10 Stocks to Sell in 2023 According to Billionaire Steve Cohen

Published on May 18, 2023 at 3:34 pm by Hamna Asim in Hedge Funds, News

In this article, we discuss 10 stocks to sell in 2023 according to billionaire Steve Cohen. If you want to see more stocks in this selection, check out 5 Stocks to Sell in 2023 According to Billionaire Steve Cohen.

Point72 Asset Management of billionaire Steve Cohen recently disclosed its Q1 holdings. The fund’s portfolio worth stood at $32.29 billion by the end of March 2023, up 9.74% from its the previous quarter.

Bloomberg cited Steve Cohen on May 17, who said that investors’ excessive concern about a potential market decline is causing them to overlook the significant opportunities presented by artificial intelligence. He believes that being overly preoccupied with the probability of a recession might cause them to miss out on the substantial potential for growth and success. Cohen emphasized the importance of recognizing and capitalizing on the “big wave” of opportunities that arise from advancements in artificial intelligence.

Cohen expressed his belief that the emerging field of artificial intelligence will likely generate new employment opportunities. Although he expressed concerns about the potential displacement of certain jobs, he anticipates that overall profit margins will improve. This improvement would alleviate the need for the Federal Reserve to implement further interest rate hikes as a measure to control inflation. As a result, Cohen expects that such a scenario would positively impact the markets and contribute to their growth. Steve Cohen said he is “actually pretty bullish”.

Institutional Investor estimated that Steve Cohen, the founder of Point72 Asset Management and owner of the New York Mets, generated personal capital gains of over $1.7 billion from his hedge fund last year. The hedge fund itself achieved a net gain of approximately 10% in 2022. It is worth noting that this estimation does not account for the founder’s share of the fees generated by the hedge fund, implying that his total earnings were likely even higher than the reported figure.

In Q1 2023, Steve Cohen’s hedge fund acquired 1182 new stocks, sold off 469 stocks entirely, made additional purchases in 368 stocks, and reduced holdings in 505 stocks. Some of the popular stocks the billionaire dumped include Tesla, Inc. (NASDAQ:TSLA), The Walt Disney Company (NYSE:DIS), and Apple Inc. (NASDAQ:AAPL).

Our Methodology

For this list, we selected the most popular stocks removed from billionaire Steve Cohen’s 13F portfolio during the first quarter of 2023. Cohen’s fund sold its entire stakes in these companies in the March quarter. The stocks are ranked in ascending order of the number of hedge fund holders in each firm as of Q4 2022.

Stocks to Sell in 2023 According to Billionaire Steve Cohen

10. Albemarle Corporation (NYSE:ALB)

Number of Hedge Fund Holders: 46

Albemarle Corporation (NYSE:ALB) specializes in the development, production, and distribution of specialized chemicals for various industries. The company is divided into three main segments – Lithium, Bromine, and Catalysts. In Q4 2022, Steve Cohen owned 64,962 shares of Albemarle Corporation (NYSE:ALB), worth $14 million. In Q1 2023, the billionaire disposed of his entire stake in the company. He also discarded his stakes in Tesla, Inc. (NASDAQ:TSLA), The Walt Disney Company (NYSE:DIS), and Apple Inc. (NASDAQ:AAPL).

On May 11, KeyBanc last night upgraded Albemarle Corporation (NYSE:ALB) to Overweight from Sector Weight with a $270 price target. The analyst believes that the risk/reward ratio for lithium has improved following the company’s recent earnings report. They anticipate an upturn in demand for lithium in China, which has been experiencing a downturn since November 2022. According to channel checks conducted within the Chinese lithium industry, inventories at the battery cell and electric vehicle levels are declining and expected to reach a low point in the next few months. The analyst suggests that this could lead to a resumption of purchase orders from major buyers in the near future.

According to Insider Monkey’s fourth quarter database, 46 hedge funds were bullish on Albemarle Corporation (NYSE:ALB), compared to 49 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest stakeholder of the company.

Carillon Tower Advisors made the following comment about Albemarle Corporation (NYSE:ALB) in its Q4 2022 investor letter:

“Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The stock gave back some of its recent gains amid investor concerns about how the future price of lithium could be affected by a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and Albemarle plays a critical role in the battery value chain and remains well-positioned for the overall continued global adoption of EVs.”

