10 Cheap Stocks Hedge Funds Are Talking About

In this article, we discuss 10 cheap stocks hedge funds are talking about.

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10 Cheap Stocks Hedge Funds Are Talking About

10. Pfizer Inc. (NYSE:PFE)

Price as of March 11, 2022: $50.27 per share

Saturna Capital, an investment management firm, published its “Amana Funds” third-quarter 2021 investor letter late last year – a copy of which can be downloaded here. For the third quarter of 2021, the Amana Income Fund Investor Shares lost 2.54% and the Institutional Shares lost 2.50%. The Amana Growth Fund Investor Shares returned 0.95%, ahead of the 0.58% return of the S&P 500 Index, as well as the NASDAQ Composite’s dip of 0.22% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2022.

Saturna Capital Amana Funds, in its Q3 2021 investor letter, mentioned Pfizer Inc. (NYSE:PFE) and discussed its stance on the firm. Pfizer Inc. (NYSE:PFE) is a New York, New York-based pharmaceutical industry company with a $282.6 billion market capitalization. Pfizer Inc. (NYSE:PFE) has lost 14.87% since the beginning of the year, while its 12-month returns still up by 43.88%. The stock closed at $50.27 per share on March 11, 2022.

Here is what Saturna Capital Amana Funds had to say about Pfizer Inc. (NYSE:PFE) in its Q3 2021 investor letter:

“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer Inc. (NYSE:PFE). The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of the Pfizer vaccine for select populations, further increasing demand for vaccinations.”

9. Wells Fargo & Company (NYSE:WFC)

Price as of March 11, 2022: $48.47 per share

L1 Capital, an investment management firm, published its ‘L1 Long Short Fund Limited’ fourth quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly loss of 1.7% was recorded by the fund for the fourth quarter of 2021, underperforming its S&P ASX 200 AI benchmark by 3.8 percentage points. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

In its Q4 2021 investor letter, the fund mentioned Wells Fargo & Company (NYSE:WFC) and discussed its stance on the firm. Wells Fargo & Company (NYSE:WFC) is a San Francisco, California-based financial services company with a $184.8 billion market capitalization. Wells Fargo & Company (NYSE:WFC) has delivered a 1.02% return since the beginning of the year, while its 12-month returns are 21.27%. The stock closed at $48.47 per share on March 11, 2022.

Here is what L1 Capital Long Short Fund Limited had to say about Wells Fargo & Company (NYSE:WFC) in its Q4 2021 investor letter:

“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Wells Fargo & Company (NYSE:WFC), (due to its) improving compliance and operational performance, falling bad debts and progress towards removal of ‘asset cap’. Exited our holding in June at a >50% gain.”

8. Intel Corporation (NASDAQ:INTC)

Price as of March 11, 2022: $45.83 per share

Third Point Management has published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A loss of 5.3% was suffered by its flagship Offshore Fund during the final quarter of 2021, bringing its year-to-date returns to 22.7%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Third Point Management, in its Q4 2021 investor letter, mentioned Intel Corporation (NASDAQ:INTC) and discussed its stance on the firm. Intel Corporation (NASDAQ:INTC) is a Santa Clara, California-based semiconductor company with a $186.6 billion market capitalization. Intel Corporation (NASDAQ:INTC) has lost 11.01% of its value since the beginning of the year, while its 12-month returns are down by 27.14%. The stock closed at $45.83 per share on March 11, 2022.

Here is what Third Point Management had to say about Intel Corporation (NASDAQ:INTC) in its Q4 2021 investor letter:

“2021 was a highly productive year for Intel Corporation (NASDAQ:INTC)‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.

We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.

Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”

7. Comcast Corporation (NASDAQ:CMCSA)

Price as of March 11, 2022: $45.02 per share

Artisan Partners, a high value-added investment management firm, published its “Artisan Value Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.48% was recorded by its Investor Class: ARTLX, 4.55% by its Advisor Class: APDLX, and 4.54% was gained by its Institutional Class: APHLX for the fourth quarter of 2021, all below the Russell 1000® Value Index that delivered a 7.77% return, and the Russell 1000® Index that gained 9.78% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Artisan Value Fund mentioned  Comcast Corporation (NASDAQ:CMCSA) in its Q4 2021 investor letter and discussed its stance on the firm. Comcast Corporation (NASDAQ:CMCSA) is a Philadelphia, Pennsylvania-based telecommunications company with a $204 billion market capitalization. Comcast Corporation (NASDAQ:CMCSA) shares are down by 10.55% since the beginning of the year, while their 12-month losses stand at 21.14%. The stock closed at $45.02 per share on March 11, 2022.

