In this article we present the list of 10 Stocks Billionaire Tiger Cub Rob Citrone is Buying.
Visa Inc. (NYSE:V), T-Mobile US, Inc. (NYSE:TMUS), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) are some of the stocks that hedge fund billionaire Rob Citrone is buying in 2022.
Rob Citrone’s Discovery Capital Management is a Connecticut-based hedge fund that was co-founded by the billionaire Tiger Cub in 1999. Discovery Capital, which manages $3.75 billion in assets as of March 31, has been one of the most successful hedge funds in the world since inception, posting annualized returns of 17%.
Rob Citrone earned a bachelor’s degree from Hampden-Sydney College, then followed that up with an MBA from the Darden School of Business. He then spent five years at Fidelity Investments before heading over to Tiger Management to work under legendary investor Julian Robertson. He co-founded Discovery Capital alongside Harry Krensky in 1999 with seed money from Robertson.
Citrone has built a reputation for himself as something of an emerging markets specialist over the years, with investments in more than 50 countries. He’s also proven to be adept as a macro trader, including his recent winning bets on Bitcoin, which helped Discovery return 55% in 2020. 2021 was another strong year for Discovery Capital, as it posted 19% returns, and it was off to another strong start in 2022 with 4% gains in January. Citrone’s stellar returns over the years have allowed him to amass a personal fortune of $1.1 billion according to Forbes.
Citrone’s 13F portfolio underwent a characteristically high amount of turnover during Q1, as his fund unloaded 38 of its former positions, replacing them with 40 new additions. Citrone cut his fund’s exposure to tech stocks down to 24% from 38% during the quarter (and down from 57% two quarters earlier), while slightly increasing its exposure to finance, energy, and consumer discretionary stocks. Discovery Capital’s 13F portfolio contained $1.17 billion in assets on March 31.
In this article, we’ll look at ten stocks that the billionaire money manager has been buying in 2022 as he looks to position Discovery Capital for another strong year.
Our Methodology
The following data is gathered from Discovery Capital Management’s latest 13F filing with the SEC. We follow hedge funds like Discovery Capital Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
10 Stocks Billionaire Tiger Cub Rob Citrone is Buying
10. Palo Alto Networks, Inc. (NYSE:PANW)
Value of Discovery Capital Management‘s 13F Position: $6.63 million
Number of Hedge Fund Shareholders: 86
We’ll get to Visa Inc. (NYSE:V), T-Mobile US, Inc. (NYSE:TMUS), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), but first up on billionaire Rob Citrone’s buying list from Q1 is Palo Alto Networks, Inc. (NYSE:PANW), which the Tiger Cub bought 10,647 shares of.
He was far from the only hedge fund manager to take a keen interest in the network security company during the quarter, as there was an 18% increase in hedge fund ownership of PANW. Maverick Capital, led by Tiger Cub Lee Ainslie, also built a new stake in Palo Alto Networks during Q1, amassing 2,946 shares.
Palo Alto Networks, Inc. (NYSE:PANW) has been a popular buy among hedge funds given the growing risk of cyberattacks and the relative fragility of many companies’ sensitive systems and information. It’s not surprising then that cyber threats were cited as the number one concern among a group of CEOs that were recently polled by PricewaterhouseCoopers, topping even the possibility of a recession.
Demand for Palo Alto Networks, Inc. (NYSE:PANW)’s security offerings is booming, as evidenced by its 40% year-over-year billings increase to $1.8 billion during the company’s fiscal Q3. That growth is expected to slow to about 25% in Q4, about in line with the company’s expected revenue growth for the quarter. Morgan Stanley believes PANW shares are “materially mispriced” and has an $823 price target on them.
9. HDFC Bank Limited (NYSE:HDB)
Value of Discovery Capital Management‘s 13F Position: $6.96 million
Number of Hedge Fund Shareholders: 42
Hedge funds began souring on HDFC Bank Limited (NYSE:HDB) in late 2020 and early 2021, but have been buying back into the stock over the past few quarters. In Q1 it was Rob Citrone’s turn to take a new stake in the Indian bank, buying 113,400 shares. As of March 31, Tiger Cub Andreas Halvorsen owns the largest stake in HDB among the hedge funds tracked by Insider Monkey’s database, holding more than 7.07 million shares in its 13F portfolio.
