In this article, we discuss the 10 stocks to sell according to billionaire James Dinan.
James Dinan is an American investor, philanthropist, and the founder of York Capital Management. Mr. Dinan’s early years were spent in Maryland and Massachusetts, from where he went on to pursue his bachelor’s degree in economics from the University of Pennsylvania. Upon graduating from the University of Pennsylvania in 1981, he began his professional career with a stock research firm Donaldson, Lufkin & Jenrette, where he worked as an investment banker until 1983. Mr. Dinan then went on to pursue his advanced degree in business administration from Harvard University in 1985, and then in 1991, the now billionaire founded his hedge fund York Capital Management.
According to Forbes, Mr. Dinan’s real-time net worth as of 17th November 2021, is $1.9 billion. The billionaire founded his hedge fund with $3.6 million in the 90s and his hedge fund reached a record high in 2015 of managing over $26 billion in 13F securities. Unfortunately, the hedge fund lost more than $700 million as a consequence of wrong energy bets and has declined by 50% since 2018.
As of the third quarter, Mr. Dinan manages over $947 million in 13F securities through his hedge fund, York Capital Management.
In the third quarter, Mr. Dinan sold his stakes in several companies, including McDonald’s Corporation (NYSE:MCD), Target Corporation (NYSE:TGT), Intel Corporation (NASDAQ:INTC), and Mastercard Incorporated (NYSE:MA).
Our Methodology
With this context in mind, let’s take a look at 10 stocks to sell according to billionaire James Dinan. We compiled this list according to York Capital Management’s 13F portfolio at the end of the third quarter of 2021 and picked the stocks Mr. Dinan exited completely.
James Dinan of York Capital Management
Stocks to Sell According to Billionaire James Dinan
10. NCR Corporation (NYSE:NCR)
Number of Hedge Fund Holders: 38
NCR Corporation (NYSE:NCR) provides software and services worldwide. It operates through Banking, Retail, Hospitality, and Telecommunications, and Technology segments. NCR Corporation (NYSE:NCR) was founded in 1881 and is headquartered in Atlanta, Georgia.
NCR Corporation (NYSE:NCR) was a new addition to York Capital Management’s 13F portfolio in the second quarter of 2021. Mr. Dinan bought over 40,000 shares of the stock that were worth about $1.83 million. The investment covered 0.2% of the billionaire’s 13F portfolio. As we moved into the third quarter, Mr. Dinan sold his stake in the company and completely exited NCR Corporation (NYSE:NCR) by the end of September.
At the end of the second quarter of 2021, 38 hedge funds, including York Capital Management, held stakes in NCR Corporation (NYSE:NCR) that were worth $526.4 million. This is compared to 24 hedge funds in the first quarter, with a total stake of $383.04 million.
In addition to NCR Corporation (NYSE:NCR), Dinan sold his stakes in McDonald’s Corporation (NYSE:MCD), Target Corporation (NYSE:TGT), Intel Corporation (NASDAQ:INTC), and Mastercard Incorporated (NYSE:MA).
9. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 44
StoneCo Ltd. (NASDAQ:STNE) provides financial technology solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. The company was founded in 2000 and is headquartered in George Town, Cayman Islands.
By the end of the second quarter, Mr. Dinan’s stake in StoneCo Ltd. (NASDAQ:STNE) was more than $3.45 million. The investment covered 0.38% of York Capital Management’s 13F portfolio. However, in the third quarter, Dinan decided to sell all his shares in the company and completely exited StoneCo Ltd. (NASDAQ:STNE).
JDP Capital Management shared its insights about the stock of StoneCo Ltd. (NASDAQ:STNE) in its second-quarter 2021 investor letter. Here’s what they had to say:
“StoneCo (NYSE: STNE) has been in our portfolio since early 2019 and has appreciated 225% since. In the first half of 2021 the stock was down nearly 20% and was a drag on the fund’s performance.
Stone is a leading fintec company in Brazil that provides back-office software, loans and other financial services to small and medium sized businesses (SMBs). We have discussed Stone in past letters and the company’s “ladder up” from a card processor to a supplier of enterprise software used to sell financial products on top of such as working capital loans.
The company generates a lot of cash that it reinvests to acquire or build new financial products for its customer base. Since we invested, the company has grown the number of SMB clients by 3x, revenue by 2.3x, and net income by 2.2×11.
