Below we present the list of the top 5 stocks billionaire Larry Robbins just added to his portfolio. For more background on the billionaire investor, as well as our methodology and a more comprehensive list of Larry Robbins’ newest stock picks, you can go directly to Top 9 Stocks Billionaire Larry Robbins Just Added to His Portfolio.
5. Alibaba Group Holding Limited (NYSE:BABA)
Value of Glenview Capital’s 13F Position: $9.84 million
Number of Hedge Fund Shareholders: 97
Hedge funds have been abandoning Alibaba Group Holding Limited (NYSE:BABA) in droves in recent quarters, as 35% of the Chinese ecommerce giant’s former hedge fund shareholders sold off their positions in the second half of 2021. Larry Robbins took a contrarian stance, buying 82,789 BABA shares during Q4.
Alibaba Group Holding Limited (NYSE:BABA) shares have fallen by nearly 50% over the past year owing to a myriad of factors that have impacted not only the company’s own growth rate but the entire Chinese online market as well. Online retail sales in China slumped to just 5% growth in the third quarter, which lead Alibaba to make a significant downgrade to its fiscal year outlook, slashing it by close to 33% on both the upper and lowers ends of the range.
Longleaf Partners International Fund discussed the above issues as well as some of the other rationale behind its decision to sell off Alibaba Group Holding Limited (NYSE:BABA) during the fourth quarter in the fund’s Q4 2021 investor letter:
“Alibaba (-50%, -2.26%; -22%, -0.82%), the largest online retail platform in China, was another top detractor for the year and in the fourth quarter. Alibaba reported weak quarterly results and downgraded its sales outlook for the current fiscal year to 20- 23% growth, down from the original guidance of 29-32% growth. Macro headwinds, weak consumer sentiment, regulatory scrutiny and competitive forces are having a larger than expected impact on overall retail sales and Alibaba’s market share. Notably, overall retail sales in China slowed down to a meager 5% growth in the September quarter. Slowing consumption, combined with stiff competition from new entrants in live streaming e-commerce, have resulted in transitory deceleration in Alibaba’s core ecommerce growth trajectory. Additionally, the company is accelerating strategic investments in new initiatives, including Community Group Buying (Taocaicai), Taobao Deals, Local Consumer Services and International Ecommerce. These are future growth drivers but are depressing company’s earnings today. In December, we exited our full position in Alibaba. This was more of a tactical move than a change in investment conviction. We initiated the position early in 2021, and the continued challenges in the second half of the year resulted in a loss that was material enough to be helpful from a tax distribution management point of view. We are sensitive to taxable gains and try to minimize where sensible, so we took advantage of the opportunity to reduce that liability and plan on revisiting the Alibaba opportunity in 2022. We continue to own Alibaba in our Asia Pacific strategy.”
4. Activision Blizzard, Inc. (NASDAQ:ATVI)
Value of Glenview Capital’s 13F Position: $20.57 million
Number of Hedge Fund Shareholders: 69
Activision Blizzard, Inc. (NASDAQ:ATVI) is another large-cap stock that has lost quite a bit of hedge fund support in recent quarters, with more than 30% of former shareholders ditching ATVI since early 2020. Robbins again took a contrarian stance on the stock, which lost 28% in 2021, and has been rewarded thus far in 2022, as ATVI shares have gained 21%.
Activision Blizzard, Inc. (NASDAQ:ATVI)’s strong performance this year has been thanks to a rather unexpected savior in Microsoft Corporation (NASDAQ:MSFT), which announced in January that it would acquire the struggling World of Warcraft and Call of Duty developer for $68 billion. The deal isn’t a sure bet to be approved by regulators however, which is why there’s a nearly 10% gap between ATVI’s current share price and the value of the Microsoft offer.
Citing some of those struggles that have beset Activision recently, Baron Partners Fund had to say about closing its Activision Blizzard, Inc. (NASDAQ:ATVI) position in the fund’s Q4 2021 investor letter:
“The Fund’s Core Growth investments were negatively impacted by the market rotation to value-oriented businesses. Fundamentals for most of our Core Growth holdings remain strong. We exited two positions in this space, which included Activision Blizzard, Inc. We believe ESG concerns at Activision could be a negative for the company in the coming years.
