In this article, we will discuss the 10 stocks hedge fund legend Donald Sussman is buying. You can skip our comprehensive analysis of Donald Sussman’s history, investment philosophy, and hedge fund performance, and go directly to 5 Stocks Hedge Fund Legend Donald Sussman is Buying.
Donald Sussman’s Paloma Partners is a Greenwich, Connecticut-based multi-strategy hedge fund that was founded in 1981. The fund has been able to not only survive but thrive over the course of four decades thanks to its emphasis on dynamic capital allocation and a flexible trading model that has been able to capitalize on changing markets and opportunities. While the fund employs various strategies as needed, quantitative and relative value investing have been its core approaches.
Since its inception in 1981, Paloma Partners LLC A has delivered staggering total returns of 6,152%, which equates to a strong compound annual return of 11.34%. The fund hasn’t slowed down in recent years, as it posted positive, though often modest returns each year between 2015 and 2019, landing between 3.34% and 11.11%. Paloma Partners had $11.36 billion in assets under management as of April 27, 2021.
The fund’s latest 13F filing, for the reporting period of September 30, 2021, showed that Paloma Partners’ 13F portfolio was valued at $4.08 billion, down from $5.54 billion at the end of June. Given its dynamic approach to investing, the fund was extremely active during the third quarter, closing out over 1,200 of its former positions while adding close to 500 new ones.
Donald Sussman of Paloma Partners
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Now then, let’s check out the 10 Stocks Hedge Fund Legend Donald Sussman is Buying. Note that all hedge fund data is based on the exclusive group of 800+ funds tracked by Insider Monkey as part of our market-beating investment strategy.
Stocks Hedge Fund Legend Donald Sussman is Buying
10. LyondellBasell Industries NV (NYSE:LYB)
LyondellBasell Industries NV (NYSE:LYB) is first up on our list, as Donald Sussman and his team bought 38,963 shares of the chemicals giant, a position valued at $3.66 million on September 30. Paloma Partners was one of 41 hedge funds tracked by Insider Monkey that were long LYB at the end of the third quarter.
Paloma Partners wasn’t the only hedge fund to show interest in LYB during Q3, as Miller Howard Investments also initiated a position in LyondellBasell Industries NV (NYSE:LYB) during the quarter. In its Q3 investor letter, the fund said that it found LyondellBasell Industries NV (NYSE:LYB)’s valuation to be low. The fund also likes LyondellBasell Industries NV (NYSE:LYB)’s healthy yield of just under 5% as well as the current robustness of the chemicals market, which was affected heavily by plant shutdowns in 2020.
9. Teladoc Health, Inc (NYSE:TDOC)
28,859 shares of Teladoc Health, Inc (NYSE:TDOC) were added to the 13F portfolio of Donald Sussman’s hedge fund during Q3, giving it a $3.66 million stake in Teladoc Health, Inc (NYSE:TDOC). Paloma Partners is going against the hedge fund grain somewhat with his purchase of TDOC, as hedge fund ownership of the stock fell by 24% last year, a less precipitous drop than Teladoc Health, Inc (NYSE:TDOC)’s share price, which has tumbled by 49% over the last six months.
Luca Capital, an investment management firm, published its third-quarter 2021 investor letter, and mentioned Teladoc Health, Inc (NYSE:TDOC). Here‘s what the fund said:
“As bullish as we are on the future of telemedicine though, we acquiesce that it can be difficult to build a durable moat. Although telemedicine is very scalable and an easy sell (everyone is a potential customer), the service itself is a commodity with little pricing power and low switching costs. However, scale is a significant advantage as a larger network of providers confers lower connection times and wider coverage. In addition, different areas of the country have varying access to care at any given time, but since regulations now allow providers to see patients across all states, we can better match doctors with patients under a national network, similar to “load balancing” in computing. Since Teladoc is international too, there also exists an opportunity to see patients across international borders. These are just a handful of reasons why we do not believe off-the-shelf consumer products like Zoom or Twilio will eventually replace the core telemedicine providers. They’re not integrated, not on-demand, limited to local physician supply, not accessible at the point-of-care via carts or other hospital equipment, and there’s nothing like Livongo to give the providers a continuous picture of patient health. Teladoc also allows whitelabelling, which enables health systems to take advantage of Teladoc’s additional provider supply while retaining the brand their patients have come to know and trust. However, while this incentivizes health systems to go with specialized platforms like Teladoc or Amwell, it’s making it more difficult for end-consumers to differentiate the major telemedicine providers at the product-level.”