HDFC Bank Limited (NYSE:HDB) shares are down by 14% in 2022 despite an April surge after the Indian bank announced its plans to merge with its parent company HDFC, which would convert the largest housing finance company in India into a subsidiary of the bank. Investors are excited about the potential growth opportunities such a merger would present for HDFC Bank, allowing it to offer HDFC’s home loan offerings to the bank’s 68 million customers.
Motiwala Capital likes HDFC Bank Limited (NYSE:HDB)’s solid growth prospects, saying this about the company in its Q4 2021 investor letter:
“HDFC Bank (NYSE:HDB) is the leading bank in India. HDFC bank continues to compound sales and profits at 15% and 20% respectively and generates a solid 15-20% ROE. We purchased shares in late December as the share price declined and became attractive. HDFC Bank is a fast grower, and we expect it to continue to generate excellent returns for shareholders.”
8. Expedia Group, Inc. (NASDAQ:EXPE)
Value of Discovery Capital Management‘s 13F Position: $7.13 million
Number of Hedge Fund Shareholders: 88
Hedge funds have bought Expedia Group, Inc. (NASDAQ:EXPE) in droves since mid-2020 after the stock cratered to 2014 levels. EXPE shares went on a tear shortly after, nearly quadrupling in value before hitting another rough patch this year. Nonetheless, global travel is expected to improve greatly in the near-term, which is likely what convinced Discovery Capital to buy 36,440 shares of Expedia in Q1.
Expedia Group, Inc. (NASDAQ:EXPE) hasn’t yet fully recovered to pre-pandemic levels, growing gross bookings by 58% year-over-year in Q1 to $24.4 billion, which still fell 17% short of Q1 2019’s bookings. Bookings were considerably stronger between February and April of this year than they were in January, when they fell by 11%, so that does bode well for the company’s Q2 results. Expedia has also become more efficient throughout the pandemic, which should boost its earnings quite a bit once its revenue fully rebounds.
The Aristotle Focus Growth Fund appreciates Expedia Group, Inc. (NASDAQ:EXPE)’s efforts to reduce expenses, stating the following in its Q1 2022 investor letter:
“Expedia outperformed in the first quarter following a better-than-expected earnings report for the company’s fourth quarter of 2021. During the pandemic, the company reduced expenses which has improved operating leverage as revenue recovers. Expectations for travel in 2022 have improved as COVID cases have declined.”
7. Meta Platforms, Inc. (NASDAQ:META)
Value of Discovery Capital Management‘s 13F Position: $7.21 million
Number of Hedge Fund Shareholders: 204
Hedge funds have been bailing on Meta Platforms, Inc. (NASDAQ:META) in recent quarters, as there’s been a 26% drop in hedge fund ownership of META over the past three quarters. Rob Citrone took a different approach to the social media giant’s Q1 weakness, building a new stake of 32,405 shares in the company.
Meta Platforms, Inc. (NASDAQ:META) shares have cratered by 49% this year, primarily on the back of the company’s disastrous Q4 results announced in February. Meta missed EPS estimates in the quarter, had a decline in daily average users for the first time in its history, and its metaverse initiative lost billions of dollars.
There are further risks for Meta Platforms, Inc. (NASDAQ:META), as digital advertising spending is expected to slow throughout the rest of 2022 and rising competition from TikTok may continue to erode Facebook’s user base. On the other hand, Bank of America analyst Justin Post believes Meta’s high margins will insulate its free cash flow, which the company could then use to buy back more of its shares while they’re cheap. He has a ‘Buy’ rating and $233 price target on the stock and considers it a top internet recession stock pick.
6. Adecoagro S.A. (NYSE:AGRO)
Value of Discovery Capital Management‘s 13F Position: $7.99 million
Number of Hedge Fund Shareholders: 16
Adecoagro S.A. (NYSE:AGRO) has been one of the rare market winners in 2022, with shares gaining over 8% year-to-date. The second quarter has been much tougher on the stock however, as it’s given back most of its exceptional 57% gains from Q1. Hedge funds appear to have timed their AGRO buys well, as ownership of the South American agricultural company nearly doubled in Q4 ahead of the stock’s big Q1 performance. Citrone’s fund opted to buy in during Q1, purchasing 661,081 AGRO shares.
