In this article, we present the list of the top 10 stocks to sell now according to billionaire Dan Loeb. You can skip our comprehensive analysis of Third Point Management’s history, investment philosophy, and hedge fund performance, and go directly to Top 5 Stocks to Sell Now According to Billionaire Dan Loeb.
Intel Corporation (NASDAQ:INTC), Meta Platforms, Inc. (NASDAQ:FB), and Visa Inc. (NYSE:V) were among the largest holdings that billionaire money manager Dan Loeb sold off during the fourth quarter of 2021.
Dan Loeb’s Third Point Management is one of the most successful hedge funds in the world, entering LCH Investments’ list of the 20 Great Money Managers for the first time at the end of 2021. According to the report, New York-based Third Point has delivered net gains of $18.8 billion since its inception in 1993, including hefty $3.3 billion gains last year.
The report credited Third Point’s flexible and opportunistic investment approach, as well as some of its recent private equity/venture capital successes for its rise into the top 20. In addition to its value-oriented investment philosophy, Third Point is also a prominent activist investor, searching out and pushing for catalysts that could spark positive change at targeted companies and unlock shareholder value.
Third Point’s flagship Offshore fund lost 5.4% in Q4, but still finished the year up 22.7% thanks in part to the remarkable performance of Upstart Holdings, Inc. (NASDAQ:UPST), which gained 271% in 2021, ranking it as the most successful single-year performance of any holding in Third Point’s history. The fund capitalized on those gains by unloading just over two-thirds of its stake in the company during Q4.
Third Point didn’t find as much success with some of the other holdings it sold off during Q4, including Paysafe Limited (NYSE:PSFE), which tumbled by 49% in Q4 and lost 74% for the year. According to the fund’s Q4 investor letter, a copy of which can be downloaded here, it sold off PSFE after the release of the company’s Q3 earnings report.
Third Point manages $17.3 billion in assets as of June 30, 2021, which rose above $18 billion by the end of Q3 according to the fund’s 13F filing for that quarter. In the fourth quarter, Dan Loeb unloaded several large holdings, lowering the value of Third Point’s 13F portfolio to $14.33 billion.
We’ll take a look at the largest positions unloaded by Dan Loeb during Q4 in this article.
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The following ten stocks were sold off completely by Dan Loeb’s Third Point during the fourth quarter according to the fund’s 13F filing for the December 31 reporting period. The rankings are based on the size of Third Point’s former position in those stocks.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
Top 10 Stocks to Sell Now According to Billionaire Dan Loeb
10. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Fund Shareholders: 34
Canadian oil and natural gas producer Suncor Energy Inc. (NYSE:SU) is the first of ten stocks to sell now according to Dan Loeb, as Third Point unloaded its entire 7-million share stake in the company during Q4. Hedge fund ownership of Suncor bottomed out in the third quarter of 2020 and has steadily rebounded since then.
Suncor Energy Inc. (NYSE:SU) does have some positives going for it, including a 4.45% dividend yield that is made possible by the company’s low-cost oil sands operations. In addition to its crude oil operations, Suncor is also developing some cleaner energy initiatives, with plans to hit zero net emissions by 2050.
Suncor Energy Inc. (NYSE:SU) set a quarterly record for AFFO in Q4, coming in at $2.17 on a per share basis, 11% higher than its previous record set all the way back in 2014. Suncor also took steps to improve its balance sheet and return more cash to shareholders last year, reducing its net debt by $4 billion and returning close to $4 billion in cash to shareholders through buybacks and dividends.
Nonetheless, Suncor joins Intel Corporation (NASDAQ:INTC), Meta Platforms, Inc. (NASDAQ:FB), and Visa Inc. (NYSE:V) as some of the stocks that Dan Loeb dumped in Q4.
9. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Shareholders: 69
Numerous hedge funds have sold off their stakes in video game developer Activision Blizzard, Inc. (NASDAQ:ATVI) over the last two years, including Dan Loeb in Q4. Third Point sold off all 2 million of its ATVI shares during the quarter, joining a list of 35 net funds that have axed the stock since early 2020.
Activision Blizzard, Inc. (NASDAQ:ATVI) is set to be acquired by Microsoft Corporation (NASDAQ:MSFT) in a deal that should be considered a blessing for the troubled game developer, prominent employees of which have been hit with sexual harassment allegations. The company’s culture has also been lambasted by the press, impacting the company’s ability to hire and retain talent. The completion of the deal is not a given, however, as it could face antitrust challenges.
Another fund that recently exited its Activision Blizzard, Inc. (NASDAQ:ATVI) position, though not one that is included in our database of 900+ elite funds, was Merion Road Capital Management, which detailed why it chose to sell its stake in Activision Blizzard in its Q4 2021 investor letter:
“The largest detractor for the year was our position in Activision (“ATVI”). ATVI took multiple legs down during the year as they became the defendants of a sexual harassment lawsuit and faced a wave of incriminating pressfrom journalists. To make matters worse, it became apparent that ATVI wasstruggling in their response to the crisis at hand. While I find such actions truly deplorable, my job as an investor is to assess the situation and determine whether or not the company’s valuation accurately reflects these associated risks. Unfortunately, I miscalculated the impact that these factors would have on the company. My initial rationale was that sexual harassment lawsuits are not uncommon and would be settled with compensation – given ATVI’s size and balance sheet, this would not be a crippling event. Furthermore, with a deep catalog of proven games, ATVI’s earnings stream is predictable and less reliant on new hits.
