In this article, we discuss 10 stocks to sell now according to Michael Zimmerman’s Prentice Capital Management.
Michael Zimmerman founded Prentice Capital Management, a financial investment advising hedge fund based in Greenwich, Connecticut. Prentice Capital Management has embraced a fundamental-driven, value-oriented investing strategy centered on public and private investments in the U.S. consumer and retail sectors since its formation in 2005. The hedge fund has a longstanding tradition of investing in public companies, utilising a combination of in-depth fundamental analysis and catalyst investing.
Michael Zimmerman resigned from Steven Cohen’s SAC Capital Advisors to establish Prentice Capital Management. He spent five years with SAC trading retail and consumer equities. Prentice Capital Partners, Zimmerman’s previous flagship hedge fund, invested in public equities and corporate debt, a strategy that has not proven to be very effective, at least in Zimmerman’s instance. During the financial crisis of 2008-2009, the fund lost 88% of its value and was temporarily closed. Zimmerman planned to start again and founded Prentice Capital Management, a new hedge fund. Zimmerman prefers to invest in undervalued firms that can increase their value by changing their management, strategy, or capital structure.
As of Q4 2021, Prentice Capital Management holds a 13F portfolio valued at $461.84 million, up from $395.61 million in the previous quarter. Some of the hedge fund’s major holdings in the fourth quarter were Uber Technologies, Inc. (NYSE:UBER), Carnival Corporation & plc (NYSE:CCL), and Las Vegas Sands Corp. (NYSE:LVS). In the fourth quarter of 2021, Michael Zimmerman’s Prentice Capital Management made new purchases in 4 stocks and additional purchases in 11. The hedge fund also reduced holdings in 3 stocks and sold off 9 securities completely.
Michael Zimmerman acquired 422,200 shares of Uber Technologies, Inc., reportedly worth $17.70 million in the fourth quarter of 2021. On April 19, Citi analyst Ronald Josey trimmed his price target on Uber Technologies, Inc. to $50 from $78, but maintained a Buy rating on the stock.
Carnival Corporation & plc (NYSE:CCL) is another prominent company in Prentice Capital’s portfolio. The fund holds 1.44 million shares valued at $29 million after increasing its stake in Carnival Corporation & plc (NYSE:CCL) by 113%. Carnival Corporation & plc (NYSE:CCL)’s price objective was decreased to $22 from $23 on April 19 by Citi analyst James Hardiman, who maintained a Neutral rating on the stock. Due to the recession discount that investors are clearly placing on values and overall attitude, the analyst decreased price predictions for the leisure industry.
Michael Zimmerman is also bullish on Las Vegas Sands Corp.. The fund increased its holding in Las Vegas Sands Corp. by 2% in the fourth quarter, ending the period with 451,754 shares of the company. Following the Q4 results, CBRE analyst John DeCree boosted his price objective on Las Vegas Sands to $47 from $42 and maintained a Hold rating on the stock on January 27.
Our Methodology
Let’s start our list of 10 stocks to sell now according to Michael Zimmerman’s Prentice Capital Management. We used Zimmerman’s 13F portfolio for Q4 2021 for this analysis. On the list are firms in which the fund reduced or sold a previously held position entirely.
Insider Monkey’s data from roughly 900 elite hedge funds tracked in Q4 2021 was used to calculate the number of hedge funds that own shares in each firm.
Stocks to Sell Now According to Michael Zimmerman’s Prentice Capital Management
10. Coty Inc. (NYSE:COTY)
Number of Hedge Fund Holders: 36
Percentage Decrease in Stake in Q4: 2%
Coty Inc. (NYSE:COTY) is a cosmetics company that manufactures, markets, sells, and distributes branded cosmetics. It is divided into three segments – Americas, EMEA, and the Asia Pacific. As of the end of the fourth quarter, 36 hedge funds in Insider Monkey’s database held stakes in Coty Inc., down from 40 funds in the preceding quarter.
JPMorgan analyst Andrea Teixeira reduced her price objective on Coty Inc. to $10 from $12 on March 30 and maintained a Neutral rating on the stock. The analyst lowered expectations for most firms in the drinks and personal care market due to the ongoing Russia/Ukraine war and its impact on commodity costs, transportation, and currency.
