enter the family-phase of life and desire more space.
It is rare to be able to partner with an excellent operator and an excellent capital allocator. As evidenced by our investment in AutoNation, when you marry those 2 concepts you can wind up with a wonderful result. Green Brick Partners, Inc. (NYSE:GRBK) has been reinvesting their cashflow in additional lots/land inventory. This masks the earnings power of the company. The company is valued somewhere between 5-8x steady-state earnings and potentially even cheaper than that. I tend to be more conservative given the potential for rate rises and inflationary increases in development costs. We have high-quality stewards at both the operating and Board level.”
9. Editas Medicine, Inc. (NASDAQ:EDIT)
Number of Hedge Fund Holders: 21
Editas Medicine, Inc. (NASDAQ:EDIT) is a clinical-stage genome editing firm. The veteran investor brought up the stock during the Lightning Round of his show on April 11, giving it a negative mention. When asked about his views on the firm, Cramer noted that it was not wise to buy growth stocks that have no hope of making money. He went on to add that the present market conditions did not allow for this kind of buying.
On February 25, SVB Leerink analyst Rick Bienkowski maintained a Market Perform rating on Editas Medicine, Inc. (NASDAQ:EDIT) stock and lowered the price target to $27 from $41. Other advisors like Barclays and Chardan have also lowered their targets on the stock recently.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Editas Medicine, Inc. (NASDAQ:EDIT) with 880,184 shares worth more than $23 million.
8. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 24
Virgin Galactic Holdings, Inc. (NYSE:SPCE) is a space flight firm. The former hedge fund manager gave his analysis of the outlook for the space flight firm during the Lightning Round segment of his show on April 14. Cramer said that the stock was like a “lottery ticket” and right now he was not recommending stocks that were losing a lot of money to his viewers.
On February 24, Susquehanna analyst Charles Minervino maintained a Neutral rating on Virgin Galactic Holdings, Inc. (NYSE:SPCE) stock and lowered the price target to $9 from $22, highlighting that the long road to profitability for the firm was loaded with risks and competition.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Virgin Galactic Holdings, Inc. (NYSE:SPCE) with 3.3 million shares worth more than $345 million.
7. Monday.com Ltd. (NASDAQ:MNDY)
Number of Hedge Fund Holders: 25
Monday.com Ltd. (NASDAQ:MNDY) is a systems software firm. Cramer was bearish on the stock during the Lightning Round of his show on April 12. While fielding a query about the company, the journalist investor said that the firm was losing a lot of money so he would not recommend buying the stock.
On February 24, Needham analyst Scott Berg kept a Buy rating on Monday.com Ltd. (NASDAQ:MNDY) stock and lowered the price target to $230 from $420, noting that multiple compressions across the software sector were one of the main reasons behind the lowered target.
At the end of the fourth quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $821 million in Monday.com Ltd. (NASDAQ:MNDY), compared to 17 in the preceding quarter worth $495 million.
6. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 31
Sunrun Inc. (NASDAQ:RUN) markets residential solar energy systems. Cramer gave the stock a Sell rating during the Lightning Round of his show on April 12. Answering a question on the company, Cramer said he would rather own Tesla, Inc. (NASDAQ:TSLA) stock than Sunrun as the latter was losing a lot of money.
On March 14, Piper Sandler analyst Kashy Harrison maintained an Overweight rating on Sunrun Inc. (NASDAQ:RUN) stock and lowered the price target to $41 from $57, noting that the renewables market was now operating with uncertainties of war.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Sunrun Inc. (NASDAQ:RUN) with 7 million shares worth more than $242 million.
Along with Meta Platforms, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), and AT&T Inc. (NYSE:T), Sunrun Inc. (NASDAQ:RUN) is one of the stocks that institutional investors are flocking to.
In its Q2 2021 investor letter, Horizon Kinetics, an asset management firm, highlighted a few stocks and Sunrun Inc. (NASDAQ:RUN) was one of them. Here is what the fund said:
“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business in the table is Sunrun Inc. (NASDAQ:RUN). Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.
To start at the top of the income statement, Sunrun Inc. (NASDAQ:RUN) shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.” (Click here to see full text)
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Disclosure. None. Jim Cramer Says You Should Sell These 10 Stocks is originally published on Insider Monkey.
