In this article, we discuss 10 bargain stocks that billionaire Paul Tudor Jones is buying amid selloff. If you want to see more stocks that were purchased on the dip by the billionaire, click This Billionaire is Buying These 5 Bargain Stocks Amid Selloff.
Amid the broad market selloff, many prominent companies have fallen into deep value territory. Value names have proven to protect investors in this volatile market as they hold up better than growth plays. Market analysts and experts suggest that investors should benefit from the steep decline in prices and valuations, and buy the dip.
According to UBS Group, about one third of high net worth investors are likely to add to their existing holdings if markets tumble further, while only 20% would cut down their exposure.
Citi global strategist Robert Buckland maintains a Bear Market Checklist, consisting of 18 key indicators that have historically assisted in identifying an upcoming bear territory in the stock market. After a 16.5% year to date drop for the MSCI All Country World Index, the current checklist readings inform investors to definitely buy the dip.
Billionaire Paul Tudor Jones of Tudor Investment Corp has employed a similar strategy and he purchased several bargain stocks amid market selloff. Some of the most notable additions to his Q1 portfolio despite declines included Salesforce, Inc. (NYSE:CRM), Coinbase Global, Inc. (NASDAQ:COIN), and Cisco Systems, Inc. (NASDAQ:CSCO).
Our Methodology
We used the Q1 2022 portfolio of billionaire Paul Tudor Jones for this analysis, selecting the most prominent stocks he added to his holdings despite losses. We have mentioned the YTD share price decline as of May 26 for all securities.
10. Avaya Holdings Corp. (NYSE:AVYA)
Number of Hedge Fund Holders: 24
YTD Share Price Decline as of May 26: 82.38%
Avaya Holdings Corp. (NYSE:AVYA) is a North Carolina-based company that provides digital communications products, solutions, and services for businesses worldwide. Tudor Investment Corp added Avaya Holdings Corp. (NYSE:AVYA) to its Q1 portfolio by purchasing 141,656 shares of the company, worth $1.7 million. The shares have declined 82.38% year-to-date as of May 26.
On May 10, Avaya Holdings Corp. (NYSE:AVYA) reported earnings for the first fiscal quarter of 2022. The company posted an EPS of $0.53, below consensus estimates by $0.08. The revenue of $716 million also fell short of analysts’ predictions by $21.62 million.
Barclays analyst Ryan MacWilliams downgraded Avaya Holdings Corp. (NYSE:AVYA) to Underweight from Equal Weight with a price target of $5, down from $8. The analyst sees “increasing threats to the company’s installed-base” and risks from its exposure to Europe, the Middle East, and Africa. European macro headwinds could likely affect Avaya Holdings Corp. (NYSE:AVYA)’s Q2 results significantly, the analyst told investors.
Insider Monkey’s Q1 data suggests that 24 hedge funds were bullish on Avaya Holdings Corp. (NYSE:AVYA), compared to 25 funds in the last quarter. Alkeon Capital Management held the biggest stake in the company, with 4.5 million shares worth $57.7 million.
In addition to Salesforce, Inc. (NYSE:CRM), Coinbase Global, Inc. (NASDAQ:COIN), and Cisco Systems, Inc. (NASDAQ:CSCO), elite investors are monitoring Avaya Holdings Corp. (NYSE:AVYA) amid the broader market selloff.
Here is what Voss Capital has to say about Avaya Holdings Corp. (NYSE:AVYA) in its Q4 2021 investor letter:
“Avaya is an American multinational technology company headquartered in Durham, North Carolina, that specializes in cloud communications and workstream collaboration solutions. Avaya is a “legacy” tech player undergoing a material business model transition from perpetual license and maintenance to a cloud and subscription model. The company has amassed a giant enterprise customer base in their Telephony (100 million seats) and Contact Center (6 million seats, ~40% global market share) businesses. Avaya is working to rapidly convert these customers to a subscription model while also moving as many as possible to public and private cloud infrastructures.
