Legendary Value Investor Seth Klarman is Selling These 5 Stocks in 2023

In this article, we discuss the 5 stocks that legendary value investor Seth Klarman is selling in 2023. If you want to see more stocks in this selection, check out Legendary Value Investor Seth Klarman is Selling These 10 Stocks in 2023. 

5. Outbrain Inc. (NASDAQ:OB)

Percentage of Stake Sold: 100%

Number of Hedge Fund Holders: 13

Outbrain Inc. (NASDAQ:OB) operates a recommendation platform worldwide. Its product suite, called Outbrain Engage, is designed for media partners and offers data-driven recommendations to enhance user engagement. The platform provides a dashboard for managing and controlling different elements, such as content, formats, sources, frequency, and categories of ads delivered on media properties. In Q1 2023, Seth Klarman dumped the entirety of his stake in Outbrain Inc. (NASDAQ:OB), which comprised 153,231 shares worth $555,000 in the prior quarter. 

On May 9, Outbrain Inc. (NASDAQ:OB) reported a Q1 non-GAAP EPS of -$0.09 and a revenue of $231.77 million, outperforming Wall Street estimates by $0.05 and $4.8 million, respectively. 

According to Insider Monkey’s fourth quarter database, 13 hedge funds were bullish on Outbrain Inc. (NASDAQ:OB), with collective stakes worth $4.14 million. Cliff Asness’ AQR Capital Management held the biggest position in the company. 

4. Nuvation Bio Inc. (NYSE:NUVB)

Percentage of Stake Sold: 100%

Number of Hedge Fund Holders: 33

Nuvation Bio Inc. (NYSE:NUVB) is a clinical-stage biopharmaceutical company that focuses on the development of therapeutic candidates for oncology. In Q4 2022, Seth Klarman’s Baupost Group owned 4.80 million shares of the company worth $9.2 million. In the first quarter of 2023, the value investor dumped his stake in Nuvation Bio Inc. (NYSE:NUVB) completely. 

On January 6, Jefferies analyst Michael Yee downgraded Nuvation Bio Inc. (NYSE:NUVB) from  Buy to Hold, while also reducing the price target from $5 to $2. Yee considers Nuvation Bio Inc. (NYSE:NUVB) to be a “show-me” story in 2023, as the company focuses on its novel BET program and advances in its DDC platform. Despite the stock trading at a negative enterprise value, the analyst’s downgrade is based on the fact that both programs are still in their early stages and lack validated clinical data. He believes that it may take time for Nuvation Bio Inc. (NYSE:NUVB) to generate significant clinical data catalysts that add value in 2023.

According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Nuvation Bio Inc. (NYSE:NUVB), compared to 28 funds in the earlier quarter. 

3. Micron Technology, Inc. (NASDAQ:MU)

Percentage of Stake Sold: 100%

Number of Hedge Fund Holders: 74

Micron Technology, Inc. (NASDAQ:MU) specializes in the design, development, manufacturing, and sale of memory and storage products. The company is divided into four segments – Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit. In Q4 2022, Seth Klarman owned 3.28 million shares of Micron Technology, Inc. (NASDAQ:MU) worth $164.2 million. However, in Q1 2023, the investor discarded the entirety of his stake in the company. 

On May 5, Citi analyst Christopher Danely maintained a Buy rating on Micron Technology, Inc. (NASDAQ:MU) with a price target of $75. Following discussions with management, the analyst believes that despite the DRAM industry experiencing a prolonged period of low performance, the corrective measures implemented by Samsung, Hynix, and Micron should lead to a recovery starting in the second half of 2023. However, the analyst noted that visibility into the market remains limited, and Micron Technology, Inc. (NASDAQ:MU) continues to adopt a cautious approach regarding spending and utilization rates.

According to Insider Monkey’s fourth quarter database, 74 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU), and Andreas Halvorsen’s Viking Global held the biggest stake in the company. 

Here is what Claret Asset Management has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2022 investor letter:

“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party’s over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”

2. Meta Platforms, Inc. (NASDAQ:META)

Percentage of Stake Sold: 100%

Number of Hedge Fund Holders: 194

Meta Platforms, Inc. (NASDAQ:META) has been part of Seth Klarman’s portfolio since the first quarter of 2020. In Q4 2022, the legendary value investor held 1.72 million shares of Meta Platforms, Inc. (NASDAQ:META) worth nearly $208 million, representing 3.39% of the total 13F portfolio. In Q1 2023, Klarman dumped his position in the company completely. 

