10 Beaten Down Stocks Billionaires Are Crazy About

Published on December 12, 2023 at 12:43 pm by Muhammad Jamal Akbar in Hedge Funds, News

In this article, we will take a look at the 10 beaten down stocks billionaires are crazy about.

Investor sentiment in the United States markets is on a bullish trend with improvements in the macroeconomic environment, pause in interest rate hikes, and potential cuts in interest rates in the upcoming year. This follows a rough year for the stock markets in 2022 which marked one of the worst years for the stock market since 2008. Of the three major U.S. stock indices, NASDAQ 100 fared the worst, declining more than 30% in 2022 as shareholders withdrew from growth firms due to escalating fears of a recession. S&P 500 fared better than the NASDAQ-100 but still went down more than 19% in 2022.

The stock markets behaved erratically during 2023 as well with major indices going up and down (mostly up) with the macroeconomic and geopolitical developments. The last Fed meeting, going to be held this week, is expected to maintain interest rates at the current level. Investors and analysts are watching closely to ascertain Fed’s tone to ascertain the probable timing of rate cuts. With a strong Labor Department’s monthly jobs report that exceeded estimates for new job additions in November, and this year’s lowest core PCE increase, major stock indices in the United States had another week of positive close, which has led to six consecutive weeks of growth. S&P 500 and Nasdaq Composite indices hit their highest levels since early 2022 and closed 20.4% and 38.67% up on December 8, respectively.

We cannot judge all the stocks based on the same factors across the board. In addition to broader macroeconomic factors, industry-specific and company-specific factors also play a significant role in the performance of different stocks. For instance, a significant portion of the gains in 2023 can be attributed to the rise of the “Magnificent Seven”, i.e., Apple, Amazon, Alphabet, Meta Platforms, Microsoft, NVIDIA, and Tesla. These stocks, combined, have soared an average of 70% year-to-date, compared to a measly average 6% for the rest of the S&P 500 constituents, as of November end. You can read more about this here.

On the other hand, just a year ago, some of these stocks showed some of the worst performances across the board. Meta Platforms, Inc. (NASDAQ:META), the Facebook parent, went down more than 64% in 2022. Similarly, Amazon.com, Inc. (NASDAQ:AMZN) and NVIDIA Corporation (NASDAQ:NVDA) went down nearly 50% each. The remarkable recovery for these stocks can be attributed to certain company and industry specific factors such as recent advancements in generative AI, operational efficiency and cost cutting measures, and improved margins.

In a similar vein, the stocks that have made it onto our list of 10 beaten down stocks billionaires are crazy about, have at least one thing in common: poor year-to-date performance. Despite that, or due to that, these quality stocks, trading at lower valuations, provide a reasonable investment option and improved upside potential.

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Methodology

To compile our list of the beaten down stocks billionaires are crazy about, we first made a list of stocks with year-to-date performance worse than -20% and market capitalization of more than $2.0 billion. Then, the number of billionaires that owned their shares as of September 2023 was determined through Insider Monkey’s database. Out of these, the stocks with the most billionaire investors were selected. The stocks on our list have been ranked in an ascending order of billionaire ownership.

10. General Mills, Inc. (NYSE:GIS)

Number of Billionaire Holders: 14

Minneapolis, Minnesota-based General Mills, Inc. (NYSE:GIS) is a leading global manufacturer and marketer of branded consumer foods with more than 100 brands in 100 countries across six continents. The company offers products including snacks, cereal, convenient meals, natural pet food, refrigerated and frozen dough, baking mixes and ingredients, yogurt, and ice cream.

General Mills, Inc. (NYSE:GIS) has a history of 125 years of uninterrupted dividend payments. On November 14, the board of directors of the company declared a regular quarterly dividend of $0.59 per share which represents an annualized yield of 3.60% based on the share price on December 8.

On November 9, General Mills, Inc. (NYSE:GIS) announced the acquisition of Fera Pets, Inc., a vet-founded pet supplement company. The acquisition marks the company’s first step into the pet supplement category and first acquisition by its newly launched growth equity fund.