Prentice Capital Management started building its position in Coty Inc. in the second quarter of 2020. In the fourth quarter of 2021, it held 7.53 million shares in the company, valued at $79.06 million. The company represents 17.11% of the hedge fund’s 13F portfolio. In the fourth quarter, the hedge fund reduced its holdings in the company by 2%.
Unlike Uber Technologies, Inc., Carnival Corporation & plc (NYSE:CCL), and Las Vegas Sands Corp., Coty Inc. is one of the stocks to sell now according to Michael Zimmerman’s Prentice Capital Management.
9. Evolv Technologies Holdings, Inc. (NASDAQ:EVLV)
Number of Hedge Fund Holders: 17
Percentage Decrease in Stake in Q4: 2%
Touchless security screening solutions based on artificial intelligence (AI) are provided by Evolv Technologies Holdings, Inc. (NASDAQ:EVLV). In the fourth quarter, Prentice Capital Management sold 38,774 shares of Evolv Technologies Holdings, Inc., reducing its stake by about 2%. At the end of the quarter, the hedge fund still held more than 2.39 million shares of Evolv Technologies Holdings, Inc., worth about $10.64 million.
By the end of Q4 2021, Insider Monkey found Evolv Technologies Holdings, Inc. to be a part of 17 hedge fund portfolios. The consolidated stakes held by these funds in the company are worth $80.10 million, down from $103.96 million with 18 positions in the previous quarter.
Northland analyst Michael Latimore maintained an Outperform rating on Evolv Technologies Holdings, Inc. on March 15, lowering his price objective to $7 from $16. According to Latimore, Evolv Technologies Holdings, Inc. reported tremendous revenue growth of 236% year-over-year and bookings increase of 201% year-over-year. Still, its first public forecast for FY22 was well below the Street estimates.
8. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 35
Percentage Decrease in Stake in Q4: 14%
United Airlines Holdings, Inc. (NASDAQ:UAL) operates air transportation services in North America, Asia, the Middle East, Europe, the Pacific, Africa, and Latin America through its subsidiaries. The smart money is paying attention to United Airlines Holdings, Inc., as 35 hedge funds tracked by Insider Monkey reported having interests in the firm at the end of the fourth quarter, up from 30 funds a quarter earlier.
The hedge fund of Michael Zimmerman entered the fourth quarter of 2021 with 173,709 shares of United Airlines Holdings, Inc. in its portfolio, worth around $7.61 million. The hedge fund reduced its stake in United Airlines Holdings, Inc. by 14% in the fourth quarter of 2021. The company has featured on Zimmerman’s portfolio since the third quarter of 2021.
MKM Partners analyst Conor Cunningham boosted his price objective on United Airlines Holdings, Inc. to $59 from $53 on April 22 and reiterated a Buy recommendation on the stock. In a research note to investors, the analyst stated that the business had very positive results that implied a bullish demand scenario, with all categories rising.
7. Guess’, Inc. (NYSE:GES)
Number of Hedge Fund Holders: 22
Percentage Decrease in Stake in Q4: 100%
Guess’, Inc. is a company that designs, markets, distributes, and licences modern garments and accessories for men, women, and children. The company’s segments are Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. In the third quarter of 2021, Prentice Capital Management held 50,733 shares of Guess’, Inc., valued at $1.07 million, which the hedge fund sold in the fourth quarter of 2021.
Following the Q4 data, B. Riley analyst Susan Anderson decreased her price objective on Guess’, Inc. to $36 from $38 and maintained a Buy rating on the stock. She adjusted her forecasts to account for rising air freight.
At the end of Q4, Rima Senvest Management was the leading shareholder of Guess’, Inc., holding over 1.03 million shares. Overall, 22 hedge funds in Insider Monkey’s database were bullish on Guess’, Inc. in Q4, up from 21 in the previous quarter. These stakes are valued at over $132.02 million.
6. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 43
Percentage Decrease in Stake in Q4: 100%
Macy’s, Inc. is a multi-channel retailer that operates via shops, websites, and mobile apps. It runs 725 department stores under the Macy’s, Macy’s Backstage, Market by Macy’s, Bloomingdale’s, Bloomingdale’s The Outlet, Bloomies, and Bluemercury brands in the District of Columbia, Puerto Rico, and Guam as of January 29, 2022.
