In this piece, we will take a look at the ten stocks to sell now according to Orkun Kilic’s Berry Street Capital.
Orkun Kilic is a Britain-based investor who is at the helm of the investment fund Berry Street Capital. Mr. Kilic set up the fund in 2019, and prior to venturing on his own in the financial world, he spent some time working in the finance industry. His hedge fund primarily manages the Berry Street Master Fund, which itself has two more funds, namely the Berry Street Fund Ltd and the Berry Street Fund L.P.
The feeder fund Berry Street Fund L.P., also known as Berry Street Capital Management LL.P., is run by Ms. Teresa Durso, and as of the second quarter of this year, the fund had 35 companies in its portfolio and managed close to $576 million in assets. The bulk of the investments in this fund is focused on U.S. companies, and it mostly targets the high growth, high return technology industry.
Mr. Kilic himself hails from Turkey, and he received his bachelor’s in business administration from the famed Koc University in 2004, making him one of the younger hedge fund executives in an industry that is flanked by investors with multiple decades of experience under their belt. He went on to do Master’s in financial engineering from Bogazici University in 2006, and immediately afterward would go on to attend the illustrious Harvard Business School for his MBA.
The hedge fund executive started his career in the finance world in Turkey, by working as an analyst for Fiba Capital. He would join Morgan Stanley as an associate in 2008. He worked at Morgan Stanley for three years before becoming a partner at Paulson & Co for eight years until 2019.
Berry Street Capital‘s latest filings with regulators reveal that the fund had $800 million in its portfolio as of the second quarter of this year, for a roughly 22% annual drop.
In this article we will take a look at some of the stocks the fund sold in the second quarter. Some notable names dumped include AT&T Inc. (NYSE:T), Netflix, Inc. (NASDAQ:NFLX), and Omnicell, Inc. (NASDAQ:OMCL).
Photo by Javier Esteban on Unsplash
Our Methodology
In order to decipher the inner workings of Mr. Kilic’s mind, we sifted through his firm’s portfolios for the first and second quarters of this year to pick out which ones did not make the cut as of the latest quarter.
Stocks to Sell Now According to Orkun Kilic’s Berry Street Capital
10. Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH)
Berry Street Capital’s Stake Value In Q1 2022: $929,000
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.1%
Number of Hedge Fund Holders: 15
Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) is a Canadian biopharmaceutical company that is involved in developing treatments for diseases such as active lupus nephritis. It is headquartered in Victoria.
Berry Capital owned a small $928,000 stake in Aurinia Pharmaceuticals Inc. as part of its Q1 2022 holdings. This came through the firm owning 75,000 shares of the company, and the stake was sold off during the second quarter of this year. 15 out of the 895 hedge funds part of Insider Monkey’s Q2 2022 survey had invested in the company.
Aurinia Pharmaceuticals Inc.’s shares have dropped by a massive 66% year to date, proving that it was perhaps prudent for Berry Street Capital to have eliminated the firm from its investment portfolio. Following the company’s Q2 2022 results, H.C. Wainwright lowered its share price target to $26 from $30 in August 2022.
Aurinia Pharmaceuticals Inc.’s largest investor in our database is Ken Griffin’s Citadel Investment Group which owns 869,244 shares that are worth $8.7 million.
Aurinia Pharmaceuticals Inc., AT&T Inc., Netflix, Inc., and Omnicell, Inc. are some of the stocks Berry Street Capital sold during the second quarter of this year.
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Berry Street Capital’s Stake Value In Q1 2022: $1.3 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.15%
Number of Hedge Fund Holders: 87
Advanced Micro Devices, Inc. (NASDAQ:AMD) is an American semiconductor designer that is known for developing and selling a wide variety of chip products that are used for computing, rendering, gaming, and enterprise use. The firm is headquartered in Santa Clara, California.
Advanced Micro Devices, Inc. is among the few chip companies that have managed to grow their revenues during this year’s first half, even as economic slowdown and a semiconductor shortage alongside a crash in cryptocurrency prices has hammered earnings of its larger peers such as Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA). Mizuho lowered the company’s share price target to $125 from $140 in September 2022, as it worried about the demand for hyperscale computing slowing down.
Mr. Kilic’s Berry Street Capital sold 12,500 Advanced Micro Devices, Inc. shares as the second quarter of this year ended. During the first quarter, its stake in the company was worth $1.3 million and it represented 0.15% of the investment portfolio. Insider Monkey studied 895 hedge funds for their holdings during this year’s June quarter to discover that 87 had invested in the firm.
Ken Fisher’s Fisher Asset Management is Advanced Micro Devices, Inc.’s largest investor. It owns 25 million shares that are worth $1.9 billion.
8. Sohu.com Limited (NASDAQ:SOHU)
Berry Street Capital’s Stake Value In Q1 2022: $2.5 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.28%
Number of Hedge Fund Holders: 12
Sohu.com Limited (NASDAQ:SOHU) is a Chinese company that develops online videos, games, and other content for personal computing and mobile devices. The firm is headquartered in Beijing.
