In this article, we discuss the value hedge funds winning in 2022 and the 15 stocks that helped them do it. If you want to read about some more value stocks, go directly to Value Hedge Funds are Winning in 2022 Thanks to These 5 Stocks.
Elite hedge funds are often lauded as huge market-beating machines that have withstood the test of time. However, they are also criticized for limiting access to just a few high net worth individuals and charging ludicrously high fees. In a volatile marketplace, investors are eagerly looking towards hedge funds for advice. Growth-focused funds, like Tiger Global Management and RTW Investments, are down 52% and 34%, respectively, while value-focused funds like Greenlight Capital have gained over 20% year-to-date, per HFRX Global Hedge Fund Index.
The numbers indicate that rate hikes and soaring inflation have contributed to one of the worst starts to the year on record for growth-focused funds. HFR data shows that equity hedge funds in general, which manage $1.2 trillion in assets, are suffering amid the escalating crisis, and have lost, on average, at least 8% so far in 2022. Value funds have focused on investments in gold, macro bets and shorts on tech-driven small firms to protect themselves from the developing economic crisis and done much better.
Some of the top value stocks that hedge funds backed in 2022 include Berkshire Hathaway Inc. (NYSE:BRK-B), Wells Fargo & Company (NYSE:WFC), and General Motors Company (NYSE:GM). Morgan Stanley estimates that last month, hedge funds betting on US equities cut the difference between their long positions and their short positions to close to the lowest since 2010, a signal showing the caution around the stock market in the past few months, although these positions are starting to build up again.
Our Methodology
The stocks common to elite hedge funds that have won 2022 in light of their value investing strategy were identified. These were then sorted using the Price-to-Earning (PE) ratios. Stocks that have a PE ratio of less than 25 were preferred for the list. The Year-to-Date (YTD) increase in the share price of each firm is mentioned as well. The business fundamentals and analyst ratings of each company are also discussed to provide some additional context. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each company.
Value Hedge Funds are Winning in 2022 Thanks to These 15 Stocks
15. BP Prudhoe Bay Royalty Trust (NYSE:BPT)
Number of Hedge Fund Holders: 1
PE Ratio: 23.90
YTD Increase in Share Price as of June 16: 401.39%
BP Prudhoe Bay Royalty Trust (NYSE:BPT) operates as a grantor trust. The firm has a large interest in the Prudhoe Bay oil field in Alaska that contains 50,000 gross productive acres. The stock has gained in the past few weeks on the back of tightening supplies. Oil has registered a seventh straight week of gains as inflation climbs, with investment bank Goldman Sachs predicting that the prices would continue to rise as the supply was nowhere near enough to meet demand. Oil is near $5 per gallon in the US.
On April 7, BP Prudhoe Bay Royalty Trust (NYSE:BPT) declared a quarterly dividend of $1.0875 per share, up substantially from the prior dividend of $0.5812 per share. The forward yield was also an impressive 27.74%.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in BP Prudhoe Bay Royalty Trust (NYSE:BPT) with 131,700 shares worth more than $1.9 million.
Just like Berkshire Hathaway Inc. (NYSE:BRK-B), Wells Fargo & Company (NYSE:WFC), and General Motors Company (NYSE:GM), BP Prudhoe Bay Royalty Trust (NYSE:BPT) is one of the stocks that hedge funds are monitoring as interest rates rise.
14. Adams Resources & Energy, Inc. (NYSE:AE)
Number of Hedge Fund Holders: 3
PE Ratio: 9.77
YTD Increase in Share Price as of June 16: 20.48%
Adams Resources & Energy, Inc. (NYSE:AE) is an oil and gas firm. On May 16, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $1.39, beating market estimates by $0.01. The revenue over the period was $774 million, up more than 137% compared to the revenue over the same period last year and beating analyst expectations by $123 million. The firm also declared a quarterly dividend of $0.24 per share, in line with previous. The forward yield was 2.76%.
On March 17, B Riley analyst Liam Burke initiated coverage of Adams Resources & Energy, Inc. (NYSE:AE) stock with a Buy rating and a price target of $45, noting that the firm operated with “best-in-class service and safety records”.
