In this article, we discuss the top 10 stock picks of Cinctive Capital Management. If you want to skip our detailed analysis of the fund’s investment philosophy and performance, go directly to Top 5 Stock Picks of Cinctive Capital Management.
Rich Schimel and Lawrence Sapanski founded Cinctive Capital Management in 2019 and the hedge fund’s assets have nearly quadrupled since it began operating. Sapanski and Schimel have been co-workers for 14 years. They worked for Steve Cohen’s SAC Capital Advisors in the early 2000s. They started Diamondback in 2005, and it eventually handled $5.8 billion. The company shut its doors in 2012 as a result of client withdrawals following the signing of a non-prosecution agreement connected to an insider trading probe. Schimel joined Ken Griffin’s Citadel in 2016 and served as the head of Aptigon Capital, one of the company’s equities investment divisions. Two years after he left, Aptigon was shut down.
Cinctive Capital Management, run by the pair, is a long-short hedge fund that employs various trading teams, each focusing on a different industry. The company’s portfolio management experts use exclusive quantitative methods supported by a robust risk management strategy. The fund saw a 2% loss in the fourth quarter of 2019. Many hedge fund firms initially neglected the harm that the coronavirus presented. Cinctive Capital Management identified possible issues before anybody else. The hedge fund asked the portfolio managers to minimize the gross exposure from the end of February to the beginning of March 2020, which helped the fund reduce its reliance on leverage or borrowing money to increase returns.
By trading more often, the disruption was thus made profitable. Its scepticism paid off – through April, Cinctive Capital Management recovered 4.6%, outperforming the 6.56% loss seen by the typical hedge fund. It also attempted to capitalize on market turmoil brought on by the coronavirus Omicron strain and worries about the Federal Reserve taking a tough stance in 2021. The hedge fund began a risk arbitrage plan. Schimel and Sapanski gave their investment teams wide latitude and let portfolio managers make investments in smaller companies. Holdings in small and midsize companies accounted for slightly more than 70% of the fund’s returns.
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Cinctive Capital Management invests in several sectors, including information technology, energy, industrials, consumer discretionary, industrials, finance, materials, healthcare, communications, transports, consumer staples, utilities and communications, and real estate. The hedge fund’s portfolio had a value of $2.69 billion at the end of the first quarter of 2022, up from $2.27 billion in the fourth quarter of 2021. Some of the most significant stocks in Cinctive Capital Management’s portfolio included Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and T-Mobile US, Inc. (NASDAQ:TMUS).
Our Methodology
Here is our list of top 10 stock picks of Cinctive Capital Management. The stocks were picked from the first-quarter regulatory filings of the hedge fund. Data from over 900 elite hedge funds tracked by Insider Monkey in Q1 2022 were used to calculate the number of hedge funds holding positions in each firm.
Top Stock Picks of Cinctive Capital Management
10. Salesforce, Inc. (NYSE:CRM)
Cinctive Capital Management’s Stake Value: $21,952,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.81%
Number of Hedge Fund Holders: 114
Salesforce, Inc. (NYSE:CRM) is a technology company in California that provides customer relationship management software. Cinctive Capital Management purchased 103,393 shares of Salesforce, Inc. (NYSE:CRM) in the first quarter of 2022, worth $21.95 million. Salesforce, Inc. (NYSE:CRM) is one of the prominent stocks in the portfolio of Cinctive Capital Management, along with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and T-Mobile US, Inc. (NASDAQ:TMUS).
Guggenheim analyst John DiFucci commenced coverage of Salesforce, Inc. (NYSE:CRM) on August 11, assigning the stock a ‘Sell’ rating and a $150 price target. According to the analyst, even software is sensitive to macro factors, and the near-term macro downturn will last longer than most investors think.
Among the hedge funds tracked by Insider Monkey, 114 were long Salesforce, Inc. (NYSE:CRM) in the first quarter of 2022, compared to 110 funds in the fourth quarter of 2021. Ken Fisher’s Fisher Asset Management is a notable shareholder of Salesforce, Inc. (NYSE:CRM), with 15.67 million shares worth $2.59 billion.
Vulcan Value Partners mentioned Salesforce, Inc. (NYSE:CRM) in its first-quarter 2022 investor letter. Here is what the fund said:
“Salesforce.com Inc. is the dominant provider of customer relationship management software and technology. Salesforce has high retention rates, pricing power, high free cash flow, and a competitive moat. The company continues to execute well. Margins decreased slightly during the fourth quarter but continue to be on path for material expansion over the long term. Salesforce is seeing increased spending as employees are returning to the office, and we believe the global pandemic has only improved its prospects.”
9. Imperial Oil Limited (NYSE:IMO)
Cinctive Capital Management’s Stake Value: $24,070,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.89%
Number of Hedge Fund Holders: 16
Imperial Oil Limited (NYSE:IMO) is a Canadian petroleum corporation with a market valuation of $29.38 billion that is owned about 70% by Exxon Mobil Corporation (NYSE:XOM). On July 29, Imperial Oil Limited (NYSE:IMO) reported C$17.31 billion in revenue in its second quarter of 2022, reflecting a 115% growth from the second quarter of 2021. It was caused by a precarious supply/demand equilibrium for processed items like oil, natural gas, and natural gas, increasing natural gas realizations and refining margins significantly over the last ten years.