Shares of Activision Blizzard, Inc., a leading video game publisher, detracted from performance. The company reported solid earnings results and maintained guidance for fiscal year 2021. However, the stock fell primarily due to a combination of increased concern around an employee lawsuit alleging sexual harassment and timing delays for two key Blizzard games (Diablo IV and Overwatch 2). We sold our position.”
3. Quantum-Si incorporated (NASDAQ:QSI)
Value of Glenview Capital’s 13F Position: $47.22 million
Number of Hedge Fund Shareholders: 17
Smack dab in the middle of a bunch of large-cap behemoths on the second half of this list sits Quantum-Si incorporated (NASDAQ:QSI), a small-cap biotech that Larry Robbins took a significant stake in during Q4, buying up just over 5% of the company’s outstanding shares, 6 million in total.
Quantum-Si incorporated (NASDAQ:QSI) shares have lost 59% of their value since the end of June 2021, shortly after the company went public following its merger with an SPAC. It’s unclear what investors were expecting from the company, which didn’t even have a commercialized product in Q3 and earned zilch on the revenue front.
On the other hand, this will be a big year for Quantum-Si incorporated (NASDAQ:QSI), which plans to fully commercialize its proteomics platforms, which includes its single molecule analyzer Platinum, which it will sell for $70,000. The company purports the device to be more sensitive, more portable, and cheaper than competing mass spectrometers on the market, making it a potentially valuable acquisition for researchers.
2. US Foods Holding Corp. (NYSE:USFD)
Value of Glenview Capital’s 13F Position: $56.39 million
Number of Hedge Fund Shareholders: 39
There was a 30% jump in hedge fund ownership of US Foods Holding Corp. (NYSE:USFD) during Q4, with Larry Robbins being one of the prominent money managers to take a new stake in the company. Ray Dalio’s Bridgewater Associates and Lee Ainslie’s Maverick Capital were among the other hedge funds to add USFD to their 13F portfolios.
US Foods Holding Corp. (NYSE:USFD) grew adjusted EBITDA by 58% year-over-year during the fourth quarter, which has the fresh food producer well on its way to achieving its goal of $1.7 billion in adjusted EBITDA in 2024. The company expects to achieve the bulk of its EBITDA growth through a combination of growing its market share and optimizing its gross margins.
US Foods Holding Corp. (NYSE:USFD) has also been the target of hedge fund activism in recent months, as Scott Ferguson’s Sachem Head Capital, which raised its stake in USFD by 198% during Q4. The activist fund announced that it will attempt to take over US Foods’ board at the company’s 2022 annual meeting, nominating a slate of seven directors.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Value of Glenview Capital’s 13F Position: $64.6 million
Number of Hedge Fund Shareholders: 282
Amazon.com, Inc. (NASDAQ:AMZN) hit a record high in hedge fund ownership during Q4, as 282 funds in our database were long AMZN. That included Larry Robbins’ Glenview Capital, which made Amazon its biggest new portfolio addition of Q4, buying 19,375 shares.
Amazon.com, Inc. (NASDAQ:AMZN) struggled to put up big numbers in Q4 against its tough 2020 comps, growing North American online sales by just 9% during the quarter, while its operating income profit from a year earlier became a loss in 2021. On the other hand, Amazon’s Web Services continued to excel, offsetting some of the stumbles from the e-commerce side of Amazon’s business. AWS grew sales by 37% year-over-year in 2021 to $62.2 billion, while achieving a hefty operating margin of 29.8%.
In it Q4 2021 investor letter, Davis New York Venture Fund expressed some consternation over unproven and unprofitable growth companies trading at exceptional valuations compared to dominant companies like Amazon.com, Inc. (NASDAQ:AMZN). Here is what the fund had to say:
“Within the traditional growth category, growing euphoria has led to bubble prices for many companies, most especially those with new and unproven business models such as those discussed above. In contrast, our research focuses on a select handful of proven growth stalwarts whose shares still trade at reasonable valuations. For example, because of concerns about future litigation and regulation, several dominant internet businesses, including Amazon, trade at steep discounts to many unproven and unprofitable growth darlings that, in our view, trade at euphoric prices. While we expect a continued barrage of negative headlines around the company, as well as increased regulation in the years ahead, we do not expect a significant decline in its long-term profitability.”
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Finance Stocks to Buy During Interest Rate Hikes and 10 Blue Chip Stocks in Warren Buffett’s Portfolio.