Converting a customer to subscription on its own provides an over 20% uplift in recurring revenue but moving them to public and private clouds gives a far more substantial uplift as the customer is able to generate significant savings from the move. i Management has guided to $1 billion in Annual Recurring Revenue from transitioning to subscriptions/cloud by the end of this year and $2 billion by fiscal year 2024 (versus $620 million now). We believe the buy side is skeptical of these numbers given the valuation and recent collapse in the stock. Putting aside the fact that the company has raised their ARR estimates each of the last four quarters, what finally convinced us they are making tangible progress in converting large cloud customers (as opposed to just subscription) was a $400 million, seven-year win with a “major financial institution” in Q4 for Contact Center as a Service (CCaaS).ii We believe this came in at roughly $125/month/seat which, if extrapolated to the rest of their Contact Center base, would give them a $9 billion ARR TAM. Keep in mind that this estimation is just considering their existing customer base and does not even include the 100 million Telephony users. The company only needs to convert a small percentage of its current base to cloud to achieve its stated $2 billion ARR target…” (Click here to see the full text)
9. Ceridian HCM Holding Inc. (NYSE:CDAY)
Number of Hedge Fund Holders: 24
YTD Share Price Decline as of May 26: 46.22%
Ceridian HCM Holding Inc. (NYSE:CDAY) was incorporated in 2013 and is headquartered in Minneapolis, Minnesota. It operates as a human capital management software company in the United States, Canada, and internationally. Paul Tudor Jones’ Tudor Investment Corp purchased 102,314 shares of Ceridian HCM Holding Inc. (NYSE:CDAY) in the first quarter of 2022, worth about $7 million. As of May 26, the share price dropped over 46% year-to-date.
Ceridian HCM Holding Inc. (NYSE:CDAY) posted on May 4 earnings for the first quarter of 2022. The company announced earnings per share of $0.13, beating market estimates by $0.05. The $293.30 million revenue grew 25.07% year-over-year, outperforming Street predictions by $3.86 million.
On May 23, Jefferies analyst Samad Samana lowered the price target on Ceridian HCM Holding Inc. (NYSE:CDAY) to $56 from $65 and reiterated a Hold rating on the shares. The analyst has slashed price targets for several software companies “across the board” due to challenging economic headwinds and the threat of recession. Multiple recent data points reported consumer behavior is shifting rapidly and that demand may also be dampening, while big box retailers stated concerns about a slowdown in e-commerce spending, the analyst added.
Among the hedge funds tracked by Insider Monkey, Ceridian HCM Holding Inc. (NYSE:CDAY) was found in the public stock portfolios of 24 funds at the end of Q1 2022, up from 22 funds in the prior quarter. Select Equity Group is the leading shareholder of the company, with approximately 15 million shares worth $1 billion.
Here is what Baron Asset Fund has to say about Ceridian HCM Holding Inc. (NYSE:CDAY) in its Q1 2022 investor letter:
“Shares of Ceridian HCM Holding Inc., a leader in global payroll software, fell as valuations for high-growth technology stocks compressed. We retain conviction in Ceridian’s long-term opportunity. Growth in Ceridian’s flagship Dayforce platform is reaccelerating toward 30% revenue growth, helped by continued market share gains, its ongoing ability to service larger-sized customers, and the broader recovery in employment trends. We expect Ceridian’s growth to be enhanced by its Wallet suite, which allows all employees on Dayforce to request and receive their wages as soon as they are earned (not just at the end of a typical two-week pay cycle) at no cost to employer or employee. We think this feature has the potential to revolutionize the market for payroll software.”
8. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 52
YTD Share Price Decline as of May 26: 30.86%
D.R. Horton, Inc. (NYSE:DHI) is an American homebuilding company that is involved in the construction and sale of residential homes under brands such as D.R. Horton, America’s Builder, Express Homes, Emerald Homes, and Freedom Homes. Tudor Investment Corp added D.R. Horton, Inc. (NYSE:DHI) to its portfolio in the first quarter of 2022 by acquiring 27,386 shares of the company, worth $2 million. The shares declined about 31% year-to-date as of May 26.
