In this article, we discuss 10 stocks that Warren Buffett is not giving up on despite losses. If you want to see more stocks in this selection, Warren Buffett Is Not Giving Up on These 5 Stocks Despite Losses.
Warren Buffett, the legendary billionaire heading Berkshire Hathaway, has always stressed upon the importance of buying stocks when they are trading at a discount. Similarly, he advises investors to hold on to quality stocks despite near-term market turbulence, since a portfolio strategy should be focused on long-term gains. If the underlying fundamentals of companies are robust, Buffett prefers to hold good quality stocks forever.
While the US economy has been uprooted by multiple negative catalysts including inflation, recession threats, high interest rates, the Russia-Ukraine war, and now the China-Taiwan tensions, the Oracle of Omaha remains steadfast with his equity portfolio and investments. He only disposed of 2 previously held positions in Q2 2022 – Royalty Pharma plc (NASDAQ:RPRX) and Verizon Communications Inc. (NYSE:VZ), and poured $3.8 billion in strengthening his existing positions during the quarter. Warren Buffett’s latest buying spree, despite the negative stock market indicators and chaotic macro backdrop, is a sign that the billionaire believes the economy will rebound.
According to the 13F filings for the second quarter of 2022, Warren Buffett made additional purchases in 9 stocks, sold off 2 securities, and reduced holdings in 4 companies. The billionaire invests in the energy, information technology, consumer staples, and finance sectors. Some of the most notable stocks that Warren Buffett is not giving up on despite losses include General Motors Company (NYSE:GM), Snowflake Inc. (NYSE:SNOW), and Charter Communications, Inc. (NASDAQ:CHTR).
Our Methodology
We selected these stocks from the Q2 2022 portfolio of Warren Buffett’s Berkshire Hathaway. The billionaire owns a position in these firms despite the stocks registering notable year-to-date losses as of August 19. We have ranked the list according to the hedge fund sentiment around the securities, which was measured from Insider Monkey’s database of about 900 elite hedge funds as of the second quarter of 2022.
Warren Buffett Is Not Giving Up on These Stocks Despite Losses
10. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 22
YTD Share Price Decline as of August 19: 52.66%
Nu Holdings Ltd. (NYSE:NU) is a digital financial services and technology company operating in Brazil, Mexico, and Colombia. Warren Buffett, as of Q2 2022, owned more than 107 million Nu Holdings Ltd. (NYSE:NU) shares worth $400.6 million, representing 0.13% of the total portfolio. On August 16, the company reported a Q2 revenue of $1.16 billion, exceeding Wall Street consensus of $1.04 billion. The shares climbed 20% as a result. However, the stock has lost about 53% in value year to date as of August 19.
Citi analyst Ashwin Shirvaikar on July 25 reiterated a Buy rating on Nu Holdings Ltd. (NYSE:NU) but lowered the price target on the stock to $7 from $9. The analyst slashed estimates of short-term loan growth due to Nu Holdings Ltd. (NYSE:NU)’s plan to tighten credit underwriting.
According to Insider Monkey’s Q2 data, 22 hedge funds were long Nu Holdings Ltd. (NYSE:NU), up from 17 funds in the prior quarter. Chase Coleman’s Tiger Global Management is the leading position holder in the company, with 203 million shares worth $759.2 million.
In addition to General Motors Company (NYSE:GM), Snowflake Inc. (NYSE:SNOW), and Charter Communications, Inc. (NASDAQ:CHTR), Warren Buffett remains bullish on Nu Holdings Ltd. (NYSE:NU).
9. Floor & Decor Holdings, Inc. (NYSE:FND)
Number of Hedge Fund Holders: 29
YTD Share Price Decline as of August 19: 29.25%
Floor & Decor Holdings, Inc. (NYSE:FND) is a Georgia-based multi-channel specialty retailer of hard surface flooring and related accessories. Warren Buffett’s hedge fund held 4.78 million Floor & Decor Holdings, Inc. (NYSE:FND) shares in Q2 2022, worth about $301 million. Buffett added the stock to his portfolio in Q3 2021, and has held the stock steadily. Floor & Decor Holdings, Inc. (NYSE:FND) shares have plunged over 29% YTD as of August 19.
Floor & Decor Holdings, Inc. (NYSE:FND) stock gained 10.2% on August 5, after the company reported above consensus Q2 results, driven by robust year over year growth in net sales and comparable store sales. The company also updated its expected comparable store sales growth forecast for FY 2022 to 10%-11% from a prior guidance of 10.5%-13%.