Securities filings show that Prentice Capital Management owned 140,671 shares of Macy’s, Inc. at the end of the third quarter of 2021, worth $3.18 million, representing 0.8% of the portfolio. In the fourth quarter of 2021, the hedge fund sold its entire interest in Macy’s, Inc.. The company had featured in Prentice Capital Management’s portfolio since the first quarter of 2020.
Citi analyst Paul Lejuez raised Macy’s, Inc. to Neutral from Sell on February 24 and assigned a price target of $25. At the end of the fourth quarter, 43 hedge funds in Insider Monkey’s database held stakes in Macy’s, Inc., an increase compared to 41 funds in the preceding quarter.
Michael Zimmerman’s Prentice Capital Management sold Macy’s, Inc. in Q4 2021, but significant stocks to watch in its portfolio were Uber Technologies, Inc., Carnival Corporation & plc (NYSE:CCL), and Las Vegas Sands Corp..
ClearBridge Investments, an investment management firm, in its third quarter 2021 investor letter, mentioned Macy’s, Inc.. Here is what the fund said:
“Meanwhile, Macy’s, an omnichannel retail organization that operates stores, websites, and mobile applications under the Macy’s, Bloomingdale’s, and Bluemercury brands, also had a strong quarter (+21.5%). Macy’s delivered strong second-quarter earnings, beating on earnings and revenue and raising guidance as the retailer continues to pay down debt and grow its digital business.”
5. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 55
Percentage Decrease in Stake in Q4: 100%
MGM Resorts International (NYSE:MGM) owns and manages several casino resorts in the United States and China that offer gaming, hotel rooms, food, entertainment, shopping, and other services. MGM Resorts International has been in Prentice Capital Management’s portfolio since the first quarter of 2020. The fund sold its stake completely in the fourth quarter of 2021.
According to Insider Monkey’s database of elite funds, 55 hedge funds were long MGM Resorts International in the fourth quarter of 2021, up from 50 funds in the preceding quarter. Corvex Capital is a significant stakeholder of MGM Resorts International, with 15.67 million shares worth $703.44 million.
As part of a comprehensive research note reviewing Q1 earnings in Gaming, Truist analyst Barry Jonas dropped his price objective on MGM Resorts International to $48 from $51 and reiterated a Hold rating on the stock.
In its fourth quarter 2021 investor letter, Longleaf Partners Fund mentioned MGM Resorts International. Here is what the fund said:
“MGM Resorts (43%, 2.54%; 4%, 0.29%), the casino and online gaming company, was another strong performer. The company’s third quarter Las Vegas revenues grew massively over 2020, approaching within 8% of 2019 levels despite some lingering COVID restrictions. MGM has gained nearly 10 percentage points of Vegas Strip market share since 2019, an extraordinary achievement for CEO Bill Hornbuckle, who has also done a terrific job controlling corporate costs. Though its current Las Vegas margins are unsustainably high at 39%, MGM’s Vegas EBITDA should grow steadily from this year’s $1.6 billion as national reopening boosts travel in the next year(s). MGM’s regional casinos are now exceeding their 2019 EBITDA levels as well, while MGM’s digital iGaming revenues grew 17% sequentially for an excellent 32% market share. MGM repurchased shares at a 13% annualized pace during the last quarter at a $40 average price, while our growing value is now approaching $60. MGM acquired the Cosmopolitan, a “tuck-in” casino with achievable synergies, at a reasonable price and recently announced the sale of the Mirage for a headline price over $1billion, well above our appraisal for the asset. We are delighted with the progress of this management team and business over the last two years.”
4. Skillsoft Corp. (NYSE:SKIL)
Number of Hedge Fund Holders: 21
Percentage Decrease in Stake in Q4: 100%
Skillsoft Corp. (NYSE:SKIL) is a company that specializes in enterprise learning solutions. It is divided into three sections – Content, Global Knowledge, and SumTotal. Prentice Capital Management first purchased a stake in Skillsoft Corp. during the third quarter of 2021, buying close to 111,178 shares. In the next quarter, this position was totally sold off.
Piper Sandler analyst Arvind Ramnani reduced his price objective on Skillsoft Corp. to $10 from $12 on January 13 and maintained a Neutral rating on the stock. Following repeated resets and estimate revisions, the analyst lowered price targets on 20 vertical software and fintech equities.
