In this article we present the list of The 10 Stocks Billionaire Louis Bacon Can’t Stop Buying. Click to skip ahead and see The 5 Stocks Billionaire Louis Bacon Can’t Stop Buying.
Electric vehicle maker Fisker Inc (NYSE:FSR), and cybersecurity companies CrowdStrike Holdings Inc (NASDAQ:CRWD) and Palo Alto Networks Inc (NYSE:PANW) are among the stocks that renowned billionaire investor Louis Bacon can’t stop buying.
Louis Bacon’s Moore Capital Management is a New York-based global investment firm that manages over $27 billion in assets. The firm was founded in 1989 by Bacon, who remains its Chairman and Principal Investment Manager. Through his skill as a stock picker and foreign exchange trader, Moore has amassed a personal fortune estimated at $1.6 billion by Forbes.
Bacon graduated from Columbia Business School with an M.B.A. in Finance before working as a trader at both Bankers Trust and Shearson Lehman Hutton. He quickly became an investing icon after launching his own firm, delivering 86% returns in his first full year thanks to a prescient bet on the impact that the Iraq war would have on oil prices.
Bacon’s success continued over much of the next three decades, as his fund posted annualized returns of 17.6% through 2019. Moore Capital’s returns began to lag towards the end of the last decade however, which prompted the money manager to announce that he was closing his fund to outside investors. Freed from the shackles and stress of having to invest for others, Moore Capital was one of the best performing funds in the world in 2020, gaining more than 70%.
That performance swelled the fund’s 13F assets to over $9.1 billion by the end of 2020, which has since been scaled back to $3.93 billion as of the end of Q1. Bacon was active during the first quarter as he looks to again capitalize on a chaotic investment environment, adding 202 stocks to his 13F portfolio during quarter while unloading 186 former holdings.
Bacon was betting more heavily on energy stocks in Q1, growing his 13F portfolio’s exposure to them by over 6 percentage points to 7.55%. On the other hand, Moore Capital slightly cut its exposure to consumer discretionary, tech, and healthcare stocks. Close to half of the fund’s portfolio assets were invested in finance stocks and ETFs.
In this article we’ll look at 10 stocks that the iconic billionaire money manager can’t stop buying as we head deeper into 2022.
Our Methodology
The following data is gathered from Moore Capital Management‘s latest 13F filing with the SEC. We follow hedge funds like Moore Capital Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
The 10 Stocks Billionaire Louis Bacon Can’t Stop Buying
10. Workday, Inc. (NYSE:WDAY)
Value of Moore Capital Management‘s 13F Position: $32.4 million
Number of Hedge Fund Shareholders: 87
Fisker Inc (NYSE:FSR), CrowdStrike Holdings Inc (NASDAQ:CRWD), and Palo Alto Networks Inc (NYSE:PANW) are some of the stocks that Louis Bacon can’t stop buying, another being business software provider Workday, Inc. (NYSE:WDAY). Bacon increased his stake in WDAY more than four-fold during Q1, having amassed 135,343 shares by the end of Q1. Other hedge funds were also buying Workday in droves, as there was an 18% first quarter jump in the number of funds long the stock.
Workday, Inc. (NYSE:WDAY) had somewhat soft bookings in Q1 of its fiscal year 2023, with the company noting that several deals were pushed back to Q2, which was likely to have a domino effect on other deals that had previously been expected to close in that quarter. The company’s 24-month backlog grew by 21% to $7.97 billion. Subscription revenue growth grew by 23% year-over-year to $1.27 billion, and the company has targeted 20%+ growth in that area as a key target on its road to $10 billion in annual revenue.
The ClearBridge Investments Sustainability Leaders Strategy talked about the diversification effect that Workday, Inc. (NYSE:WDAY) has on its portfolio in the fund’s Q4 2021 investor letter:
“We believe the weakness created an opportunity for us to add to an exceptionally high-quality payments franchise with an attractive growth and free cash flow profile and little credit or interest rate exposure. It also supported our efforts to maintain diversified IT exposure in a narrowing market; additions to our software-as-aservice (SaaS) holding Workday during the quarter also bolstered this diversification, in which we seek to balance exposure to more widely owned mega cap names…”
9. The Allstate Corporation (NYSE:ALL)
Value of Moore Capital Management‘s 13F Position: $32.4 million
Number of Hedge Fund Shareholders: 44
One of the 10 Best Insurance Stocks To Buy Now, Louis Bacon was doing just that in Q4, buying 260,000 shares of The Allstate Corporation (NYSE:ALL). He trimmed the holding by 10% in the first quarter after ALL shares went on a tear, gaining 17%. Hedge fund ownership of Allstate ticked up by 10% during Q1.
The Allstate Corporation (NYSE:ALL) has been adept at keeping its payout ratios below 100% over the past decade, but that didn’t prevent the insurer from losing $462 million in the first quarter, though that was down from $590 million in the year-ago period. The company’s estimated pre-tax catastrophe losses for April and May of this year totaled $752 million.