The pandemic’s impact on SMBs in Brazil has been severe, especially for the many retailers who are only now adopting an e-commerce strategy. In the first half of 2021 Stone increased loss provisions on its lending product, and overall growth has slowed somewhat. The stock’s decline earlier this year was not surprising, but investors are now ignoring progress that has enhanced Stone’s position for coming out much stronger when the recovery begins.
StoneCo Q1 2021 Earnings Call: “Based on (i) our learnings with lockdowns last year, (ii) recent client transactional data and (iii) learnings from the dynamics of countries where vaccines are widespread, we expect that once vaccination scale (which we think will happen in the second half of 2021), the economic recovery will be fast and – although delayed – Brazil is moving in the right direction. For these reasons, we have made an informed decision to be ready for recovery by investing in growth…”
“…In the first quarter, we decided to increase our salesforce headcount by 24%, marketing investments by 33%, customer service and logistics headcount by 32% and technology headcount by 20% in order to be the fastest player when our economy comes back to normal levels.”
“I want to start our presentation by highlighting that Brazil went through a second wave of COVID in the first quarter of ’21, which imposed commerce restrictions in several cities throughout the country. Those restrictions were felt by our clients with average TVP reaching a low in the end of March…
…But similar to the behavior we saw in the comeback from the first lockdown in 2020, we already observed significant and quick recovery with average TPV in May achieving levels above January 2021. As Thiago mentioned, we expect that once vaccinations are scaled, the economy recovery of the country will be fast.”
In terms of COVID recovery opportunities within our portfolio, Stone might be the most “coiled” because the impact on Brazilian small businesses has been so traumatic. In addition, Stone is part of a much larger and fast-moving transition happening in Brazil around the digitalization of financial services. The speed of this transition is unique to Brazil because the Central Bank is actively trying to reduce the country’s previous dependency on a small handful of large banks. Important progress in the first half of 2021 included closing on the long-awaited acquisition of Linx, a mature provider of enterprise software with a large footprint across Brazil. The acquisition will provide Stone meaningful cross-selling opportunities and a more diversified customer base.”
8. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 69
Union Pacific Corporation (NYSE:UNP) engages in the railroad business in the United States. The company was founded in 1862 and is headquartered in Omaha, Nebraska.
For the third quarter of 2021, which ended in September, Union Pacific Corporation (NYSE:UNP) reported an EPS of $2.57, beating estimates by $0.07. The railroad giant generated revenues of $5.57 billion, up 13.15% year over year, and beat estimates by $175.07 million.
On 22nd October, RBC Capital analyst Walter Spracklin raised his price target on Union Pacific Corporation (NYSE:UNP) to $252 from $227 and kept an Outperform rating on the shares due to a profitable third quarter for the company.
By the end of the second quarter of 2021, 69 hedge funds including York Capital Management, held stakes in Union Pacific Corporation (NYSE:UNP). The total value of these stakes was $5.03 billion. This is compared to 75 hedge funds in the first quarter with stakes amounting to $4.68 billion. Mr. Dinan sold all his shares of Union Pacific Corporation (NYSE:UNP) in the third quarter.
Vltava Fund, an investment management firm, published its first-quarter 2021 investor letter in which it mentioned Union Pacific Corporation (NYSE:UNP). Here’s what Vltava Fund had to say:
“There was a slight change in Vltava Fund’s portfolio in the first quarter. We sold shares of Union Pacific. It was one of three stocks we bought a year ago at the market bottom. Although from a P/E viewpoint this was one of our most expensive purchases ever, the shares worked out quite well, and, when they were more than 90% higher at the beginning of this year, we decided to take profit and put the money into stocks with more attractive valuations.”
7. JD.Com Inc (NASDAQ:JD)
Number of Hedge Fund Holders: 76
JD.Com Inc (NASDAQ:JD) operates as an e-commerce company and retail infrastructure service provider in the People’s Republic of China. It operates in two segments: JD Retail and New Businesses. The company was incorporated in 2006 and is headquartered in Beijing, China.
Mr. Dinan’s stake in the company by the end of the second quarter of 2021 was $54.65 million and the company was among the top 5 holdings of York Capital Management. By the end of the third quarter of 2021, JD.Com Inc (NASDAQ:JD) was not a part of York Capital Management’s 13F portfolio. JD.Com Inc (NASDAQ:JD) is one of the 10 stocks to sell according to billionaire James Dinan.
