The Motley Fool’s 1623 Capital Latest Portfolio: Top 5 Stock Picks

2. FedEx Corp. (NYSE:FDX)

1623 Capital’s Stake Value: $11.6 million

Percentage of 1623 Capital’s 13F portfolio: 7.23%

Number of Hedge Fund Holders: 63

FedEx Corp. (NYSE:FDX), formerly Federal Express Corporation and later FDX Corporation, is an American multinational conglomerate holding company focused on transportation, e-commerce and business services. In Q2 2022, 1623 Capital owned 51,200 FDX shares, with a total value of over $11.6 million. The company represented 7.23% of the fund’s portfolio.

On September 23, Evercore ISI analyst Jonathan Chappell lowered the price target on FedEx Corp. (NYSE:FDX) to $225 from $243 and kept an Outperform rating on the shares, following the company’s Q1 report. According to the analyst, FedEx’s earnings release and associated conference call were “far more about the path forward and management’s cost strategies than the financials themselves.” Chappell believes that FedEx Corp. (NYSE:FDX) is likely to be “a strong show-me story” until the execution risk is proven to have passed.

As of Q2 2022, 63 hedge funds held a collective stake of $1.75 billion in FedEx Corp. (NYSE:FDX) This is up from 52 funds having a stake of $1.79 billion in the company in Q1 2022. As of Q2 2022, Ken Griffin’s Citadel Investment Group is the largest stakeholder in FedEx Corp. (NYSE:FDX), owning more than 2.1 million shares worth at around $480 million.

Here is what Artisan Partners specifically said about FedEx Corporation (NYSE:FDX) in its Q2 2022 investor letter:

“FedEx Corporation (NYSE:FDX), a global shipping and logistics firm, was another relative winner in Q2. Its stock price was mostly unchanged in Q2, which made it a strong outperformer in a weak quarter for US stocks. Over the past 12-18 months, the stock has suffered from weak sentiment as labor cost headwinds and air network disruptions have overshadowed solid top-line trends. However, the stock’s reaction to the company’s first investor day in 10 years may be an early sign that the company is beginning to get more credit for its improved governance. At the investor day, new CEO Raj Subramanian outlined the company’s multi-year financial plan targeting EPS growth of 14%-19% driven by revenue growth of 4%-6% and increased operating margins from technology investments and efficiency gains, as well as an increase in its dividend payout ratio to 25% from ~20%. With the company’s mixed record of achieving its targets, we believe there remains a fair amount of skepticism embedded in the current stock price as it sells at just 10X our estimated of normalized earnings power.”