Mario Gabelli is Selling These 5 Stocks

1. Zillow Group, Inc. (NASDAQ:Z)

Number of Hedge Fund Holders: 67

Zillow Group, Inc. (NASDAQ:Z) is a Washington-based online real estate marketplace, offering services including buying, selling, renting, and financing for residential real estate establishments. 

Mario Gabelli purchased a stake in Zillow Group, Inc. (NASDAQ:Z) in Q3 2020, and by Q2 2021, he held a $232,000 position in the company, which he discarded entirely in the third quarter. 

Jefferies analyst John Colantuoni assumed coverage of Zillow Group, Inc. (NASDAQ:Z) on February 3 with a Buy rating and a price target of $75, down from $95. He believes Zillow Group, Inc. (NASDAQ:Z)’s dominant share of traffic supports a further transition to flex pricing and provides ongoing monetization opportunities, which should help drive above-market growth and attractive free cash flow.

In the third quarter of 2021, 67 hedge funds were long Zillow Group, Inc. (NASDAQ:Z), down from 76 funds in the preceding quarter. ARK Investment Management held the biggest stake in Zillow Group, Inc. (NASDAQ:Z) as of Q3 2021, with 11.2 million shares worth approximately $995 million. 

Here is what Baron Asset Fund has to say about Zillow Group, Inc. (NASDAQ:Z) in its Q4 2021 investor letter:

“Real Estate investments detracted the most from relative performance, with real estate marketplace Zillow Group, Inc. accounting for all of the weakness. Zillow unexpectedly announced that it was exiting its home buying business, as it became apparent that the company had overpaid for many homes. We were surprised and disappointed by these developments and decided to exit our position in the company.

Zillow Group, Inc. operates the leading residential real estate websites in the U.S. In 2018, Zillow entered the iBuying market through its Zillow Offers unit, which purchased and resold homes, while also providing title, escrow, and mortgage services. By 2020, Zillow Offers had grown rapidly, was available in 25 markets and generated $1.7 billion in revenues. We were excited by the rapid growth in this business segment, and we believed that it could become a significant contributor to Zillow’s overall profitability. In November 2021, Zillow unexpectedly announced that it was exiting the home business, as it became apparent that the company had overpaid for a large number of homes, leading to a $500 million write-off. Their explanation for this shocking development was that the valuation algorithms they had developed had made dramatic errors. We were surprised and disappointed by these developments, which caused us to lose conviction in the company’s management and strategy. We exited the position during the quarter.”

You can also take a look at 10 Best Value Stocks in Warren Buffett’s Portfolio and 10 Financial Stocks to Buy According to Ken Griffin’s Citadel Investment Group.

Follow Insider Monkey on Twitter