Here is what Artisan Value Fund had to say about Comcast Corporation (NASDAQ:CMCSA) in its Q4 2021 investor letter:

“Comcast Corporation (NASDAQ:CMCSA) is the leading broadband cable company in North America and a global content producer. Comcast and other cable companies are seeing decreased net subscriber additions as they are lapping tough comparisons from a year ago when net additions were high earlier in the pandemic. Interestingly, churn remains at record low levels—a positive metric that speaks to cable’s value proposition. For Comcast, an additional headwind is a delayed recovery in its theme parks business due to the ongoing pandemic. Additionally, increased investment in 5G by wireless competitors may be weighing on shares. However, 5G is not currently competitive with cable, and based on the economics of 5G capex, it’s unlikely to be competitive for many years, if ever. Cable continues to have a competitive advantage with respect to network speeds and reliability. High recurring revenue, pricing power and low capital intensity make for a powerful economic model that contribute to Comcast’s free cash flow generation, allowing the company to play offense with regards to capital allocation. In summary, Comcast is a well-financed business with a wide competitive moat, that trades cheaply at under 13X our estimate of normalized earnings.”

6. General Motors Company (NYSE:GM)

Price as of March 11, 2022: $41.51 per share

RLT Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In the eight years since the Fund’s inception, its portfolio has finished the year in negative territory only twice. A return of 1.76% was recorded by the Fund for the fourth quarter of 2021, versus the S&P 500 TR Index which gained 11.03% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

RLT Capital, in its Q4 2021 investor letter, mentioned General Motors Company (NYSE:GM) and discussed its stance on the firm. General Motors Company (NYSE:GM) is a Detroit, Michigan-based automotive manufacturing company with a $60.3 billion market capitalization. General Motors Company (NYSE:GM) has sank by 29.20% since the beginning of the year, while its 12-month returns are down by 29.95%. The stock closed at $41.51 per share on March 11, 2022.

Here is what RLT Capital had to say about General Motors Company (NYSE:GM) in its Q4 2021 investor letter:

“Despite my enthusiasm for General Motors Company (NYSE:GM)’s competitive positioning in the years to come, it’s the decidedly unsexy legacy operations that keep GM’s cash registers ringing in the here and now. On that front, investor enthusiasm for the current manufacturing – and financing – of internal combustion engines remains pretty muted by most measures. And understandably so:

-GM’s operations are capital intensive,
-GM’s marketplace is highly competitive (and with excess capacity to boot),
-GM’s supply chain is super complex (e.g., semi shortage, tariffs, etc),
-GM’s labor force is (very) unionized,
-GM’s liabilities are aplenty and long-dated (e.g., warranties, recalls, lawsuits, etc),
-GM’s operations have ample – and unavoidable – commodity exposure (in both raw materials & the resulting impact on product demand/mix), and
-There’s no shortage of debt to consider.

Although that hardly represents a comprehensive accounting of the risks that crowd GM’s disclosures, it’s more than sufficient to obscure the many positives to be found under GM’s hood. Of particular note is GM’s strong showing across seemingly every facet of the changes looming over the broader automotive industry:

-Internal Combustion Engines (ICE): If you think all the talk about electric and/or autonomous vehicles is either total hogwash or still decades into the future . . . GM’s legacy business has you covered. For as long as consumers continue to demand ICE powered vehicles, GM will capably meet said demand. In fact, despite the many headwinds faced by the entire automotive industry in 2021, GM still capably sold ~6.3 million vehicles, and generated ~$113.6 billion of automotive-related revenues…” (Click here to see the full text)

5. Bank of America Corporation (NYSE:BAC)

Price as of March 11, 2022: $40.33 per share

Oakmark Funds, an investment management firm, recently published Bill Nygren’s third-quarter 2021 market commentary – a copy of which can be seen here. In the letter, the fund talked about corporate governance, with a related topic about shareholders vs. stakeholders, and also discussed some great companies to invest in. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2022.