9. Airbnb, Inc. (NASDAQ:ABNB)

Number of Hedge Fund Holders: 54

Airbnb, Inc. (NASDAQ:ABNB) operates a platform that allows hosts worldwide to offer accommodations and experiences to guests. Using a marketplace model, the company’s platform enables hosts and guests to connect and book spaces and experiences online or through mobile devices. In Q4 2022, Cohen owned 314,926 shares of Airbnb, Inc. (NASDAQ:ABNB) worth nearly $27 million, which he sold in the first quarter of 2023.

On May 9, Airbnb, Inc. (NASDAQ:ABNB) reported a Q1 GAAP EPS of $0.18 and a revenue of $1.82 billion, outperforming Wall Street estimates by $0.08 and $30 million, respectively. During the first quarter, the total number of active listings increased by 18% compared to the same period in the previous year. This growth rate was higher than the 16% recorded in the fourth quarter of 2022.

RBC Capital analyst Brad Erickson lowered the firm’s price target on Airbnb, Inc. (NASDAQ:ABNB) on May 10 to $105 from $135 and kept a Sector Perform rating on the shares. Although the company’s Q1 earnings exceeded expectations, the management’s guidance for Q2 Nights fell well below the consensus. Erickson anticipates that there will be greater pressure on the marginal Average Daily Rate in the future. Due to the company’s high valuation and a clearer understanding of the structural limits on room night growth, RBC prefers to wait for a more significant pullback before recommending a more positive stance on Airbnb, Inc. (NASDAQ:ABNB)’s stock.

According to Insider Monkey’s fourth quarter database, 54 hedge funds were bullish on Airbnb, Inc. (NASDAQ:ABNB), compared to 58 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a prominent stakeholder of the company, with 2.16 million shares worth $269.4 million.

In addition to Tesla, Inc. (NASDAQ:TSLA), The Walt Disney Company (NYSE:DIS), and Apple Inc. (NASDAQ:AAPL), Cohen disposed of his Airbnb, Inc. (NASDAQ:ABNB) stake.

Artisan Developing World Fund made the following comment about Airbnb, Inc. (NASDAQ:ABNB) in its Q1 2023 investor letter:

“Top contributors to performance for the quarter included online travel marketplace Airbnb, Inc. (NASDAQ:ABNB). Airbnb outperformed on the resilience of the travel category including for long-term stays, and on operating leverage as cost optimization is met with revenue increases. Notably, our top four holdings entering the quarter (Sea, Meli, Nvidia, Airbnb) which represented 24.37% of capital on December 31, 2022, increased an average of 64.42% during the quarter.”

8. PepsiCo, Inc. (NASDAQ:PEP)

Number of Hedge Fund Holders: 70

PepsiCo, Inc. (NASDAQ:PEP) has been distributing cash dividends every quarter since 1965, and the year 2023 signifies the 51st consecutive year in which the company has raised its annual dividend, making it a dividend king. On May 2, PepsiCo, Inc. (NASDAQ:PEP) declared a $1.265 per share quarterly dividend, a 10% increase from its prior dividend of $1.150. The dividend is payable on June 30, to shareholders of record as of June 2. Although PepsiCo, Inc. (NASDAQ:PEP) has a strong history of paying dividends, Steve Cohen sold all of his shares in the company during the first quarter of 2023, worth approximately $80 million as of Q4 2022.

On April 27, Barclays raised the firm’s price target on PepsiCo, Inc. (NASDAQ:PEP) to $206 from $201 and maintained an Overweight rating on the shares. According to the analyst, the company increased its organic sales and core profit growth projections after its Q1 earnings report.

According to Insider Monkey’s fourth quarter database, 70 hedge funds were long PepsiCo, Inc. (NASDAQ:PEP), compared to 72 funds in the prior quarter. Terry Smith’s Fundsmith LLP is the biggest stakeholder of the company, with 6.65 million shares worth $1.20 billion.

Madison Sustainable Equity Fund made the following comment about PepsiCo, Inc. (NASDAQ:PEP) in its Q1 2023 investor letter:

“PepsiCo, Inc. (NASDAQ:PEP) announced that it will commit $3.3 million in funds toward water replenishment projects across North America. These projects aim to reduce absolute water use and replenish back into the local watershed more than 100% of the water used at company-owned and third-party sites in high water-risk areas.”

7. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Holders: 70

Block, Inc. (NYSE:SQ) develops solutions that empower merchants to receive payments via card and also offer reporting and analysis features, as well as prompt settlement on the following day. The company increased its projections for 2023 and reported Q1 earnings that surpassed expectations. In the fourth quarter of 2022, Cohen held 587,303 shares of the company worth $37 million. However, during the first quarter of 2023, the billionaire sold all of his shares in Block, Inc. (NYSE: SQ).

On May 11, CLSA analyst John Marrin downgraded Block, Inc. (NYSE:SQ) to Underperform from Buy with a price target of $63, down from $93, and expressed concerns about the macro environment that outweigh the firm’s optimism about the company’s long-term growth potential. The analyst believes that there is a growing likelihood of a “hard landing” in the U.S. during the latter half of 2023, as regional banks’ withdrawal puts more pressure on consumers and small businesses, who are already struggling with high interest rates. Despite posting decent earnings last week, Block, Inc. (NYSE:SQ)’s stock performance has trailed the market, and investors may already be anticipating lower earnings in 2024, the analyst wrote in the research note.

According to Insider Monkey’s fourth quarter database, 70 hedge funds were bullish on Block, Inc. (NYSE:SQ), compared to 75 funds in the prior quarter. Cathie Wood’s ARK Investment Management is the biggest position holder in the company, with 9 million shares worth $565.7 million.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:

“Block, Inc. (NYSE:SQ) provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to mixed quarterly results with more modest growth in the Seller business offsetting strength in Cash App. While integration of recently acquired Afterpay is progressing well and credit metrics remain healthy, the buy-now-pay-later business slowed due to greater competitive intensity. We continue to own the stock due to Block’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund include Wells Fargo.”

6. Booking Holdings Inc. (NASDAQ:BKNG)

Number of Hedge Fund Holders: 83

Booking Holdings Inc. (NASDAQ:BKNG) offers online reservation services for travel and restaurants worldwide. These services include accommodation reservations through Booking.com, rental car reservations through Rentalcars.com, travel reservation services, hotel distribution services, and vacation packages and cruises through Priceline, as well as flight, ground transportation, and activities reservation services through Agoda. The company also operates KAYAK, an online meta-search service, and OpenTable for booking online restaurant reservations. In Q4 2022, Cohen owned 66,448 shares of Booking Holdings Inc. (NASDAQ:BKNG), worth $134 million. In the first quarter of 2023, he dumped his stake entirely.

On May 4, Booking Holdings Inc. (NASDAQ:BKNG) reported a Q1 non-GAAP EPS of $11.60 and a revenue of $3.78 billion, outperforming Wall Street consensus by $0.86 and $30 million, respectively. Revenue for the period climbed 40% on a year-over-year basis.

Deutsche Bank raised the firm’s price target on Booking Holdings Inc. (NASDAQ:BKNG) on May 8 to $3,000 from $2,910 and maintained a Buy rating on the shares following the Q1 results.

According to Insider Monkey’s fourth quarter database, 83 hedge funds were bullish on Booking Holdings Inc. (NASDAQ:BKNG), compared to 92 funds in the prior quarter. Harris Associates is a prominent stakeholder of the company, with 515,271 shares worth over $1 billion.

Like Tesla, Inc. (NASDAQ:TSLA), The Walt Disney Company (NYSE:DIS), and Apple Inc. (NASDAQ:AAPL), Booking Holdings Inc. (NASDAQ:BKNG) is one of the stocks dropped by Cohen in Q1 2023.

Diamond Hill Large Cap Strategy made the following comment about Booking Holdings Inc. (NASDAQ:BKNG) in its Q1 2023 investor letter:

“We did have several strong performing stocks this quarter. Our top contributors to return included NVR, Amazon, Alphabet, Microsoft and Booking Holdings Inc. (NASDAQ:BKNG), all of which posted double-digit gains.

Online travel services provider Booking Holdings reported strong results in the quarter with gross bookings well above pre-pandemic levels. In addition, the outlook for consumer travel continued to be relatively strong. We exited our position in Booking as its share price approached our estimate of intrinsic value, reallocating funds to more deeply discounted opportunities.”

Click to continue reading and see 5 Stocks to Sell in 2023 According to Billionaire Steve Cohen.

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Published on May 1, 2024 at by Inan Dogan, PhD

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