Below is the list of 5 stocks David Tepper was selling in the first quarter of 2022. For a detailed discussion about David Tepper’s investment philosophy and portfolio management strategies, please see Was David Tepper Right About These 10 Stocks?.
5. Alight, Inc. (NYSE:ALIT)
No. of Hedge Fund Holders: 38
Performance of ALIT Over the Past 6 Months: +5.58%
Alight, Inc. (NYSE:ALIT) provides integrated, cloud-based human capital solutions that empower clients and employees to manage health, wealth, and HR needs.
Out of 912 elite hedge funds tracked by Insider Monkey at the end of the first quarter of 2022, 38 hedge funds were long on the company, down from 39 hedge funds (out of 924 hedge funds tracked by Insider Monkey) in the preceding quarter.
The company’s Director, Richard N. Massey, acquired 10,000 shares of the company’s stock on 1st April. This transaction was done at an average cost of $9.54 per share, totaling $95,400.00.
4. Foot Locker, Inc. (NYSE:FL)
No. of Hedge Fund Holders: 21
Performance of FL Over the Past 6 Months: +13.7%
Foot Locker, Inc. (NYSE:FL) operates thousands of retail stores across the US, Canada, Europe, Australia, and New Zealand. The company sells athletically inspired shoes and apparel. The company uses omni-channel capabilities to bridge the digital world and physical stores.
On 23rd May, analysts at Morgan Stanley raised their price target on Foot Locker, Inc. (NYSE:FL) from $23.00 to $24.00. They gave an “Underweight” rating on the stock.
Foot Locker, Inc. (NYSE:FL) will find it difficult to develop a shield that protects it from its competitors. The focus of the company is on selling more through its e-commerce sites, and there has been a decline in its store count lately.
At the end of the first quarter of 2022, 21 hedge funds tracked by Insider Monkey reported owning stakes worth $177.09 million, down from 27 in the preceding quarter worth $222.4 million.
Miller Value Partners, an investment management firm, published its investor letter for Q1 2022 and mentioned about Foot Locker, Inc. (NYSE:FL). Here is what the fund said:
“Finally, Foot Locker (NYSE:FL) came under significant pressure during the quarter, with the stock down more than 50% from its highs and valuation not far from early 2020 lows. Nike continues to place a greater focus on their Direct-to-Consumer business, which will decrease their contribution to Foot Locker’s total sales, retreating to historical averages of 50% by 2023. While a near-term headwind to sales, management plans to offset the lost business by expanding distribution to other leading brands, rolling out larger neighborhood free-standing stores, and expanding two new growth banners (WSS & Atmos). WSS stores will provide an off-mall presence and focus on the rapidly growing and underserved Hispanic market. Atmos will provide Foot Locker with the ability to expand into Japan and Asia sneaker market with their digitally led business model. These new growth concepts have a combined potential to add more than $1B in sales by 2024. The company’s balance sheet remains very strong with $800M in cash and management is increasing returns to shareholders through raising the dividend by 40% and announcing a $1.2B share buyback (more than 40% of the float at current share prices). With the next 12 to 18 months as a transition period for the company, the share price weakness provides attractive reward/risk investment potential, near 3x Enterprise Value/Earnings Before Income, Taxes, Depreciation, and Amortization (EV/EBITDA) and close to a 30% normalized free cash flow yield.”
3. The Gap, Inc. (NYSE:GPS)
No. of Hedge Fund Holders: 23
Performance of GPS Over the Past 6 Months: +25%
The Gap, Inc. (NYSE:GPS) is a collection of purpose-led, lifestyle brands offering apparel, accessories, and personal care products. The company offers an assortment of products for men, women, and children through its Intermix, and Janie and Jack brands.
Analysts at Robert W. Baird lowered their target price on shares of The Gap, Inc. (NYSE:GPS) from $14.00 to $11.00, giving a “Neutral” rating on the stock on 27th May.
The Gap, Inc. (NYSE:GPS) was in 23 hedge fund portfolios at the end of the first quarter of 2022. Comparatively, in the preceding quarter, 30 hedge funds reported owning stakes in the company.
2. Bread Financial Holdings, Inc. (NYSE:BFH)
No. of Hedge Fund Holders: 31
Performance of BFH Over the Past 6 Months: -21%
Bread Financial Holdings, Inc. (NYSE:BFH), formerly Alliance Data Systems Corporation, provides data-driven marketing, loyalty, and payment solutions, and it serves large, consumer-based industries. The company helps its partners create and increase customer loyalty across several touchpoints by using traditional, digital, mobile, and emerging technologies.
In FY22, Bread Financial Holdings, Inc. (NYSE:BFH) expects total revenue growth to be aligned with average loan growth, and an improved net interest margin should lend some support. It continues to expect a net loss rate in the low-to-mid 5% range as credit metrics start to normalize from historically low rates.
On 12th May, Wolfe Research analyst Bill Carcache downgraded the ratings on credit card issuers as the analyst predicts a recession. According to Bill Carcache, credit card issuers having greater exposure to prime and super-prime credits can see some pressure. The analyst has reduced the price target on Bread Financial Holdings, Inc. (NYSE:BFH) to $49 from $60.
Out of 912 hedge funds tracked by Insider Monkey, 31 hedge funds held stakes in Bread Financial Holdings, Inc. (NYSE:BFH) at the end of the first quarter, down from 35 hedge funds in the previous quarter.
1. General Motors Company (NYSE:GM)
No. of Hedge Fund Holders: 76
Performance of GM Over the Past 6 Months: +12%
General Motors Company (NYSE:GM), incorporated as a Delaware corporation in 2009, designs, builds and sells trucks, crossovers, cars, and automobile parts.
The company’s first-quarter results for 2022 were supported by improved production and solid customer demand in North America. For FY22, its net income is expected to come between $9.6 billion-$11.2 billion.
Analysts predict that high inflation and aggressive interest rate hikes by the US Fed can put pressure on the economy. This can have an impact on the company’s earnings. While General Motors Company (NYSE:GM) continues to struggle with higher costs for materials and supply chain issues, high inflation can make things even worse.
Oakmark Funds, an investment management firm, has released its first-quarter 2022 investor letter and mentioned General Motors Company (NYSE:GM). Here is what the fund said:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
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