By the end of the second quarter of 2021, JD.Com Inc (NASDAQ:JD) was a part of 76 hedge funds’ investment portfolios, including York Capital Management. The total stake value of these hedge funds in the China-based e-commerce corporation was in excess of $10.69 billion. This is compared to 75 positions in the first quarter with stakes as high as $11.30 billion.
On November 2nd Barclays analyst Jiong Shao initiated coverage of JD.Com Inc (NASDAQ:JD) with an Overweight rating and $82.50 price target.
Arisaig Partners mentioned JD.Com Inc (NASDAQ:JD) in its second-quarter 2021 investor letter. Here’s their verdict on the company’s stock:
“JD.com, for example, continues to display impressive operating momentum, with sales on track to grow around 30% this year by our estimates. Looking longer term, this company is making a credible claim to be the dominant player in Chinese grocery ecommerce, an enormous chunk of overall consumption in China, and the last one yet to move online in a big way. We think that JD has a clear advantage over rivals here thanks to its integrated and fully self-managed logistics capabilities. Whereas an offline big box retailer might have 10-20,000 SKUs, JD offers 8 million. 90% of orders fulfilled by JD Logistics can be delivered on the same day or the next day to 500 million customers. The fact that JD has just 30 days of inventory tells us that this is a highly-optimised fulfilment chain. It is very hard to be both fast and efficient, and in order to achieve this it is necessary to know what inventory to hold in which warehouse, and when to hold it (“right place, right time, right person”), a highly information-intensive challenge. The only other retailer that comes close to being able to manage that level of complexity is Amazon, and indeed these are capabilities that are very hard to replicate, taking decades of painstaking investment, trial and error testing, and data accumulation.
Moreover, far from being some sort of ‘victim’, this company is most likely a beneficiary of tighter regulation in this sector. A recurrent message running through JD’s recent investor day was that of “deep purpose”, the objective being to create shared value for a broader ecosystem of customers, merchants and employees. As we describe in the next section on “Navigating China”, this form of alignment with the strategic objectives of the government is a very China-specific way of conceptualising ESG, and essential for all businesses that operate in this country to get right…” (Click here to see the full text)
6. T-Mobile US, Inc. (NYSE:TMUS)
Number of Hedge Fund Holders: 100
T-Mobile US, Inc. (NYSE:TMUS) provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. The company was founded in 1994 and is headquartered in Bellevue, Washington. Mr. Dinan’s stake in the company at the end of the second quarter of 2021 was roughly $3.72 million, which accounted for 0.41% of York Capital Management’s 13F portfolio.
This November Simon Flannery, an analyst at Morgan Stanley, raised his price target on T-Mobile, US Inc. (NYSE:TMUS) from $148 to $152 and reiterated an Overweight rating on the shares.
Along with York Capital Management, there were 99 other hedge funds that held stakes in T-Mobile US, Inc. (NYSE:TMUS) by the end of the second quarter of 2021. The total value of these stakes was $8.02 billion. This is compared to 98 positions in the first quarter, with stakes totaling $9.05 billion.
Just like McDonald’s Corporation (NYSE:MCD), Target Corporation (NYSE:TGT), Intel Corporation (NASDAQ:INTC), and Mastercard Incorporated (NYSE:MA), Mr. Dinan completely exited T-Mobile US, Inc. (NYSE:TMUS) by the end of the third quarter of 2021.
Here’s what ClearBridge Investments had to say about T-Mobile US, Inc. (NYSE:TMUS) in its “Large Cap Value Strategy” first quarter 2021 investor letter:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included communication services, where T-Mobile trailed after generating robust returns earlier in the recovery.”
5. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 66
McDonald’s Corporation (NYSE:MCD) operates and franchises McDonald’s restaurants in the United States and internationally. The company was founded in 1940 and is based in Chicago, Illinois. Billionaire James Dinan let go of all his shares in the restaurant company as the third quarter of 2021 came to an end.
On November 9, 2021, Credit Suisse analyst Lauren Silberman raised her price target on McDonald’s Corporation (NYSE:MCD) to $281 from $271 and reiterated an Outperform rating on the shares.
For the third quarter of 2021, McDonald’s Corporation (NYSE:MCD) reported earnings per share of $2.76, beating expert estimates by $0.29. The infamous fast-food brand’s revenue also went up by 14.46% year-over-year and was valued at $6.20 billion, beating revenue estimates by $158.29 million.
By the end of the second quarter of 2021, 66 hedge funds out of the 873 tracked by Insider Monkey held stakes in McDonald’s Corporation (NYSE:MCD) worth more than $2.71 billion. This is compared to 67 hedge funds in the first quarter that had stakes of approximately $3.78 billion in the company.