What I did not properly consider was that the company’s true asset is not its catalog but rather its employee base. Video games are a form of art and need creative developers to build stories that draw users in and keep them engaged. Whether it is brand new content or an iteration of a previously successful title, the quality of the work, and therefore bench of developers / creators, matters. It is clear that the culture at ATVI was unhealthy. Changing that will not be easy. It will make it difficult for the company to attract new talent and retain key employees. From a financial perspective this could lead to delays in game production and perhaps less successful products. I exited our position given these risks.”
8. TE Connectivity Ltd. (NYSE:TEL)
Number of Hedge Fund Shareholders: 44
Dan Loeb’s hedge fund also sold off 1.31 million shares of TE Connectivity Ltd. (NYSE:TEL) during Q4, closing the position it had opened during the first quarter of 2020. 44 funds were long TEL on December 31, owning a collective $2.48 billion worth of shares.
TE Connectivity Ltd. (NYSE:TEL) is experiencing solid growth and demand across many of its segments, driven by the increasing adoption of electric vehicles, a boost in capital spending on factories and in the communications sector, and thanks to the continued proliferation of cloud services globally. TE Connectivity managed 16% organic growth in its fiscal Q4 2021 despite supply chain issues hampering some of its segments, and hit $3.82 billion in revenue in its fiscal Q1 2022, topping estimates by nearly $100 million.
Madison Funds is bullish on TE Connectivity Ltd. (NYSE:TEL)’s opportunity in the electric vehicle space, having this to say about the company in its Q3 2021 investor letter:
“TE Connectivity is the most exposed to global automotive trends of any company in the portfolio. Its highly engineered and customized electrical connectors generate an average of $65 in content sold for a high proportion of cars produced globally. For TE, the move to EVs equates to a step up to $120 in content per vehicle. In its most recent quarterly report, TE’s automotive revenue was 13% higher than the like 2019 quarter despite global auto production approximately 15% lower than in 2019. The difference can only be market share gains and mix gains via EV content. We are optimistic that TE Connectivity can grow this business nicely as global auto production recovers and EVs account for increasing proportions of the mix.”
7. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Shareholders: 46
Third Point unloaded its entire 1.3-million share stake in Aptiv PLC (NYSE:APTV) during Q4, closing the position one year after initiating it. Billionaire Louis Bacon also unloaded his stake in Aptiv during the quarter, though overall hedge fund ownership rose by a net total of two funds.
Aptiv PLC (NYSE:APTV) is another company that operates in the EV and autonomous vehicle spaces, which Dan Loeb appears to still be bullish on in general given his $408 million stakes in Rivian Automotive, Inc. (NYSE:RIVN) following that company’s Q4 IPO.
Loeb’s sale of Aptiv potentially came just weeks before the company announced the acquisition of Wind River for $4.3 billion in cash, a move that wasn’t received overly well by the market. Aptiv PLC (NYSE:APTV)’s Q4 results and 2022 guidance were also mixed, with cost pressure driving down the company’s margins in Q4.
6. The Estee Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Shareholders: 45
Closing out the first part of the list is The Estee Lauder Companies Inc (NYSE:EL), which Third Point owned 1 million shares of on September 30. Those shares were sold off during Q4, closing the position Dan Loeb’s fund had opened a year earlier. Third Point hasn’t been the only hedge fund selling off shares of the cosmetics company, as hedge fund ownership of EL has fallen by 27% over the past three quarters.
The Estee Lauder Companies Inc (NYSE:EL) got strong contributions across many of its brands during its fiscal Q2 2022, with 11 different brands achieving double digit organic sales growth during the quarter. Overall organic net sales rose by 11% year-over-year, including by 19% in the Americas, while adjusted diluted earnings per share were 15% higher.
Harding Loevner’s Global Equity Fund also sold off its position in The Estee Lauder Companies Inc (NYSE:EL) during Q3, citing the stock’s rising valuation as a prime reason for closing the position according to its Q3 2021 investor letter:
“We sold cosmetic producer Estée Lauder, which we bought last March. At the time, the market reflected a dire outlook for retail demand, especially tourist-related; however, we found its Chinese business attractive and admired its agility across social media and other digital channels. As the stock has appreciated, the resulting valuation now leaves no room for error, such as a potential shift of Chinese consumers’ tastes away from US brands.”
Intel Corporation (NASDAQ:INTC), Meta Platforms, Inc. (NASDAQ:FB), and Visa Inc. (NYSE:V) are some of the most prominent stocks sold off by Dan Loeb in Q4, all of which will be discussed in the second half of this article.
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Disclosure: None. Top 10 Stocks to Sell Now According to Billionaire Dan Loeb is originally published at Insider Monkey.