Oakmark Funds, in its third-quarter 2021 market commentary, mentioned Bank of America Corporation (NYSE:BAC) and discussed its stance on the firm. Bank of America Corporation (NYSE:BAC) is a Charlotte, North Carolina-based financial services company with a $325.4 billion market capitalization. Bank of America Corporation (NYSE:BAC) shares are down by 9.35% since the beginning of the year, though their 12-month returns are still up by 6.30%. The stock closed at $40.33 per share on March 11, 2022.

Here is what Oakmark Funds had to say about Bank of America Corporation (NYSE:BAC) in its Q3 2021 investor letter:

“Earlier this year, one of our holdings, Bank of America Corporation (NYSE:BAC), announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.” Bank of America understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.

If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives at $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”

4. Twitter, Inc. (NYSE:TWTR)

Price as of March 11, 2022: $33.00 per share

RiverPark Funds published its “RiverPark Large Growth Fund” third quarter 2021 investor letter last year – a copy of which can be downloaded here. The RiverPark Large Growth Fund (the “Fund”) lost 3.23% during the third quarter of 2021, while its benchmarks, the S&P 500 Total Return Index (“S&P”) advanced by 0.58%, the Russell 1000 Growth Total Return Index (“RLG”) returned 1.16%, and the Morningstar Large Growth Category lost 0.07%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

RiverPark Large Growth Fund, in its Q4 2021 investor letter, mentioned Twitter, Inc.  (NYSE:TWTR) and discussed its stance on the firm. Twitter, Inc.  (NYSE:TWTR) is a San Francisco, California-based social network company with a $26.4 billion market capitalization. Twitter, Inc.  (NYSE:TWTR) has lost 23.65% since the beginning of the year, while its 12-month losses stand at 51.54%. The stock closed at $33.00 per share on March 11, 2022.

Here is what RiverPark Large Growth Fund had to say about Twitter, Inc.  (NYSE:TWTR) in its Q4 2021 investor letter:

“Twitter, Inc.  (NYSE:TWTR): Despite reporting in-line third quarter results, Twitter, Inc.  (NYSE:TWTR) shares struggled at the end of 2021. For  Twitter, Inc.  (NYSE:TWTR), the declines could be attributed to a fear of continued headwinds from Apple’s iOS tracking changes, as well as the stock continuing to be a show-me story after posting two disappointing quarters since its investor day in February (prior to this in-line quarter), as well as its recent CEO change (founder Jack Dorsey stepped down and is being succeeded by long-time  CTO Parag Agrawal). Investors continue to be concerned with the platform’s user engagement, as total monetizable daily active users (mDAU) grew 13% year over year to 211 million, in-line with expectations, but still below management’s long-term target of 20% growth. Management expects mDAU growth to accelerate, driven by continued economic reopening and new features such as Spaces and Communities and an increase in the number and penetration of Twitter Topics. For the quarter, revenue increased 37% year over year to $1.3 billion and 4Q guidance was strong at about 20% growth, as Twitter has less exposure to Apple’s ATT headwinds.

With $4.8 billion of TTM revenue (only 4% of Facebook’s revenue), the company has a large opportunity to take share in the $200 billion global digital advertising market that continues to flow to mobile, Twitter’s focus. As the company continues to launch and improve its products (including stories, audio chat, podcasting, video and subscriptions), its platform should become more compelling to both users and advertisers, allowing it to take advertising dollar share through increased user engagement and ad pricing. As Twitter showed this year, we believe that the company can generate 20%+ revenue growth while also driving operating leverage in its already highly profitable business model, generating expanding excess free cash flow growth over time (3Q OCF grew 81% year over year).”