On July 29, Piper Sandler analyst Peter Keith downgraded Floor & Decor Holdings, Inc. (NYSE:FND) to Neutral from Overweight with a price target of $75, down from $103. The analyst is worried that homeowners may start deferring flooring purchases due to the high expense. The downgrade is solely due to macro constraints and a belief that earnings estimates need to be toned down, said the analyst, who still has a “very high opinion” of Floor & Decor Holdings, Inc. (NYSE:FND)’s management and the company’s long-term growth potential.
According to Insider Monkey’s data, 29 hedge funds were bullish on Floor & Decor Holdings, Inc. (NYSE:FND) at the end of June 2022, compared to 30 funds in the prior quarter. Colin Moran’s Abdiel Capital Advisors is one of the leading position holders in the company, with 4.3 million shares worth $273.7 million.
Here is what Argosy Investors has to say about Floor & Decor Holdings, Inc. (NYSE:FND) in its Q1 2022 investor letter:
“Floor & Decor Holdings, Inc. (NYSE:FND), was “cyclical” risk sales in the sense that the stock has benefitted from some pandemic-related boosts in sales and/or they are more exposed to economic downturns. Floor & Décor is a terrific business that we would love to own more of at a better price. Given the significant amount of home renovations that have occurred during the pandemic, we thought better of our continued ownership in this stock until we were at a more favorable point in the economic cycle.”
8. Liberty Latin America Ltd. (NASDAQ:LILA)
Number of Hedge Fund Holders: 29
YTD Share Price Decline as of August 19: 37.32%
Liberty Latin America Ltd. (NASDAQ:LILA) is a Bermuda-based company that offers fixed, mobile, and subsea telecommunications services, operating through C&W Caribbean and Networks, C&W Panama, Liberty Puerto Rico, VTR, and Costa Rica segments. On August 3, Liberty Latin America Ltd. (NASDAQ:LILA) posted a revenue of $1.22 billion, up 4.3% year-over-year, beating market consensus by $20 million. The company also reported second quarter mobile postpaid additions of 106,000.
Warren Buffett added Liberty Latin America Ltd. (NASDAQ:LILA) to his portfolio in Q1 2018, and in Q2 2022, the billionaire owned 2.6 million shares of the company worth $20.5 million. Liberty Latin America Ltd. (NASDAQ:LILA) stock has plunged more than 37% year to date as of August 19.
According to Insider Monkey’s database, Liberty Latin America Ltd. (NASDAQ:LILA) was part of 29 hedge fund portfolios at the end of June 2022, compared to 36 funds in the preceding quarter. Ashe Capital is the leading stakeholder of the company, with roughly 12.4 million shares worth $96.5 million.
Here is what Steel City Capital has to say about Liberty Latin America Ltd. (NASDAQ:LILA) in its Q1 2022 investor letter:
“Liberty Latin America (Nasdaq: LILA): LILA is the Rodney Dangerfield of the John Malone empire – it don’t get no respect. The company is a leading telecommunications provider (broadband, television, wireless) operating in over 20 countries across Latin America and the Caribbean. Shares have had a tough go since spinning out from Liberty Global in 2018. At separation, the valuation was rich, but a lot of so-called value investors rushed in anyways because they thought any investment opportunity that checked the boxes of “spin-off” and “John Malone” had to be a money-maker. Wrong. Add to this some pretty ugly financial performance brought about by Hurricane Maria in Puerto Rico and a cumbersome (but not all the complicated) capital structure, and it’s easy to see why shares have performed so poorly. But as you’ve no doubt read in prior quarters’ letters, I’m a big believer in the notion that past performance is not indicative of future results. Today’s market cap is ~$2.1 billion (and shrinking via an ongoing buyback program) and I can very easily underwrite free cash flow north of $400 million in 2024. This reflects a P/FCF multiple of 5.25x / a free cash flow yield of nearly 20%. This is exceptionally cheap for a company with recurring cash flow streams and a very long opportunity to grow via penetration in the years to come.”
7. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 30
YTD Share Price Decline as of August 19: 54.97%
StoneCo Ltd. (NASDAQ:STNE) was founded in 2000 and is headquartered in George Town, the Cayman Islands. The company offers financial technology solutions to e-commerce merchants and retailers in Brazil. Warren Buffett has held a stake in StoneCo Ltd. (NASDAQ:STNE) since the last quarter of 2018, and in Q2 2022, the billionaire owned about 10.7 million shares of the company worth $82.3 million. Despite the stock plummeting close to 55% year to date as of August 19, Warren Buffett maintained his stake in the second quarter of 2022.