On May 19, Roth MKM maintained a Buy rating and set a price target of $255 for Meta Platforms, Inc. (NASDAQ:META) following their participation in the company’s AI Infra@Scale conference. According to the firm’s research note, Meta Platforms, Inc. (NASDAQ:META) showcased a specialized data center infrastructure that is specifically designed for AI applications. This infrastructure has the potential to offer improved cost-effectiveness, resulting in greater capital expenditure leverage. Roth MKM believes that while the CapEx related to infrastructure may continue to increase due to general trends in real estate investment, Meta Platforms, Inc. (NASDAQ:META)’s overall CapEx likely reached its peak in 2022 and is expected to decline year-over-year in 2023 and 2024.

According to Insider Monkey’s fourth quarter database, 194 hedge funds were bullish on Meta Platforms, Inc. (NASDAQ:META), compared to 177 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is a prominent stakeholder of the company, with a position worth over $1 billion. 

Baron Opportunity Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q1 2023 investor letter:

“We continued rebuilding our position of Meta Platforms, Inc. (NASDAQ:META), the world’s largest social network, this quarter. We believe Meta is competitively well positioned to utilize its leadership in mobile advertising and expand further with the generative AI shift, especially given its massive user base, substantial technological scale, and innovative culture. Core engagement has been strong at Meta, especially with the success of Instagram Reels, which is regaining share from TikTok. Across its platforms, Meta has 3.7 billion monthly active users. A U.S. TikTok ban would further materially benefit Meta. In terms of improving monetization, Meta has developed more effective ad targeting in the last few months with its Advantage+ product. Longer term, Meta has invested in generative AI for years and has among the world’s best and largest datasets and distribution. We believe generative AI can materially help Meta improve existing products (e.g., instantly generate personalized creative ads) and expand into new areas (e.g., through WhatsApp and Messenger chats). On the profitability front, Meta’s management is serious about cost discipline (laying off approximately 21,000 workers) and prioritizing a more efficient environment, led in earnest by CEO Mark Zuckerberg. Valuation remains relatively attractive, especially as we expect double-digit earnings per share growth, and additional growth options remain.”

1. Amazon.com, Inc. (NASDAQ:AMZN)

Percentage of Stake Sold: 100%

Number of Hedge Fund Holders: 240

Seth Klarman’s Baupost Group added Amazon.com, Inc. (NASDAQ:AMZN) to its portfolio in the second quarter of 2022. In Q4 2022, the hedge fund owned 990,000 shares of the company worth $83.16 million, representing 1.35% of the total 13F securities. In Q1 2023, Klarman relinquished his stake in Amazon.com, Inc. (NASDAQ:AMZN) entirely. 

On May 8, Loop Capital analyst Rob Sanderson maintained a Buy rating and set a price target of $140 for Amazon.com, Inc. (NASDAQ:AMZN) following the company’s Q1 financial results. In a research note to investors, the analyst acknowledged that concerns about a slowdown at AWS and uncertainties regarding the long-term impact of AI adoption on cloud vendor selection have been suppressing the stock. However, Sanderson believes that this slowdown is temporary and expects a rebound. Additionally, the analyst finds encouragement in recent feedback from industry experts and foresees a re-acceleration of growth as cost-reducing initiatives are implemented.

According to Insider Monkey’s fourth quarter database, 240 hedge funds were bullish on Amazon.com, Inc. (NASDAQ:AMZN), compared to 269 funds in the prior quarter. Harris Associates is a prominent stakeholder of the company, with 19.3 million shares worth $1.62 billion. 

Arch Capital made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2023 investor letter:

“Replacing our Wix investment is Amazon.com, Inc. (NASDAQ:AMZN), a company we are sure you have heard of before. We believe the company’s long-term growth runway, profit potential, and competitive advantages were being vastly underrated in early January when its market cap was well below $1 trillion. We think early January was one of those rare times you could buy a special business like Amazon at a discounted valuation. Our hope is that – if we are right about its competitive advantages in retail and cloud computing – our Amazon stake will end up being a permanent holding in the limited partnership.”

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