In the fourth quarter of 2021, hedge fund sentiment decreased for Skillsoft Corp.. According to data compiled by Insider Monkey, 21 hedge funds owned shares in Skillsoft Corp. at the end of the fourth quarter, down from 23 funds a quarter earlier.
3. SmileDirectClub, Inc. (NASDAQ:SDC)
Number of Hedge Fund Holders: 16
Percentage Decrease in Stake in Q4: 100%
SmileDirectClub, Inc. (NASDAQ:SDC) is a dental service provider. SmileDirectClub, Inc. manages end-to-end processes through its teledentistry platform, SmileCheck, which includes marketing, aligner manufacturing, treatment by a doctor, fulfilment, and inspecting through the completion of treatment with over 250 licenced orthodontists and general physicians.
According to Insider Monkey’s fourth quarter database, 16 hedge funds were bullish on SmileDirectClub, Inc., with stakes valued at $9.08 million, down from 18 funds in the earlier quarter, with stakes worth $58.71 million.
An Equal Weight rating was assigned to SmileDirectClub, Inc. with a $2.30 price objective by Morgan Stanley analyst Erin Wright on January 31. She began her coverage of seven dental companies with a good outlook toward the business.
In the third quarter of 2021, Prentice Capital Management held 1.53 million shares of SmileDirectClub, Inc., valued at $8.11 million, which the hedge fund sold in the fourth quarter of 2021.
2. Spring Valley Acquisition Corp. (NASDAQ:SV)
Number of Hedge Fund Holders: 18
Percentage Decrease in Stake in Q4: 100%
Spring Valley Acquisition Corp. (NASDAQ:SV) is a blank check corporation that was founded to achieve a merger, asset acquisition, stock purchase, reorganization, stock exchange, or other similar business combinations with one or more entities. Its goal is to buy a privately owned company that can turn into a publicly-traded bellwether due to its financial acumen, operational ability, and industry network.
According to regulatory filings, Prentice Capital Management had 54,909 shares of Spring Valley Acquisition Corp. at the end of the third quarter of 2021, valued at $477,000, which it sold off entirely in the fourth quarter of 2021.
Nucor Corporation (NYSE:NUE) made a $15 million investment in NuScale Power, a developer of small modular reactor nuclear reactors, on April 6. Nucor has agreed to support NuScale through a private placement in Spring Valley Acquisition Corp., which plans to merge with NuScale.
Among the hedge funds tracked by Insider Monkey, 18 funds were bullish on Spring Valley Acquisition Corp. at the end of the fourth quarter of 2021, with stakes amounting to $88.48 million. D E Shaw is the biggest stakeholder in Spring Valley Acquisition Corp., with 2.24 million shares worth $22.45 million.
1. World Wrestling Entertainment, Inc. (NYSE:WWE)
Number of Hedge Fund Holders: 25
Percentage Decrease in Stake in Q4: 100%
World Wrestling Entertainment, Inc. (NYSE:WWE), a diversified media and entertainment company, competes in the sports entertainment industry in North America, the Middle East, Africa, Europe, Asia Pacific, and Latin America. Michael Zimmerman added World Wrestling Entertainment, Inc. to his portfolio in the third quarter by buying 98,976 shares. However, the hedge fund sold all the shares of World Wrestling Entertainment, Inc. in the fourth quarter of 2021.
In the fourth quarter of 2021, 25 of the 924 hedge funds owned interests in World Wrestling Entertainment, Inc. worth $199.23 million, compared to the same number of funds owning stakes in World Wrestling Entertainment, Inc. totaling $223.95 million in the previous quarter.
JPMorgan analyst David Karnovsky boosted his price objective on World Wrestling Entertainment, Inc. to $64 from $58 on April 21 and maintained a Neutral rating on the stock ahead of the Q1 2022 earnings. After executing several action items since World Wrestling Entertainment, Inc. released Q4 earnings, the analyst upgraded his EBITDA expectations for 2022.
ClearBridge Investments, in its first quarter 2021 investor letter, mentioned World Wrestling Entertainment, Inc.. Here is what the fund said:
“We also sold World Wrestling Entertainment as we believe the shares reflected full value after finally signing a U.S. content distribution agreement.”
You can also take a peek at 8 Stocks to Sell Now According to Mitch Cantor’s Mountain Lake Investment Management and 10 Tech Stocks to Buy Now According to Robert Pitts’ Steadfast Capital.
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This article is originally published at Insider Monkey.