On August 18, StoneCo Ltd. (NASDAQ:STNE) announced that it expects Q3 total revenue and income to exceed R$2.40 billion, up approximately 63% year over year, compared to $R2.30 billion in Q2 2022. The Q2 total revenue and income of R$2.30 billion grew from R$2.07 billion in Q1 2022 and from R$613.4 million in Q2 2021.
Susquehanna analyst James Friedman on July 11 maintained a Positive rating on StoneCo Ltd. (NASDAQ:STNE) and lowered the price target on the shares to $20 from $28. The analyst is encouraged by StoneCo Ltd. (NASDAQ:STNE)’s conviction in improving profitability, despite ongoing interest rate constraints. He lowered the price target due to lower estimates and peer group compression.
According to Insider Monkey’s Q2 data, 30 hedge funds were long StoneCo Ltd. (NASDAQ:STNE), down from 43 funds in the earlier quarter. Nitin Saigal and Dan Jacobs’ Kora Management is a prominent stakeholder of the company, with 4.6 million shares worth $35.75 million.
Here is what Nordstern Capital has to say about StoneCo Ltd. (NASDAQ:STNE) in its Q2 2022 investor letter:
“‘To grow its customer base, X.com had been giving out lines of credit to prospective customers, part of its plan for a full suite of financial services products. But with X.com expanding as fast as it had, appropriate underwriting had taken a back seat.’ – Jimmy Soni, in ‘The Founders’
StoneCo Ltd. (Stone) today is seen as a payment provider with lower margins than its peers in a structurally difficult environment in Brazil: strong competition, declining take rates, increasing funding costs. The last two quarterly updates indicated improvement in all business lines for Stone and management did forecast further margin increases throughout all of 2022. In contrast to the other payment providers, Stone also has a sizable software business. In addition, Stone is working towards becoming a full-fledged financial services provider. Both endeavors add costs to the P&L, but do not yet add meaningful profits, which is about to change. Particularly the lending business could become bigger and more profitable than the current bread-and-butter payments business. However, the lending business was suspended last year after experiencing issues that resemble those of the early PayPal from more than two decades ago (“X.com” was renamed “PayPal” in 2001)…” (Click here to see the full text)
6. Celanese Corporation (NYSE:CE)
Number of Hedge Fund Holders: 36
YTD Share Price Decline as of August 19: 31.75%
Celanese Corporation (NYSE:CE) is a Texas-based technology and specialty materials company, operating through three segments – Engineered Materials, Acetate Tow, and Acetyl Chain. Warren Buffett lifted his stake in Celanese Corporation (NYSE:CE) by 17% in Q2 2022, holding 9.15 million shares worth more than $1 billion. The stock has dropped about 32% year to date as of August 19, and Warren Buffett loaded up on Celanese Corporation (NYSE:CE) shares on the dip.
Celanese Corporation (NYSE:CE) reported on July 28 its Q2 results, posting earnings per share of $4.99, surpassing consensus estimates by $0.43. The company announced a revenue of $2.49 billion, gaining 13.2% year over year, outperforming Wall Street forecast by $100 million. Deutsche Bank analyst David Begleiter on August 2 reaffirmed a Buy rating on Celanese Corporation (NYSE:CE) and lowered the price target on the stock to $140 from $175 after the “solid” Q2 report.
Among the hedge funds tracked by Insider Monkey, Lyrical Asset Management is a notable stakeholder of Celanese Corporation (NYSE:CE), with roughly 1.3 million shares worth $152.4 million. Overall, 36 hedge funds were bullish on the stock at the end of June 2022, with collective stakes amounting to $1.82 billion.
Like General Motors Company (NYSE:GM), Snowflake Inc. (NYSE:SNOW), and Charter Communications, Inc. (NASDAQ:CHTR), elite hedge funds are piling into Celanese Corporation (NYSE:CE).
Here is what Vltava Fund has to say about Celanese Corporation (NYSE:CE) in its Q1 2022 investor letter:
“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stocks of Celanese (CE).
Celanese is the world’s largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomers and emulsions. Their applications are used in a wide range of industries, such as automotive tobacco, coatings, construction, energy, telecommunications, food, and medical. Celanese recently closed the acquisition of a large part of DuPont’s business, which will make Celanese an even bigger player in the industry while reducing the cyclicality of its business. The acquisition is quite large and should deliver significant value to shareholders that in our view is not at all presently reflected in the share price. Celanese is a business that stands more or less aside from the main interests of most investors, but it is a company with very high returns on capital, strong free cash flow, and historically very efficient resource allocation.”
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Disclosure: None. Warren Buffett Is Not Giving Up on These 10 Stocks Despite Losses is originally published on Insider Monkey.