Berry Capital had held an $2.5 million stake in Sohu.com Limited as part of its Q1 2022 holdings. This came through the firm holding 150,000 shares of the company and it represented 0.28% of its investment portfolio. By the second quarter end, the hedge fund removed it from its portfolio, but at the same time, 12 out of the total 895 funds polled by Insider Monkey had invested in Sohu.com Limited.
Sohu.com Limited’s fair share price value is estimated to be $19.95/share, if a cost of capital (WACC) of 9% and a terminal value equal to China’s long term growth rate is applied This provides for a slight undervaluation over the current share price of $17.66.
Sohu.com Limited’s largest investor in our database is Jim Simons’s Renaissance Technologies which owns 1.8 million shares that are worth $30 million.
7. Bally’s Corporation (NYSE:BALY)
Berry Street Capital’s Stake Value In Q1 2022: $3.8 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.43%
Number of Hedge Fund Holders: 27
Bally’s Corporation is an American gaming company headquartered in Providence, Rhode Island. The company has casinos and resorts all over the United States and it also operates an online gaming platform.
Berry Street Capital held a $3.8 million stake in Bally’s Corporation as part of its Q1 2022 portfolio, which was sold by the end of the second quarter. Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 27 had held a stake in the company.
Bally’s Corporation is looking to open a new casino in Chicago, from which it expects to earn $800 million in targeted revenue – a figure that industry observers have described as a tad too optimistic given the strong casino ecosystem in the area. The facility is slated to have 500 rooms and 3,400 slots alongside a 3,000 seat entertainment facility and 170 table games. Cowen reduced the company’s share price target to $45 from $53 in August 2022, stating that recessionary fears will strongly affect casinos outside Las Vegas.
6. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Berry Street Capital’s Stake Value In Q1 2022: $5.7 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.65%
Number of Hedge Fund Holders: 66
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is an American video game company that owns some of the largest gaming brands and titles in the world. One of its renowned brands is Rockstar Games, which is known for the video game title Grand Theft Auto. Take-Two Interactive Software, Inc. is headquartered in New York, New York.
Berry Street Capital owned a $5.7 million stake in Take-Two Interactive Software, Inc. as part of its Q1 2022 holdings, which came in the form of 37,500 shares. The second quarter saw the firm remove this completely from its portfolio. Insider Monkey surveyed 895 hedge funds for their Q2 2022 investments and discovered that 66 had held a stake in the company.
Take-Two Interactive Software, Inc.’s latest quarterly results saw the firm suffer amidst a wider downturn in the video gaming market. For its full year, the company shared reduced bookings guidance of $5.8 billion, which were well below the $6.4 billion guidance expected by analysts.
Take-Two Interactive Software, Inc.’s largest investor in our database is Andreas Halvorsen’s Viking Global which owns 1.9 million shares that are worth $245 million.
AT&T Inc., Netflix, Inc., and Omnicell, Inc. are joined by Take-Two Interactive Software, Inc. on the list of stocks sold by Orkun Kilic.
5. argenx SE (NASDAQ:ARGX)
Berry Street Capital’s Stake Value In Q1 2022: $7.8 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.89%
Number of Hedge Fund Holders: 35
argenx SE (NASDAQ:ARGX) is a Dutch biotechnology company that focuses on developing treatments for autoimmune diseases. Some of the diseases that its treatments target include neuropathy, myopathy, cancer, and airway inflammation. The firm is headquartered in Breda, the Netherlands.
argenx SE has been performing well when it comes to its drug that treats muscle weakening. This drug is called Vyvgart, and the company’s latest quarter revealed that it sequentially grew sales by $21 million to stand at $75 million as the second quarter ended. Piper Sandler raised the company’s share price target to $450 from 465 in August 2022, sharing that Vyvgart’s performance was impressive, with neurologists expressing confidence in the drug.
Mr. Kilic’s first quarter of 2022 stake in argenx SE was worth $7.8 million and it came in the form of 25,000 shares. During the second quarter, this entire stake was sold by Kilic’s fund.
argenx SE’s largest investor is Kurt Von Emster’s VenBio Select Advisor which owns 1.2 million shares that are worth $479 million.
4. Omnicell, Inc. (NASDAQ:OMCL)
Berry Street Capital’s Stake Value In Q1 2022: $8 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 0.91%
Number of Hedge Fund Holders: 19
Omnicell, Inc. is an American company that provides medication management and adherence tools for pharmacies and other healthcare companies. These allow for pharmacy automation, automated dispensing of medications, and other uses. The company is headquartered in Mountain View, California.
Berry Street Capital held an $8 million stake in Omnicell, Inc. during Q1 2022, which came in the form of 62,500 shares. At the time, it represented 0.91% of the firm’s investment portfolio, but the firm sold all these shares as the second quarter ended. Insider Monkey’s Q2 2022 research covering 895 hedge funds saw 19 investors in the company.
Omnicell, Inc.’s shares have dropped by 32% over the past six months – a factor that was undoubtedly on Mr. Kilic’s mind as his fund sold its entire stake in the company. Piper Sandler reduced the firm’s share price target to $150 from $162 in August 2022, stating that its second quarter results were impressive.