On April 26, D.R. Horton, Inc. (NYSE:DHI) reported its Q1 financial results. The company posted earnings per share of $4.03, above consensus by $0.63. Revenue over the period grew 24.08% compared to the revenue in the same quarter last year, reaching $8 billion, surpassing market estimates by $354.42 million.
BTIG analyst Carl Reichardt on April 27 lowered the price target on D.R. Horton, Inc. (NYSE:DHI) to $104 from $126 but reiterated a Buy rating on the stock. The company’s Q2 earnings beat was driven by improved deliveries, average selling prices, and margins higher than he had anticipated, but unit orders decreased 10% compared to his estimate of 3%, the analyst told investors in a research note. D.R. Horton, Inc. (NYSE:DHI) yet again intentionally slowed sales to match production capacity, and while this will impact delivery volume, its pricing power is robust enough to allow revenues to exceed guidance, the analyst added.
Among the hedge funds tracked by Insider Monkey, D.R. Horton, Inc. (NYSE:DHI) was part of 52 public stock portfolios, compared to 54 funds in the earlier quarter. John Armitage’s Egerton Capital Limited held the biggest position in the company, with 7.8 million shares worth $582.5 million.
Here is what Third Avenue Management Real Estate Value Fund has to say about D.R. Horton, Inc. (NYSE:DHI) in its Q1 2022 investor letter:
“Outside of these additions, the Fund also sold “out-of-the-money” put options on the common stock of D.R. Horton, Inc. (“DR Horton”)-the largest homebuilder in the U.S. that accounted for nearly 1 out 9 new homes sold in the U.S. last year. Having followed the company for years, Fund Management can say without hesitation that DR Horton is an incredibly efficient builder focused on delivering quality product at the entry-level price point (its average selling price was less than $325,000 last year) with leading positions in key Sunbelt markets including Dallas, Houston, Austin, Atlanta, and Phoenix.
While the near-term outlook for DR Horton is somewhat uncertain given mortgage rate and supply chain volatility, the medium-to-long-term prospects for volume-based homebuilders with super-strong balance sheets and scale advantages seem promising (such as DR Horton and Lennar Corp.) in Fund Management’s view. This is especially the case when considering that:
- Residential inventories are at record- low levels in most major markets whether gauged by “month’s supply” or aggregate units available,
- Demand for single- family residences is accelerating as the largest generation in U.S. history (the “millennial cohort”) enters its prime home buying years and desires more space not only due to “life events” but also “remote” and “hybrid” working arrangements, and
- Significant inflation in rental rates for multi-family units in urban areas has left the rent-to-own proposition for single- family homes in suburban areas in a compelling range…” (Click here to see the full text)
7. Herbalife Nutrition Ltd. (NYSE:HLF)
Number of Hedge Fund Holders: 34
YTD Share Price Decline as of May 26: 46.21%
Herbalife Nutrition Ltd. (NYSE:HLF) shares have tumbled over 46% year-to-date as of May 26. The company offers nutrition solutions in the areas of weight management, targeted nutrition, energy, sports, and fitness. Paul Tudor Jones’ Tudor Investment Corp acquired 108,312 shares of Herbalife Nutrition Ltd. (NYSE:HLF) in Q1 2022, worth $3.2 million.
Herbalife Nutrition Ltd. (NYSE:HLF) reported its Q1 results on May 3, announcing earnings per share of $0.99, beating Street forecasts by $0.09. The $1.34 billion revenue slipped 11.04% year-over-year, falling short of analysts’ predictions by $47.20 million.
On May 17, Argus analyst John Staszak downgraded Herbalife Nutrition Ltd. (NYSE:HLF) to Hold from Buy. The analyst observed that while the pandemic-related restrictions allowed Herbalife Nutrition Ltd. (NYSE:HLF) distributors to earn extra income last year, the company is now facing a tough year comparatively, with headwinds from soaring commodity and freight costs. He added that Herbalife Nutrition Ltd. (NYSE:HLF) expects declines in both revenue and earnings this year, and he also cut his FY22 EPS forecast to $4.00 from $5.52 and his FY23 estimate to $5.00 from $6.00.