On August 10, Credit Suisse analyst William Janela initiated coverage of Imperial Oil Limited (NYSE:IMO), rating the stock as ‘Neutral’ and a price target of C$72. In the first quarter, 16 hedge funds monitored by Insider Monkey were bullish on Imperial Oil Limited (NYSE:IMO). These funds’ investments are worth $606.71 million.
According to the 13F filings for the first quarter of 2022, Cinctive Capital Management purchased 496,589 shares of Imperial Oil Limited (NYSE:IMO), amounting to more than $24.07 million and representing 0.89% of the fund’s portfolio value. Jean-Marie Eveillard’s First Eagle Investment Management owned a $1.17 million position in Imperial Oil Limited (NYSE:IMO) at the end of the first quarter, making it a notable stakeholder of the company.
In its second quarter 2021 investor letter, Artisan Partners mentioned Imperial Oil Limited (NYSE:IMO) and discussed its stance on the firm. Here is what the fund said:
“Imperial Oil is Exxon’s Canadian subsidiary. The company owns worldclass oil mining assets that are efficient, operate at large scale with low cash costs and have long useful lives. The company’s share price has recovered from last year’s lows, prompted by a significant increase in the price of oil. In addition, the company’s decision to focus on its existing assets has paid off in terms of improved volume production and free cash flow generation. The share price increased by 27% during the quarter.”
8. JPMorgan Chase & Co. (NYSE:JPM)
Cinctive Capital Management’s Stake Value: $24,197,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.89%
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) finalized its previously announced acquisition of Global Shares, a prominent cloud-based supplier of share plan administration software, on August 11. JPMorgan Chase & Co. (NYSE:JPM) is now a market-leading supplier of cutting-edge employee ownership solutions to both private and public firms throughout the globe as a consequence of its most recent acquisition.
Investors were recently seen buying JPMorgan Chase & Co. (NYSE:JPM) shares. At the close of the first quarter, 110 hedge funds were bullish on the stock, compared to 107 in the previous quarter. With about 7.99 million shares valued at $899.69 million, Fisher Asset Management is the biggest shareholder of JPMorgan Chase & Co. (NYSE:JPM).
JPMorgan Chase & Co. (NYSE:JPM) is a new arrival in Cinctive Capital Management’s portfolio, as it bought about 177,498 shares of the company, worth $24.20 million. Although JPMorgan Chase & Co. (NYSE:JPM) worked in a challenging environment, Berenberg analyst Peter Richardson upgraded the company on July 18 from ‘Sell’ to ‘Hold’ with a price target of $120 on July 18.
ClearBridge Investments mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here is what the fund said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
7. NRG Energy, Inc. (NYSE:NRG)
Cinctive Capital Management’s Stake Value: $24,616,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.91%
Number of Hedge Fund Holders: 31
NRG Energy, Inc. (NYSE:NRG) is a US-based integrated power supplier. It owned and leased 25 facilities with a total capacity of about 18,000 megawatts in energy generation as of December 31, 2021. With 16.53 million shares valued at $630.97 million, Pzena Investment Management is a prominent shareholder of NRG Energy, Inc. (NYSE:NRG).
On August 4, NRG Energy, Inc. (NYSE:NRG) posted earnings for the second quarter of 2022. The $7.28 billion revenue for the period was up 38.9% year-over-year. On July 21, NRG Energy, Inc. (NYSE:NRG) declared a quarterly dividend of $0.35, in line with the previous.
Cinctive Capital Management bought 68,183 shares of NRG Energy, Inc. (NYSE:NRG) in the fourth quarter of 2020. At the end of the first quarter of 2022, the hedge fund held 641,698 shares of NRG Energy, Inc. (NYSE:NRG), worth about $24.62 million. At the end of the first quarter, 31 hedge funds owned stakes in NRG Energy, Inc. (NYSE:NRG), with a combined value of $1.54 billion. This is in contrast to 28 hedge funds a quarter ago.
6. Exxon Mobil Corporation (NYSE:XOM)
Cinctive Capital Management’s Stake Value: $25,112,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.93%
Number of Hedge Fund Holders: 83
Cinctive Capital Management strengthened its position in Exxon Mobil Corporation (NYSE:XOM) by 160%. This made its stake in Exxon Mobil Corporation (NYSE:XOM) total 304,060 shares worth $25.11 million. Besides Exxon Mobil Corporation (NYSE:XOM), the hedge fund also has substantial positions in Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and T-Mobile US, Inc. (NASDAQ:TMUS).
Credit Suisse analyst William Janela initiated coverage of Exxon Mobil Corporation (NYSE:XOM) on August 10, assigning the stock an ‘Outperform’ rating and a $125 price target. On July 29, Exxon Mobil Corporation (NYSE:XOM) reported solid earnings in the second quarter of 2022, with earnings per share of $4.14, exceeding estimates by $0.25. In addition, the company declared revenue of $115.68 billion, beating predictions by $4.01 billion.
Irving Kahn’s Kahn Brothers held a significant stake in Exxon Mobil Corporation (NYSE:XOM) at the end of the first quarter of 2022, equalling $1.90 billion. In addition, Insider Monkey spotted 83 hedge funds that were long Exxon Mobil Corporation (NYSE:XOM) at the end of Q1 2022. The collective stakes of these hedge funds totaled $8.56 billion, compared to $5.39 billion a quarter ago, with 71 positions.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its “Amana Funds” fourth-quarter 2021 investor letter. Here is what the firm said:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
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Disclosure: None. Top 10 Stock Picks of Cinctive Capital Management is originally published on Insider Monkey.