Omnicell, Inc.’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 256,333 shares that are worth $29 million.
Carillon Tower Advisers mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Omnicell (NASDAQ:OMCL) provides an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities. Cloud services have been a focus of the company and have shown good growth, automating many manual processes.”
3. Houghton Mifflin Harcourt Company (NASDAQ:HMHC)
Berry Street Capital’s Stake Value In Q1 2022: $15.7 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 1.78%
Number of Hedge Fund Holders: N/A
Houghton Mifflin Harcourt Company (NASDAQ:HMHC) was an American company that provided educational solutions to schools and educators. This included curriculum, supplemental, and other solutions.
Houghton Mifflin Harcourt Company was acquired by the private equity firm Veritas Capital in August 2022, with the firm’s shares ceasing to trade on the market during mid August as the deal was completed. Prior to its closing, Mr. Kilic’s hedge fund owned 750,000 shares of the company which was a new addition to its portfolio in the first quarter. The shares were worth $15.7 million and they represented 1.78% of the holdings.
2. AT&T Inc. (NYSE:T)
Berry Street Capital’s Stake Value In Q1 2022: $17.7 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 2%
Number of Hedge Fund Holders: 55
AT&T Inc. is an American telecommunications company that provides a wide variety of services such as call packages, broadband internet, handsets, and customer premises equipment. The company is headquartered in Dallas, Texas.
Berry Street Capital owned a $17.7 million stake in AT&T Inc. as part of its Q1 2022 holdings, which came in the form of 750,000 shares. The second quarter saw the firm remove this completely from its portfolio. Insider Monkey surveyed 895 hedge funds for their Q2 2022 investments and discovered that 55 had held a stake in the company.
AT&T Inc.’s share price has dropped by a painful 18% over the past twelve months, and the company isn’t seeing much love from Wall Street either. For instance, MoffettNathanson reduced its share price target to $17 from $19 in August 2022, stating that AT&T Inc.’s cash flows and dividends are being sacrificed for subscriber growth. AT&T Inc. currently pays a 28 cent dividend for a 6.6% yield.
AT&T Inc.’s largest investor in our database is D. E. Shaw’s D E Shaw which owns 11.4 million shares that are worth $239 million.
Argosy Investors mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“I purchased shares of AT&T Inc. (NYSE:T) prior to its spin-off of Warner Brothers Discovery (WBD). Most people are probably familiar with AT&T. They are a major cellular service provider, and until recently owner of the Time Warner media assets, which include HBO, CNN, TNT, TBS, Cartoon Network, DC Comics and the Batman content brands, and more. At the time of my purchase, I estimated that the combined T/WBD assets traded at a 15% levered FCF yield, or 6x FCF. I also believe that WBD, which now has HBO Max, has future growth in front of it which was previously in doubt when Discovery was primarily tied to the declining cable television bundle. Since then, Netflix reported disappointing subscriber growth, which threw all streaming companies into disarray. WBD followed that news with a disappointing outlook on its business during its own quarterly earnings.
As a result, shares of WBD have declined nearly 40% since the spin-off. WBD now trades for 7x 2023E FCF and there is great potential for returns over the next few years as WBD pays down debt used to finance its merger combining Warner Brothers and Discovery and grows. We do not own a large position in WBD at present, but we may add to it over time.”
1. Netflix, Inc. (NASDAQ:NFLX)
Berry Street Capital’s Stake Value In Q1 2022: $23 million
Percentage of Berry Street Capital’s 13F Portfolio In Q1 2022: 2.65%
Number of Hedge Fund Holders: 95
Netflix, Inc. is an entertainment services provider that hosts an online platform allowing its users to access a wide variety of content such as movies, tv shows, and documentaries. The company is headquartered in Los Gatos, California, the United States.
Netflix, Inc. is one of the worst performing stocks in the U.S. index, as its shares have bled a massive 59% in value over the course of this year. While it plans to increase advertising spending to boost growth, the fact that it lost a million subscribers in its fiscal Q2 did not help investor confidence. JP Morgan kept a $245 price target for the company in September 2022, stating that its plans for an advertisement supported subscription tier are slowly gaining investor interest.
Netflix, Inc. was another stock that Berry Street Capital removed from its portfolio during the second quarter of this year. In the prior quarter, the fund had owned a $23 million stake in the company which represented 2.65% of its portfolio. Insider Monkey’s 895 hedge fund survey for this year’s June quarter saw 95 as having invested in Netflix, Inc..
Netflix, Inc.’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 6.5 million shares that are worth $1 billion.
Pershing Square Holdings mentioned the company in its Q2 2022 investor letter, and it stated that:
“In April, we announced that we exited our position in Netflix, Inc. (NASDAQ:NFLX) following the company’s first quarter results as management commentary and a required shift in the company’s business model toward ad-supported streaming caused us to lose confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty. While we have confidence in Netflix’s superb management team and their long-term record, we believed the dispersion of outcomes had widened such that it no longer met our requirements for a core holding. We discussed our decision to sell Netflix in detail in our April 20th letter to investors which you can read here.”
Suggested Articles:
This article is originally published at Insider Monkey.