3. Uber Technologies, Inc. (NYSE:UBER)

Price as of March 11, 2022: $30.76 per share

ClearBridge Investments published its “Large Cap Growth Strategy” third quarter 2021 investor letter in the fourth quarter of last year – a copy of which can be downloaded here. The ClearBridge Large Cap Growth Strategy underperformed its Russell 1000 Growth Index benchmark during the third quarter. On an absolute basis, the Strategy had gains across four of the eight sectors in which it was invested (out of 11 sectors total). The leading contributors to performance were in the IT and healthcare sectors, while the consumer discretionary and industrials sectors were detractors. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2022.

ClearBridge Large Cap Growth Strategy, in its Q3 2021 investor letter, mentioned Uber Technologies, Inc. (NYSE:UBER) and discussed its stance on the firm. Uber Technologies, Inc. (NYSE:UBER) is a San Francisco, California-based transport company with a $60.1 billion market capitalization. Uber Technologies, Inc. (NYSE:UBER) shares have lost 26.64% since the beginning of the year, pushing their 12-month losses to 49.03%. The stock closed at $30.76 per share on March 11, 2022.

Here is what ClearBridge Large Cap Growth Strategy had to say about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2021 investor letter:

“We have also been looking for multiyear secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber Technologies, Inc. (NYSE:UBER) will also be a key player in the transition from internal combustion engines to EVs.”

2. ViacomCBS Inc. (NASDAQ:VIAC), now Paramount Global (NASDAQ:PARA)

Price as of March 11, 2022: $30.40 per share

Ariel Investments published its “Ariel Focus Fund” third-quarter 2021 investor letter last year – a copy of which can be downloaded here. Ariel Focus Fund lost 4.71% in the third quarter, trailing the Russell 1000 Value Index, which lost 0.78%, and the S&P 500 Index, which gained 0.58%. During the first three quarters of 2021, the Ariel Focus Fund had gained 15.44% compared to 16.14% gains for the Russell 1000 Value Index and 15.92% gains for the S&P 500. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2022.

Ariel Focus Fund, in its Q3 2021 investor letter, mentioned ViacomCBS Inc. (NASDAQ:VIAC) and discussed its stance on the firm. ViacomCBS Inc. (NASDAQ:VIAC) is a New York, New York-based mass media company, and was recently acquired by Paramount Global (NASDAQ:PARA).

Here is what Ariel Focus Fund had to say about ViacomCBS Inc. (NASDAQ:VIAC) in its Q3 2021 investor letter:

“Leading entertainment company, ViacomCBS Inc. (NASDAQ:VIAC) was the top contributor to relative performance over the trailing one-year period. Shares continued to benefit from solid earnings results and continued investor enthusiasm surrounding the launch of Paramount+ and other international streaming video on demand services. As the price of ViacomCBS Inc. substantially increased during the period, management announced an equity offering and a mandatory convertible preferred stock offering to further support investment in its streaming services. Shares began to tumble on the news, as an overleveraged family office, Archegos Capital Management, became a forced seller of the company. As prices moved closer to our assessment of intrinsic value, we reduced our position size in the company, insulating our portfolios from the largest weekly decline in the stock’s history and maintaining its status as a top contributor.”

1. AT&T Inc. (NYSE:T)

Price as of March 11, 2022: $23.19 per share

Weitz Investment Management recently published its “Hickory Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. A return of 6.54% was recorded by the fund in the fourth quarter of 2021, outperforming its Russell Midcap benchmark that delivered a 6.44% return. For the calendar year, the Fund returned 20.32% compared to 22.58% for the index. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Weitz Investment Management Hickory Fund mentioned AT&T Inc. (NYSE:T) and discussed its stance on the firm in its Q4 2021 investor letter. AT&T Inc. (NYSE:T) is a Dallas, Texas-based telecommunications company with a $165.6 billion market capitalization. AT&T Inc. (NYSE:T) is down by 5.73% since the beginning of the year and by 22.21% over the past 12 months. The stock closed at $23.19 per share on March 11, 2022.

Here is what Weitz Investment Management Hickory Fund had to say about AT&T Inc. (NYSE:T) in its Q4 2021 investor letter:

“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T Inc. (NYSE:T) to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”

You can also take a look at 10 Best Dividend Stocks According to Bill Miller’s Miller Value Partners and 10 Undervalued Dividend Aristocrats to Buy in 2022. 

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