Argus analyst Kevin Heal believes The Allstate Corporation (NYSE:ALL)’s bottom line will be impacted by the rising costs for parts on the auto insurance side of its business, lowering his 2022 EPS outlook for the company to $9.72 from $13.85. He also cut his 2023 earnings estimate to $13.19 from $14.82 and believes the stock in now fully valued, cutting his rating on it to ‘Hold’ from ‘Buy’. On the other hand, Raymond James has a ‘Strong Buy’ rating on the stock, believing the company’s rate hikes will more than offset rising costs in the second half of 2022 and beyond.
8. Alight Inc (NYSE:ALIT)
Value of Moore Capital Management‘s 13F Position: $33.9 million
Number of Hedge Fund Shareholders: 38
Louis Bacon was buying up more shares of cloud-based business solutions company Alight Inc (NYSE:ALIT) during Q1, increasing the size of his stake in the company by 62% to just over 3.4 million shares. FPR Partners had a $251 million position in the company on March 31, while Caspian Capital Partners had the greatest 13F portfolio exposure to the company at 16.63%, with it ranking as the fund’s number one stock pick.
Alight Inc (NYSE:ALIT) shares have slumped by 21% since the company went public last July through an SPAC merger. Alight, which offers a suite of business and employee engagement and wellbeing tools to clients, pulled in $2.9 billion in revenue last year and is guiding for $3.09 billion to $3.12 billion in 2022. The company expects to further accelerate its revenue growth in 2023, guiding for 10% growth.
Alight has a strong foundational base of customers, counting 70% of the Fortune 100 companies as clients, but has a slightly underwhelming average revenue retention rate of 97%. For a company valued at less than $4 billion, Alight Inc (NYSE:ALIT) does have a significant amount of net debt on its balance sheet as well, at $2.53 billion, though the vast majority of that doesn’t mature until 2028.
7. Laureate Education Inc (NASDAQ:LAUR)
Value of Moore Capital Management‘s 13F Position: $35.9 million
Number of Hedge Fund Shareholders: 19
Moore Capital Management increased its stake in Laureate Education Inc (NASDAQ:LAUR) by 15% during the fourth quarter and held on to those 3.03 million shares throughout Q1. The fund is the largest LAUR shareholder among the select group of funds that are tracked by our database. There was a 17% decline in the number of funds long Laureate Education during Q1.
Laureate Education Inc (NASDAQ:LAUR) has substantially cut the number of higher education institutions that it operates over the years, with the company now running just five institutions, two in Mexico and the other three in Peru. Laureate grew total enrollments by 11% in the first quarter and expects revenue and adjusted EBITDA to grow by 10% and 24% respectively this year. The company had a net loss of $45 million in Q1, but had $212 million in net cash on its balance sheet at the end of March.
Clark Street Value was pleased with its investment in Laureate Education Inc (NASDAQ:LAUR), detailing some of the positive changes the company has undertaken in its Q4 2021 investor letter:
“Another informal liquidation, Laureate Education (LAUR), has mostly worked out to plan, the sale of Walden University closed and they’ve since paid out $7.59/share in special dividends. They’ve also collapsed the dual share structure. It is now a purer play on Mexico and Peru, my best guess is this is not the end state and we’ll see a final sale of the remaining assets once covid subsides and/or the political climate in Latin America improves. Most of my exposure rolled off earlier in December when my calls expired, now just hanging onto a smallish position to see how the rest plays out.”
6. T-Mobile US Inc (NYSE:TMUS)
Value of Moore Capital Management‘s 13F Position: $37.8 million
Number of Hedge Fund Shareholders: 91
Louis Bacon raised the size of his position in T-Mobile US Inc (NYSE:TMUS) more than 12-fold during Q1, ending the quarter with 294,863 shares. TMUS shares have been strong performers on the market this year, gaining 20% to beat the SPY by 40 percentage points. Hedge fund ownership of T-Mobile inched up by 6% during the first quarter.
Investors are bullish on T-Mobile US Inc (NYSE:TMUS) as the fruits from its merger with Sprint are expected to begin ripening over the next year. Even so, T-Mobile’s 22x forward P/E is more than double that of telecom rivals AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), so the stock looks expensive even when factoring in those future benefits. Intense competition in the U.S, where smartphone penetration is 85%, could further weigh on earnings expectations as well. T-Mobile also doesn’t offer investors a dividend, while T and VZ shares offer annual yields topping 5%.
The ClearBridge Investments Sustainability Leaders Strategy sold off its T-Mobile US Inc (NYSE:TMUS) in Q4 and detailed the reasons why in its Q4 2021 investor letter:
“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile. Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”
In the second half of this article we’ll check in on Louis Bacon’s intense interest in Fisker Inc (NYSE:FSR), Palo Alto Networks Inc (NYSE:PANW), CrowdStrike Holdings Inc (NASDAQ:CRWD), and more.
Click to continue reading and see The 5 Stocks Billionaire Louis Bacon Can’t Stop Buying.
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Disclosure: None. The 10 Stocks Billionaire Louis Bacon Can’t Stop Buying is originally published at Insider Monkey.