At the end of the first quarter of 2022, 3 hedge funds in the database of Insider Monkey held stakes worth $12 million in Adams Resources & Energy, Inc. (NYSE:AE), compared to 4 the preceding quarter worth $9 million.
13. Sendas Distribuidora S.A. (NYSE:ASAI)
Number of Hedge Fund Holders: 7
PE Ratio: 13.26
YTD Increase in Share Price as of June 16: 29.50%
Sendas Distribuidora S.A. (NYSE:ASAI) is a Brazilian firm that sells food products. At the end of March 2022, the company operated 216 stores under the Assaí banner. It also runs 13 distribution centers. Some of the industries it serves include restaurants, schools, small businesses, religious institutions, hospitals, and hotels. In October last year, the company had purchased Assai stores worth $946 million from another Brazilian food retailer.
The firm sells products through stores as well as through telesales. It was founded in 1974 and employs over 60,000 people. It is headquartered in Rio De Janeiro. On May 5, Sendas Distribuidora S.A. (NYSE:ASAI) declared a dividend of $0.124 per share.
At the end of the first quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $24 million in Sendas Distribuidora S.A. (NYSE:ASAI), compared to 6 in the previous quarter worth $13 million.
12. Arcos Dorados Holdings Inc. (NYSE:ARCO)
Number of Hedge Fund Holders: 13
PE Ratio: 15.16
YTD Increase in Share Price as of June 16: 15.06%
Arcos Dorados Holdings Inc. (NYSE:ARCO) is a Uruguay-based firm that operates as a franchisee of McDonald’s restaurants. The firm owns and runs the restaurant in around 20 countries in Latin America and the Caribbean. Some of these include Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, and Ecuador. At the end of 2021, the company owned and ran 2,261 restaurants across the region.
On June 15, Bradesco BBI analyst Richard Cathcart upgraded Arcos Dorados Holdings Inc. (NYSE:ARCO) stock to Outperform from Neutral with a price target of $12, noting that the company had strong post-pandemic momentum.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Moerus Capital Management is a leading shareholder in Arcos Dorados Holdings Inc. (NYSE:ARCO) with 6 million shares worth more than $49 million.
11. Adecoagro S.A. (NYSE:AGRO)
Number of Hedge Fund Holders: 16
PE Ratio: 6.20
YTD Increase in Share Price as of June 16: 19.43%
Adecoagro S.A. (NYSE:AGRO) operates as an agro-industrial firm. The company plants and harvests gains and oilseeds. It also engages in the sale of other agricultural products and land transformation activities. Some of the products it markets include sugar, ethanol, wheat, corn, soybeans, peanuts, cotton, and sunflowers. The firm owns 219,850 hectares of land, including 18 farms in Argentina, 8 farms in Brazil, and 1 farm in Uruguay, as well as a total of 241 megawatts of installed cogeneration capacity.
On May 12, Adecoagro S.A. (NYSE:AGRO) posted earnings for the first quarter of 2022, reporting a revenue of around $201 million, up more than 18% compared to the revenue over the same period last year.
Among the hedge funds being tracked by Insider Monkey, Delaware-based investment firm Route One Investment Company is a leading shareholder in Adecoagro S.A. (NYSE:AGRO) with 14.3 million shares worth more than $173 million.
10. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH)
Number of Hedge Fund Holders: 17
PE Ratio: 19.47
YTD Increase in Share Price as of June 16: 35.13%
Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is a biopharma firm based in California. On May 9, the company posted earnings for the first quarter of 2022, reporting a revenue of more than $120 million, up close to 17% compared to the revenue over the same period last year. On May 24, the firm had announced that it obtained approval for a new drug application of Regadenoson, a treatment for those unable to undergo adequate exercise stress.
On March 15, Wells Fargo analyst Jacob Hughes maintained an Equal Weight rating on Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) stock and raised the price target to $32 from $23, appreciating the solid quarterly results of the company.
At the end of the first quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $51 million in Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH), compared to 13 the preceding quarter worth $28 million.
9. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 19
PE Ratio: 9.16
YTD Increase in Share Price as of June 16: 11.67%
BHP Group Limited (NYSE:BHP) is a diversified metals and mining firm. On May 19, the shareholders of energy firm Woodside Petroleum approved the merger of the business with the petroleum arm of BHP Group, a deal that advances a plan by the latter to transition away from fossil fuels. Per Australian brokerage Barrenjoey, the company could gain around $10 billion from the sale of the petroleum business this year.
