This article discusses Paul Singer’s Elliott Management top 5 stock picks at the end of June 2022. To discover Elliott Management’s latest activist bets in detail, the fund’s history, and changes it made to its portfolio recently, please go to Paul Singer’s Latest Portfolio: Top 10 Stock Picks.
5. Suncor Energy Inc. (NYSE:SU)
Elliott Management’s Stake Value: $350,744,000
Percentage of Elliott Management’s 13F Portfolio: 4.04%
Number of Hedge Fund Holders: 47
Not only has Suncor Energy Inc.’s (NYSE:SU) stock skyrocketed by more than 80% in the last one year, but its popularity among smart money investors has also been on the rise. From 895 hedge funds tracked by Insider Monkey, 47 funds disclosed a stake in Suncor Energy Inc. (NYSE:SU) at the end of Jun 2022, more than double from 22 funds that reported a stake at the end of Q3 2020. Though Elliott Management didn’t add to its stake of 10 million shares of the company that it initiated in Q1, the value of the fund’s holdings in the company grew to $350.7 million from $326.1 million due to the rise in Suncor Energy Inc.’s (NYSE:SU) stock in Q2.
For its fiscal 2022 second quarter, Suncor Energy Inc. (NYSE:SU), on August 4, reported GAAP EPS of $2.20 on revenue of $12.6 billion, beating analysts’ estimates by $0.26 and $2.38 billion, respectively. However, despite beating estimates, Suncor Energy Inc.’s (NYSE:SU) stock declined post the earnings release as the company reduced its production guidance for the financial year 2022.
4. Nielsen Holdings plc (NYSE:NLSN)
Elliott Management’s Stake Value: $385,452,000
Percentage of Elliott Management’s 13F Portfolio: 4.44%
Number of Hedge Fund Holders: 45
Elliott Management reported a stake in Nielsen Holdings plc (NYSE:NLSN) for the first time in its regulatory filing for the third quarter of 2018. Since then, Nielsen Holdings plc’s (NYSE:NLSN) stock has fallen by more than 30%. This loss would have been even more severe if it wasn’t for the announcement by Nielsen Holdings plc (NYSE:NLSN) on August 9 that its major shareholder Windcare had agreed to it being taken private by a consortium led by Elliott Management. Following the announcement, the company’s stock shot up by 21% in a day.
Elliott Management had been in talks with Nielsen Holdings plc’s (NYSE:NLSN) management over the past few quarters to take the company private. In March, The Wall Street Journal reported that both sides had reached an agreement under which a consortium led by Elliott Management’s private equity arm and Brookfield Asset Management would take Nielsen Holdings plc (NYSE:NLSN) private in a deal that valued the company at $28 per share, or $16 billion including debt. However, the deal faced a roadblock when Windcare, one of the largest shareholders of Nielsen Holdings plc (NYSE:NLSN), announced that it planned to block the merger. With Windcare agreeing to be part of the consortium that takes Nielsen Holdings plc (NYSE:NLSN) private, several analysts think the deal will eventually close after getting approvals from antitrust regulators.
3. Peabody Energy Corporation (NYSE:BTU)
Elliott Management’s Stake Value: $551,593,000
Percentage of Elliott Management’s 13F Portfolio: 6.35%
Number of Hedge Fund Holders: 29
Peabody Energy Corporation (NYSE:BTU) started trading again on the New York Stock Exchange in 2017 after emerging from a year-long $8 billion chapter 11 bankruptcy. Elliott Management was one of the biggest beneficiaries of this relisting as it had the right to buy additional Peabody Energy Corporation’s (NYSE:BTU) shares at a 35% to 45% discount when the company started trading again on the exchanges.
Elliott Management has been Peabody Energy Corporation’s (NYSE:BTU) largest shareholder since the company got relisted. In February 2020, Peabody Energy Corporation’s (NYSE:BTU) management agreed to include Elliott Management’s nominees Dave Miller, Samantha Algaze, and Darren Yeates to its board.
With coal demand surging around the world post the pandemic, Peabody Energy Corporation’s (NYSE:BTU) stock has been one of the biggest beneficiaries of it, rising over 110% in the past year. Most analysts on Wall Street who track the company continue to remain bullish on the stock with a consensus price target of $32.67, representing a potential upside of 27.8% from the stock’s last trading price.
2. Marathon Petroleum Corp (NYSE:MPC)
Elliott Management’s Stake Value: $909,654,000
Percentage of Elliott Management’s 13F Portfolio: 10.48%
Number of Hedge Fund Holders: 50
Marathon Petroleum Corp (NYSE:MPC) hit a peak in popularity among funds tracked by Insider Monkey at the end of 2018 when 79 funds reported holding a stake in the company. Since then, although the stock of Marathon Petroleum Corp (NYSE:MPC) has made new lifetime highs, its popularity among smart money investors hasn’t seen a considerable increase, with only 50 hedge funds disclosing a stake in the company at the end of June. Elliott Management, which initiated its stake in Marathon Petroleum Corp (NYSE:MPC) during the second quarter of 2019, immediately proceeded to send a letter to the company’s management. In its letter, Elliott Management demanded that Marathon Petroleum Corp’s (NYSE:MPC) management split the company into three individual firms, which according to the fund, would unlock $22 billion in value for shareholders.
On August 16, Marathon Petroleum Corp (NYSE:MPC) announced that the US Federal Energy Regulatory Commission had approved its request for more time to convert its Kenai liquefied natural gas export plant in Alaska to an import terminal. On the same day, analysts at Barclays upped their price target on the stock to $112 from $94 while maintaining an ‘Overweight’ rating on it.
1. Howmet Aerospace Inc. (NYSE:HWM)
Elliott Management’s Stake Value: $1,291,494,000
Percentage of Elliott Management’s 13F Portfolio: 14.89%
Number of Hedge Fund Holders: 39
Howmet Aerospace Inc. (NYSE:HWM) retained its spot as Elliott Management’s top stock pick for the third quarter in a row at the end of Q2. Howmet Aerospace Inc. (NYSE:HWM) came into existence after Arconic Corporation (NYSE:ARNC) announced in mid-2020 that its board had approved the company’s separation into two independent, publicly traded companies. Elliott Management has had a history with Arconic Corporation (NYSE:ARNC), where the fund had engaged in a bitter fight with the company’s board a few years ago.
Since it started trading publicly as an independent company, Howmet Aerospace Inc.’s (NYSE:HWM) stock has more than doubled and currently trades up by 16% year-to-date. On August 4, the company reported non-GAAP earnings per share of $0.35 on revenue of $1.39 billion for the second quarter of its fiscal year 2022, while analysts had projected it to report non-GAAP EPS of $0.33 on revenue of $1.37 billion. Along with its earnings release, Howmet Aerospace Inc. (NYSE:HWM) also raised its full-year guidance for FY 2022. It now expects revenue between $5.645 billion and $5.715 billion and adjusted EPS between $1.38 and $1.42. The company had earlier estimated FY 2022 revenue to be in the $5.56 billion and $5.72 billion range and adjusted EPS between $1.33 and $1.45.
You can also look at Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks and 7 Best Stocks to Buy According to Stephen Feinberg’s Cerberus Capital Management