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 78
Intel Corporation (NASDAQ:INTC) is involved in the design, manufacture, and marketing of essential technologies for the cloud, smart, and connected devices for retail, industrial, and consumer uses worldwide. The company operates through DCG, IOTG, Mobileye, NSG, PSG, CCG, and All Other segments. Mr. Dinan sold all shares of Intel Corporation (NASDAQ:INTC) by the end of the third quarter of 2021.
By the end of the second quarter of 2021, 78 hedge funds including York Capital Management held stakes in Intel Corporation (NASDAQ:INTC). The total value of these stakes amounted to $6.76 billion. This is compared to 83 positions in the first quarter of 2021, with stakes worth $7.61 billion.
This November, Northland analyst Gus Richard upgraded Intel Corporation (NASDAQ:INTC) to Market Perform from Underperform and gave it a $49 price target.
Alger, an investment management firm, shared its insights on Intel Corporation (NASDAQ:INTC) in its “Alger Spectra Fund” first quarter 2021 investor letter. Here’s what the firm had to say:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is
deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
3. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 66
Target Corporation (NYSE:TGT) operates as a general merchandise retailer in the United States.
Dinan sold his entire stake in the retailer in the third quarter.
Nelson Capital Management, an investment management firm, published its second-quarter 2021 investor letter in which it mentioned Target Corporation (NYSE:TGT). Here’s what the experts at Nelson Capital Management had to say:
“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfilment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 156
Mastercard Incorporated (NYSE:MA) primarily functions as a technology company that provides transaction processing and other payment-related products and services in the United States and internationally. Mastercard Incorporated (NYSE:MA) was founded in 1966 and is based in New York.
On November 15, Mizuho analyst Dan Dolev raised his price target on Mastercard Incorporated (NYSE:MA) from $450 to $465 and reiterated a Buy rating on the shares.
By the end of the second quarter of 2021, Mr. Dinan’s owned a little over 9000 shares of Mastercard Incorporated (NYSE:MA) which were worth $3.42 million and accounted for 0.38% of York Capital Management’s 13F portfolio. Other than York Capital Management, there were 155 other hedge funds present in Insider Monkey’s database that held stakes of $17.09 billion in the company.
However, in the third quarter, Dinan exited Mastercard by selling his entire stake in the company.
L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ third quarter 2021 investor letter in which it shared its view on whether or not Mastercard Incorporated (NYSE:MA) is a smart long-term investment. Here’s what the firm thinks:
“Mastercard returned to top 10. We have held Mastercard since inception of the Fund. Over the 6 weeks to 30 September 2021, Mastercard’s share price retreated 10% and we took advantage of what we believe will be a short-term pullback in the share price to add to our investment. Recent weakness in Mastercard’s share price is most likely due to concerns about disintermediation and other pressures caused by growth in ‘Buy now, Pay later’ and other new payment offerings, as well a general market rotation away from higher growth companies in favour of more cyclical businesses.”
1. Visa Inc (NYSE:V)
Number of Hedge Fund Holders: 162
Visa Inc (NYSE:V) operates as a payments technology company worldwide and is a well-known rival of Mastercard Incorporated (NYSE:MA). The company facilitates digital payments among consumers, merchants, financial institutions, businesses, strategic partners, and government entities.
Visa Inc (NYSE:V) reported its earnings for the fiscal fourth quarter of 2021 that ended in September. The company’s revenue was reported to be $6.56 billion, up 28.58% year over year, beating estimates by $45.89 million. Visa Inc (NYSE:V) reported earnings per share of $1.62 and beat estimates by $0.08.
On the 27th of October, 2021, JPMorgan analyst Tien-tsin Huang raised his price target on Visa Inc (NYSE:V) to $277 from $267 and reiterated an Overweight rating on the shares in light of the company’s fiscal fourth-quarter results.
L1 Capital mentioned Visa Inc (NYSE:V) in its third-quarter 2021 investor letter, here’s what it had to say:
“In our view, the payment network company, Visa, remain very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa’s transaction volumes, however in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. Nearer term, we believe the recovery in international travel as the world gradually normalises and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
You can also take a peek at Billionaire James Dinan’s Top 10 Stock Picks and 10 Best Dividend Stocks to Buy According to Billionaire James Dinan.
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Disclosure. None. 10 Stocks to Sell According to Billionaire James Dinan is originally published on Insider Monkey.