On June 7, Jefferies analyst Christopher LaFemina upgraded BHP Group Limited (NYSE:BHP) stock to Buy from Hold and raised the price target to $82 from $72, noting that the mining sector was “undervalued and poised to outperform as China recovers”.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in BHP Group Limited (NYSE:BHP), compared to 25 in the previous quarter worth $2 billion.
8. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 19
PE Ratio: 12.41
YTD Increase in Share Price as of June 16: 11.35%
British American Tobacco p.l.c. (NYSE:BTI) provides tobacco and nicotine products. The firm has an impressive dividend history stretching back twelve years. In the past three years, the payouts have registered consistent growth. On February 17, the company declared a quarterly dividend of $0.735 per share, an increase of 1.4% from the previous dividend of $0.725 per share. The forward yield was 6.26%.
On June 7, investment advisory Barclays maintained an Overweight rating on British American Tobacco p.l.c. (NYSE:BTI) stock and raised the price target to GBP 4,400 from GBP 4,200. Analyst Gaurav Jain issued the ratings update.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in British American Tobacco p.l.c. (NYSE:BTI), compared to 18 in the preceding quarter worth $1.4 billion.
In its Q4 2021 investor letter, Motiwala Capital, an asset management firm, highlighted a few stocks and British American Tobacco p.l.c. (NYSE:BTI) was one of them. Here is what the fund said:
“British American Tobacco p.l.c. (NYSE:BTI) is one of the largest tobacco companies in the world. In 2021, BTI should have generated $37B in revenues and $10B in net income. The company is paying down debt while continuing to invest in new categories. BTI pays a high dividend payout that is well covered by free cash flow. British American Tobacco p.l.c. (NYSE:BTI) traded at 10 PE and 8% yield at purchase. The shares should appreciate as EPS grows, company pays down debt and continues to increase dividends.”
7. Caleres, Inc. (NYSE:CAL)
Number of Hedge Fund Holders: 21
PE Ratio: 5.93
YTD Increase in Share Price as of June 16: 12.38%
Caleres, Inc. (NYSE:CAL) makes and sells footwear in the United States, Canada, China, and Guam. Some of the brands that the company retails include Nike, Skechers, adidas, Vans, Converse, Crocs, Puma, Birkenstock, New Balance, Asics, New Balance, Under Armour, and Bearpaw. On May 24, the firm posted earnings for the first fiscal quarter of the year, reporting earnings per share of $1.32 and a revenue of $735 million.
Caleres, Inc. (NYSE:CAL), which has been paying a dividend to shareholders consistently for the past twenty-two years, declared a quarterly dividend of $0.07 per share on May 25. The forward yield was 1.02%.
At the end of the first quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $60 million in Caleres, Inc. (NYSE:CAL), compared to 20 in the previous quarter worth $58 million.
6. AAR Corp. (NYSE:AIR)
Number of Hedge Fund Holders: 22
PE Ratio: 22.68
YTD Increase in Share Price as of June 16: 3.11%
AAR Corp. (NYSE:AIR) is an aerospace and defense firm based in Illinois. On April 5, the company announced that it had secured a $365 million contract for F-16 Systems Program Office Support from the US Air Force. Under the terms of the deal, the company will overhaul the F-16 depot work and Service Life Extension Program. The work on the program is expected to be completed by March 2033.
On March 23, RBC Capital analyst Ken Herbert maintained an Outperform rating on AAR Corp. (NYSE:AIR) stock and raised the price target to $56 from $50, noting that the quarterly results of the firm showed steady improvement in sales.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Rubric Capital Management is a leading shareholder in AAR Corp. (NYSE:AIR) with 1.5 million shares worth more than $76 million.
In addition to Berkshire Hathaway Inc. (NYSE:BRK-B), Wells Fargo & Company (NYSE:WFC), and General Motors Company (NYSE:GM), AAR Corp. (NYSE:AIR) is one of the stocks that elite investors are keeping their eye on as inflation soars.
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Disclosure. None. Value Hedge Funds are Winning in 2022 Thanks to These 15 Stocks is originally published on Insider Monkey.