General Mills, Inc. (NYSE:GIS) shares were held by 14 billionaires with total shares held by them valued at $600 million, as of September 30.

9. Sarepta Therapeutics, Inc. (NASDAQ:SRPT)

Number of Billionaire Holders: 15

Cambridge, Massachusetts-based Sarepta Therapeutics, Inc. (NASDAQ:SRPT) is a global biotechnology company focused on the development of precision genetic medicine for rare diseases. Driven by its multi-platform precision genetic engine, the company currently has a pipeline of more than 40 programs in various stages of development across Duchenne muscular dystrophy (DMD) and limb-girdle muscular dystrophies (LGMDs), and other rare diseases.

The portfolio of Sarepta Therapeutics, Inc. (NASDAQ:SRPT) includes four FDA approved therapies including ELEVIDYS for treatment of DMD in pediatric patients, EXONDYS 51, VYONDYS 53, and AMONDYS 45.

On October 30, Sarepta Therapeutics, Inc. (NASDAQ:SRPT) announced topline results from its Phase 3 clinical study of ELEVIDYS in patients with DMD between the ages of 4 through 7 years. The company revealed that after 52 weeks, patients who underwent the therapy showed improved motor function in comparison to those who received placebos. Nevertheless, the trial results did not reach statistical significance and ultimately missed the primary objective of the study.

Following the announcement, Sarepta Therapeutics, Inc. (NASDAQ:SRPT) shares went significantly down and several analysts lowered their price targets and ratings for the shares. Morgan Stanley analyst Matthew Harrison lowered the price target to $146 from $183 but maintained an ‘Overweight’ rating for the shares, 67.76% more than the share price on December 8.

8. JD.Com, Inc. (NASDAQ:JD)

Number of Billionaire Holders: 15

JD.Com, Inc. (NASDAQ:JD) is the largest online retailer in China as well as the biggest internet company in the country by revenue. Its online retail platform offers products ranging from fresh food and apparel to electronics and cosmetics.

On November 15, JD.Com, Inc. (NASDAQ:JD) released its financial and operational results for Q3 2023. It generated a revenue of $34 billion and a net income of $1.1 billion. It recorded a normalized EPS of $0.92 which exceeded consensus estimates by $0.12.

Following the earnings release, Benchmark analyst Fawne Jiang reiterated a ‘Buy’ rating for JD.Com, Inc. (NASDAQ:JD) shares with an unchanged price target of $67 which represents a potential upside of 153.31% based on the share price on December 8.

As of September 30, JD.Com, Inc. (NASDAQ:JD) shares were owned by 53 of the 910 hedge funds tracked by Insider Monkey, with the total shares owned by these hedge funds valued at $1.5 billion. Tiger Global Management LLC was the largest hedge fund shareholder with ownership of 9.9 million shares valued at $287 million.

7. The Estee Lauder Companies Inc. (NYSE:EL)

Number of Billionaire Holders: 15

New York-based The Estee Lauder Companies Inc. (NYSE:EL) is one of the world’s leading manufacturers, marketers, and sellers of quality skin care, makeup, fragrance, and hair care products. Its products are sold in 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, and Jo Malone London, among others.

On November 1, The Estee Lauder Companies Inc. (NYSE:EL) released its financial results for Q3 2023. Its revenues declined by 10% y-o-y to $3.5 billion, while it reported a net income of $36 million. It generated a normalized EPS of $0.11, which exceeded consensus estimates by $0.31.

On April 28, The Estee Lauder Companies Inc. (NYSE:EL) completed the acquisition of the TOM FORD brand in a cash transaction that implied an enterprise value of $2.8 billion for the target company. The company licenses the TOM FORD trademark to Zegna Group for fashion and accessories and Marcolin Group for eyewear.

As of Q3 2023, 15 of the billionaires tracked by Insider Monkey owned The Estee Lauder Companies Inc. (NYSE:EL) shares worth $1.1 billion. D E Shaw was the largest shareholder with ownership of 3.1 million shares valued at $442 million.

