In this article, we present the list of the top 5 stocks to sell now according to billionaire Dan Loeb. If you want to read our comprehensive analysis of Third Point Management’s history, investment philosophy, and hedge fund performance, go directly to Top 10 Stocks to Sell Now According to Billionaire Dan Loeb.
5. Paysafe Limited (NYSE:PSFE)
Number of Hedge Fund Shareholders: 32
Dan Loeb’s Third Point was one of several hedge funds that dumped Paysafe Limited (NYSE:PSFE) during Q4, as hedge fund ownership of the fintech company fell by 24% at the tail end of a rather dismal year for the company and its shares. It was the second straight quarter that saw a steep drop in hedge fund ownership.
Loeb sold off 39.47 million shares of Paysafe Limited (NYSE:PSFE), closing the position he had owned since the company went public at the end of Q1. Early investor enthusiasm for the stock quickly waned through the year with each successive quarterly financial report the company released, as its revenue growth disappointed and its operating losses grew.
Loeb shared some of the details of why he unloaded his Paysafe Limited (NYSE:PSFE) investment in Third Point’s Q4 investor letter, stating the company failed to execute on the plans it had laid out in its IPO. His comments can be read below:
“The top five losers for the quarter (includes) Paysafe Ltd. The fourth quarter marked the beginning of a market rotation from growth to value that accelerated into January of 2022. One of the most stinging losses for the quarter was our investment in Paysafe Ltd, which was down 49% in Q4 and 74% for the year due to its failure to execute the plan articulated in its 2020 IPO (via a SPAC transaction, in which we participated.) We exited the position in its entirety following the company’s Q3 earnings report, and the shares have languished since then.”
4. Visa Inc. (NYSE:V)
Number of Hedge Fund Shareholders: 146
Dan Loeb also dumped another payment processor in Q4, though a much more established one in Visa Inc. (NYSE:V), selling out of his 1.4-million share position in the company. Hedge fund ownership of Visa fell by 15% during 2021.
Unlike Paysafe, Visa Inc. (NYSE:V) is still generating impressive net revenue growth, as that figure rose by 24% year-over-year during the company’s fiscal Q1 2022, while non-GAAP EPS grew by 27%. Visa has grown its payment transactions volume by 26% over the past two years, topping $60 billion during the quarter for the first time.
Polen Capital’s Polen Global Growth fund is still a big fan of Visa Inc. (NYSE:V) saying in its Q4 2021 investor letter that it expects mid-teens or greater EPS growth for the foreseeable future:
“Visa is also experiencing COVID-related pressures, primarily due to rolling lockdowns and the fact that international travel is yet to return to pre-pandemic levels. The lack of travel relative to before the pandemic has specifically impacted Visa’s cross-border business, which represents roughly 10% of payment volume, but approximately 25% of gross revenues. Like Autodesk, how the near-term unfolds is hard to predict, but we are confident that international travel will return eventually.
At less than 30x earnings, we don’t think we’re paying much for this eventuality. Further, despite continued advances in fintech and the increased popularity of cryptocurrencies, Visa and MasterCard continue to invest to protect and even expand their competitive advantages. Fintech remains a dynamic space, but we continue to believe that Visa and Mastercard’s scale and “network of networks” approach provides both companies a formidable competitive position within the payments ecosystem. We expect mid-teens or greater earnings per share growth for many years to come.”
3. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Shareholders: 229
Meta Platforms, Inc. (NASDAQ:FB) is another company that hedge funds have been fleeing recently, and that was even before the company’s disastrous Q4 earnings report. Hedge fund ownership of Facebook and Instagram’s parent company has fallen by 16% over the past two quarters. Third Point was one of several funds to unload Meta Platforms during Q4, selling off all 1 million of its shares.
Meta Platforms, Inc. (NASDAQ:FB) suffered the worst single-day loss in stock market history following its latest earnings report, losing $232 billion in value. The company expects its revenue growth to slow considerably this year, while its much-ballyhooed metaverse initiative lost a staggering $10 billion during the quarter. iOS privacy changes have also had a material impact on Meta’s ad revenue.
Nonetheless, Meta Platforms, Inc. (NASDAQ:FB) continues to grow its daily active users at a strong pace and is well-positioned to capitalize on the continued migration of ad spending to digital channels. The stock now trades at its lowest price-to-FCF ratio in the last five years, providing a cheap and compelling entry point into the stock.
2. Endeavor Group Holdings, Inc. (NYSE:EDR)
Number of Hedge Fund Shareholders: 27
Dan Loeb’s hedge fund sold off 12.5 million shares of Endeavor Group Holdings, Inc. (NYSE:EDR) during Q4, closing its position that was previously the third-largest among hedge funds. Third Point’s sale was counter to the broader hedge fund industry, with ownership of the stock climbing by 35% during the quarter.
Endeavor Group Holdings, Inc. (NYSE:EDR), which owns the UFC and represents some of the world’s top athletes, delivered strong Q3 results, with outperformance across all three of its segments. The company also helped deliver its balance sheet with the sale of an 80% stake in Endeavor Content for $775 million.
ClearBridge Investments was bullish on Endeavor Group Holdings, Inc. (NYSE:EDR)’s IPO in anticipation of the return of live sporting events, having this to say about the company in its Q2 2021 investor letter:
“In addition to these disruptors, we added exposure in evolving opportunities through the IPO of Endeavor Group. Endeavor owns sports leagues like UFC and Pro Bull Riders which should benefit from the return of live events as well as leading sports agency IMG and its IMG Academy training franchise. Streaming companies are hungry for content and rights prices for programming owned by Endeavor are rising. Endeavor, as a representative to many of the world’s most well-known athletes, should also benefit from soaring sports salaries.”
1. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Shareholders: 74
Topping the list is chipmaker Intel Corporation (NASDAQ:INTC), which Dan Loeb’s hedge fund sold 9 million shares of during Q4, representing the largest holding that Third Point sold off during Q4. Hedge fund ownership of INTC has dropped by 13% in 2022.
Intel Corporation (NASDAQ:INTC) has big expectations about its longer term growth trajectory, anticipating double digit revenue growth by 2026. However, the near-term isn’t quite as rosy, as revenue is expected to decline by 4% this year. Despite that, Intel could be an intriguing addition to a dividend portfolio given its 3.1% yield and future growth prospects.
And even though Dan Loeb sold off his stake in Intel Corporation (NASDAQ:INTC), he talked up the company in Third Point’s Q4 investor letter, stating that he believed their prospects had finally turned the corner. His full comments can be read below:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Undervalued Dividend Kings To Buy In 2022 and 10 Stocks to Buy Now According to Hari Hariharan’s NWI Management.