8. Arch Capital Group Ltd. (NASDAQ:ACGL)
Hedge funds tracked by Insider Monkey were selling out of Arch Capital Group Ltd. (NASDAQ:ACGL) during Q2, as 35% of former shareholders unloaded Arch Capital Group Ltd. (NASDAQ:ACGL), capitalizing on its nice share appreciation in recent quarters. They were buying back in during Q3 however, as a net total of 9 hedge funds added ACGL to their 13F portfolios, Paloma Partners among them. The fund initiated a position of 102,363 shares valued at $3.9 million on September 30.
In its Q1 investor letter, Baron Funds expressed confidence that the Bermuda-based insurance company would be able to continue growing its earnings thanks to favorable pricing trends in the property and casualty insurance markets. The fund also likes Arch Capital Group Ltd. (NASDAQ:ACGL)’s management team and disciplined underwriting.
7. Synchrony Financial (NYSE:SYF)
Paloma Partners added 97,005 shares of Synchrony Financial (NYSE:SYF) to its 13F holdings in Q3, initiating a new position valued at $4.74 million on September 30. Despite the fund’s new buy, hedge fund ownership of the stock sank to a five-year low during the quarter, as just 35 funds tracked by Insider Monkey were long SYF, down from 51 just six months earlier.
That’s not entirely surprising, as Synchrony Financial (NYSE:SYF) shares have skyrocketed since the start of the pandemic, prompting many hedge funds to take the spoils from their position. Among the notable recent sellers of Synchrony Financial (NYSE:SYF) was billionaire investing legend Warren Buffett, who completely unloaded the financial services company’s stock during Q1.
6. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Closing out the first half of our list of 10 stocks Donald Sussman is buying is ZoomInfo Technologies Inc. (NASDAQ:ZI), which the investor’s hedge fund bought 78,649 shares of during Q3, a position worth $4.81 million on September 30. Hedge funds were pouring into the stock during the quarter, as there was a 63% surge in ownership among the funds that Insider Monkey tracks.
The hedge fund buying spree of ZoomInfo Technologies Inc. (NASDAQ:ZI) may have been an attempt to squeeze short-sellers, as nearly 27% of ZoomInfo Technologies Inc. (NASDAQ:ZI)’s shares were being shorted as of October 2021. If that was the plan, it was working briefly, as ZoomInfo Technologies Inc. (NASDAQ:ZI) shares rose by about 20% between mid-October and mid-November. However, they’ve crashed since, falling by 27% since November 19.
Baron Funds, an asset management firm, published its “Baron Asset Fund” third quarter 2021 investor letter, and highlighted ZoomInfo Technologies Inc. (NASDAQ:ZI). Here‘s what the fund said:
“Favorable stock selection in Communication Services came from ZoomInfo Technologies Inc., a leading go-to-market intelligence platform for sales and marketing teams. We believe that the company’s recent acquisition of Chorus.ai, a conversation intelligence business, dramatically increased the data visibility and benefits that ZoomInfo can offer its clients. In addition, its organic revenues reaccelerated for a fifth consecutive quarter and management significantly raised its earnings guidance.”
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Disclosure: None. 10 Stocks Hedge Fund Legend Donald Sussman is Buying is originally published at Insider Monkey.