6. NextEra Energy, Inc. (NYSE:NEE)

Number of Billionaire Holders: 15

Juno Beach, Florida-based NextEra Energy, Inc. (NYSE:NEE), is a leading electric power and energy infrastructure company with operations in US and Canada. It has two major business segments: FPL, the largest electric utility company in Florida focused on generation, transmission and distribution of electricity to more than 5.8 million customer accounts; and NEER, one of the largest wholesale generators of electric power in the US with 24.1 GW of net generating capacity.

NextEra Energy, Inc. (NYSE:NEE) has steadily grown dividends over the course of its history. The latest increase came in February 2023, with a 10% increase in regular quarterly dividends to $0.4675 per share. The company intends to further increase its dividends by 10% annually, compared to its 2022 dividend, at least through 2024.

On October 25, Morgan Stanley analyst David Arcaro maintained an ‘Overweight’ rating for NextEra Energy, Inc. (NYSE:NEE) shares and lowered the target price from $91 to $79. The target price represents a potential upside of 38.99% based on the share price on November 8.

As of Q3 2023, 58 hedge funds tracked by Insider Monkey held shares of NextEra Energy, Inc. (NYSE:NEE). Ken Fisher’s Fisher Asset Management was its largest hedge fund shareholder with ownership of 9.8 million shares valued at $560 million.

In its Q3 2023 investor letter, Matrix Asset Advisors, an asset management company, made the following comments about NextEra Energy, Inc. (NYSE:NEE):

“During the quarter, we started a new position in NextEra Energy (NEE), the owner of Florida Power & Light (FPL), a regulated utility, and NextEra Energy Resources, the largest unregulated alternative power producer (wind, solar, battery) in the United States. FPL has benefitted from Florida’s population and business growth. In addition, Florida’s regulators have been business friendly and allowed the utility to raise rates, earn a good profit, and build out its infrastructure. As a result, NextEra has historically shown earnings and dividend growth above the Utility group average. On September 30, the current dividend yield was 3.3%. NEE disclosed some business setbacks after our initial partial purchase causing the stock price to decline further. We are very comfortable that they have a best-in-class franchise, and we are slowly continuing to build our position into the stock price weakness. We are upbeat about NextEra and the utility group in general after its poor performance this year.”

5. Bio-Rad Laboratories, Inc. (NYSE:BIO)

Number of Billionaire Holders: 16

Hercules, California-based Bio-Rad Laboratories, Inc. (NYSE:BIO) manufactures and supplies the life science research, healthcare, analytical chemistry, and other markets with a broad range of products and systems used to separate complex chemical and biological materials and to identify, analyze, and purify their components.

On October 26, Bio-Rad Laboratories, Inc. (NYSE:BIO) released its financial results for Q3 2023. Its revenue declined by 7% y-o-y to $632 million while it generated a net income of $106 million, compared to a net loss of $163 million. The normalized EPS, at $2.33, missed consensus estimates by $0.48.

As of Q3 2023, 44 hedge funds owned shares of Bio-Rad Laboratories, Inc. (NYSE:BIO), valued at $837 million. Israel Englander’s Millennium Management was the largest shareholder with ownership of 0.38 million shares valued at $135 million.

4. Mettler-Toledo International Inc. (NYSE:MTD)

Number of Billionaire Holders: 16

Mettler-Toledo International Inc. (NYSE:MTD) is a global manufacturer and marketer of precision instruments for use in laboratory, industrial and food retailing applications. Its products are sold in more than 140 countries and has a direct presence in approximately 40 countries.

On November 9, Mettler-Toledo International Inc. (NYSE:MTD) released its financial results for the third quarter of 2023. Its revenue declined by 4% y-o-y to $942 million and net income declined by 9% y-o-y to $202 million. The normalized EPS of $9.80 was $0.07 below the consensus estimates.

Following the earnings release, Wells Fargo analyst Timothy Daley lowered the firm’s price target on Mettler-Toledo International Inc. (NYSE:MTD) shares to $1300 from $1520 and maintained an ‘Overweight’ rating.