William Duhamel’s Route One Investment Company held the largest position in Herbalife Nutrition Ltd. (NYSE:HLF) in the first fiscal quarter of 2022, comprising 10 million shares worth about $305 million. Overall, 34 hedge funds were bullish on the stock at the end of March 2022.
Like Salesforce, Inc. (NYSE:CRM), Coinbase Global, Inc. (NASDAQ:COIN), and Cisco Systems, Inc. (NASDAQ:CSCO), Herbalife Nutrition Ltd. (NYSE:HLF) is a new arrival in billionaire Paul Tudor Jones’ portfolio amid selloff.
Here is what Bronte Capital has to say about Herbalife Nutrition Ltd. (NYSE:HLF) in its Q3 2021 investor letter:
“Herbalife is – as we have discussed many times before – a multi-level marketing scheme selling weight-loss shakes. The idea is simple. If I replaced six meals a week with low-calorie protein shakes and I walked an extra 15km a week I would quickly lose 15-20kgs. It would be good for me. It is also well-nigh impossible to do.
One solution is to hire a personal trainer (usually of the opposite sex) and have them nag you. You will do tough stuff for an attractive member of the opposite sex. More realistically you could just have your friends nag you. And that is why this works so well as a multi-level marketing scheme. The person who sells you the shakes has an incentive to keep you on the diet.
We have looked at many distributors and we see a weight-loss program – implemented for (literally) millions of people – which works about as well as any weight-loss health program that ever existed. That still means it fails most of the time – but it works enough that we can be proud of owning this stock and the health benefits it provides. Herbalife, it turns out, grew well during COVID. This was initially a surprise to us – as we thought Herbalife depended on the personal touch to make the sale. But, instead, weight loss and associated social clubs moved online – and – in many cases were the main social outlet the customers had.”
6. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 66
YTD Share Price Decline as of May 26: 28.32%
Cisco Systems, Inc. (NASDAQ:CSCO) is one of the top bargain stocks that billionaire Paul Tudor Jones bought amid the selloff, acquiring 64,547 shares of the company in the first quarter of 2022, worth $3.5 million. Cisco Systems, Inc. (NASDAQ:CSCO) manufactures and sells networking products related to the communications and information technology industries worldwide. As of May 26, Cisco Systems, Inc. (NASDAQ:CSCO) stock has declined over 28% so far this year.
On May 18, Cisco Systems, Inc. (NASDAQ:CSCO) reported earnings for Q1, posting an EPS of $0.87, beating estimates by $0.01. The revenue of $12.84 billion, however, fell short of Street estimates by $503.32 million.
Morgan Stanley analyst Meta Marshall on May 27 slashed the price target on Cisco Systems, Inc. (NASDAQ:CSCO) to $46 from $59 and kept an Equal Weight rating on the shares. The situation in Russia and Ukraine, paired with the China lockdown has severely impacted supply chains, causing Cisco Systems, Inc. (NASDAQ:CSCO)’s revenue shortfall in fiscal Q3. The analyst remains more cautious in the short-term as checks and surveys point to increasing macro risk and the fact that these tough comps are forecasted to continue through the fiscal year-end.
According to Insider Monkey’s Q1 data, 66 hedge funds were bullish on Cisco Systems, Inc. (NASDAQ:CSCO), up from 57 funds in the prior quarter. Cliff Asness’ AQR Capital Management is a significant shareholder of the company, with a position worth $331.5 million.
Here is what ClearBridge Large Cap Value Strategy has to say about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2021 investor letter:
“We reinvested a portion of the proceeds into existing holding Cisco Systems, which also has highly valuable technology and an improving secular growth story with its leading position in core networking hardware, as well as in its growing software and services business. Cisco has refocused on winning share in the large and growing hyperscale market and has been investing aggressively in R&D to support growth. We believe Cisco has found new legs after previously ceding some growth opportunities in cloud while maintaining its strong presence in the carrier and enterprise markets. Cisco boasts a strong balance sheet and accelerating multi-year growth while trading at a modest multiple of earnings.”
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Disclosure: None. This Billionaire is Buying These 10 Bargain Stocks Amid Selloff is originally published on Insider Monkey.