In its Baron Health Care Fund Q3 2023 investor letter, Baron Funds, an investment management company, made the following comments about Mettler-Toledo International Inc. (NYSE:MTD):

“Mettler’s stock declined in response to disappointing second quarter financial results and lowered 2023 guidance. Management noted market conditions in China have worsened considerably, particularly among biopharmaceutical customers who are delaying investment decisions as they wait for government stimulus. Management also stated that global manufacturing Purchasing Managers’ Indexes have continued to trend lower. We think these headwinds are temporary and continue to believe Mettler has a solid long-term outlook.”

3. Bristol-Myers Squibb Company (NYSE:BMY)

Number of Billionaire Holders: 18

Based in New Jersey, Bristol-Myers Squibb Company (NYSE:BMY) is a biotechnology company focused on the discovery, development, and delivery of innovative medicines for serious diseases across oncology, hematology, immunology, cardiovascular disease, and fibrosis.

On October 8, Bristol-Myers Squibb Company (NYSE:BMY) announced that it had entered into a definitive merger agreement to acquire Mirati Therapeutics, Inc. (NASDAQ:MRTX), in an all-cash transaction which values the target company at $4.8 billion. The acquisition is expected to strengthen and diversify the oncology portfolio of the company.

On December 6, the Board of Directors of Bristol-Myers Squibb Company (NYSE:BMY) declared a quarterly dividend of $0.60 per share, representing a 5.3% increase over last year’s quarterly rate. This marks the 15th consecutive year of dividend increases and the 92nd consecutive year of dividend payments.

2. Pfizer Inc. (NYSE:PFE)

Number of Billionaire Holders: 18

Founded in 1849, New York-based, Pfizer Inc. (NYSE:PFE) is a leading research-based biopharmaceutical company. Its product portfolio and pipeline includes several pharmaceutical therapies for primary care, specialty care, and oncology, including mRNA-based COVID-19 vaccine – COMIRNATY, and covid-19 treatment – PAXLOVID.

On October 31, Pfizer Inc. (NYSE:PFE) released its financial results for the third quarter of 2023. Its revenues declined by 42% y-o-y to $13.2 billion, while it reported a net loss of $2.4 billion. The drastic drop resulted from a decline in the company’s revenue from Comirnaty and Paxlovid. On the other hand, the revenues for non-covid products of the company increased 10% operationally.

On December 1, Pfizer Inc. (NYSE:PFE) announced topline data from the Phase 2b clinical trial investigating its oral Glucagon-like peptide-1 receptor agonist (GLP-1RA) candidate, danuglipron, in adults with obesity and without type 2 diabetes. The study demonstrated statistically significant change in body weight from baseline.

As of Q3 2023, 73 of the 910 hedge funds tracked by Insider Monkey were long Pfizer Inc. (NYSE:PFE), holding shares worth $2.4 billion. Prominent hedge funds such as Citadel Investment Group, D E Shaw, and Two Sigma Advisors, among others, held the most shares of the company.

1. Cigna Corporation (NYSE:CI)

Number of Billionaire Holders: 19

Based in Bloomfield, Connecticut, Cigna Corporation (NYSE:CI) is a global health company with primary businesses including Evernorth Health Service – a pharmacy, care and benefits solutions provider; and Cigna Healthcare – a health benefits provider serving customers and clients across United States as well as internationally.

On November 2, Cigna Corporation (NYSE:CI) released its financial results for Q3 2023. Its revenue increased by 8% y-o-y to $49 billion while net income shrunk by 49% y-o-y to $1.4 billion. The normalized EPS of the company, at $6.77, surpassed consensus estimates by $0.09.

Following the earnings release, RBC Capital analyst Ben Hendrix raised the price target for Cigna Corporation (NYSE:CI) shares from $300 to $327 and maintained a ‘Sector Perform’ rating for the shares.

As of Q3 2023, Cigna Corporation (NYSE:CI) shares were held by 74 out of 910 hedge funds tracked by Insider Monkey with a total value of $2.8 billion. The stock counted 19 billionaires among its shareholders, with ownership of $1.3 billion worth of its shares.