Adecoagro S.A. (NYSE:AGRO) has been a big beneficiary of soaring food prices, as it grew net sales by 18.1% year-over-year in Q1 to $201 million, while net income more than tripled to $65.2 million. The company rewarded shareholders with some of its bounty, announcing a $35 million cash dividend that will be paid out over two installments.
Adecoagro S.A. (NYSE:AGRO) should continue to benefit from food sticker shock in the months to come, as 100% of its ethanol production is unhedged, while the same can be said about 76% of its sugar production. The company has also proven to be adept at taking advantage of golden opportunities in the marketplace, with the flexibility to switch its production focus from sugar to ethanol or vice versa depending on prices, as well as from hydrous to anhydrous ethanol.
Visa Inc. (NYSE:V), T-Mobile US, Inc. (NYSE:TMUS), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) are among several other compelling stocks that billionaire Rob Citron was buying in Q1, check them out at the link below.
5. Visa Inc. (NYSE:V)
Value of Discovery Capital Management‘s 13F Position: $8.04 million
Number of Hedge Fund Shareholders: 163
Visa Inc. (NYSE:V) shares are down by 9% this year after having undergone several notable rises and falls. Investors seem to be unsure what to make of the company’s prospects given the economic uncertainty. A possible recession and declining consumer confidence may not bode well for the financial services company. On the other hand, Visa is growing at a strong rate, boosting revenue by 25% year-over-year in the company’s fiscal Q2, while its non-GAAP earnings shot up by 30%. Analysts don’t see that trend slowing down much over the next five years either, predicting 18% annual growth.
The Polen Global Growth Fund believes that with profitable cross-border transactions set to rebound, Visa Inc. (NYSE:V) should be a good investment in the long run, discussing the company in its Q1 2022 investor letter:
“We added to both Visa and Mastercard during the final quarters of 2021, based on the belief that both businesses were trading at attractive prices and poised to deliver, double-digit returns over the next three to five years. Cross-border transactions–a highly profitable business segment for both companies–represent roughly 10% of Visa and Mastercard’s volumes and 25% of their gross revenues, so lockdowns have severely impacted this segment due to stifled travel. While it was impossible to know when people would begin traveling again, we accepted this reality with the belief that travel would eventually return. Both companies have commented that as soon as a country or geography reopens, cross-border volumes reignite, amplifying each business’s growth and profitability. We think these near- term headwinds have created an attractive long-term investment opportunity.”
4. Enphase Energy, Inc. (NASDAQ:ENPH)
Value of Discovery Capital Management‘s 13F Position: $10.4 million
Number of Hedge Fund Shareholders: 57
Enphase Energy, Inc. (NASDAQ:ENPH) hit an all-time high in terms of its ownership among hedge funds during Q1, with the home energy supplier being found in the 13F portfolios of 57 money managers. One of them was Rob Citrone’s Discovery, which bought 51,500 shares of ENPH to take a new stake in the company.
Shares of Enphase Energy, Inc. (NASDAQ:ENPH), which sells micro inverter systems to the solar industry, have been on a ridiculous tear since the end of 2018, gaining 3,933%, which has pushed the company’s P/E ratio to a sizzling 168x. Enphase has grown its revenue more than four-fold during that period, to $1.38 billion in 2021, while its gross income has surged more than five-fold to $554 million and EBITDA 15-fold to $247 million. The company also appears to have a regulatory step up on some other industry players, as new safety and compliance standards in Australia have prompted more solar installers to switch to Enphase products.
In its Q1 2022 investor letter, asset management firm Clearbridge Investments discussed some of the challenges that Enphase Energy, Inc. (NASDAQ:ENPH) has faced in the near-term, even as the company has solidified its long-term value. Here is what the fund said:
“Enphase Energy, Inc. (NASDAQ:ENPH) is a key solar holding that should be able to take advantage of greater incentives for solar installations in many geographies. The company was also a strong contributor for the quarter, overcoming pressures of a higher discount rate on their strong projected future earnings, raw material inflation and supply chain challenges as their long-term value was reaffirmed.”
3. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Value of Discovery Capital Management‘s 13F Position: $12.5 million
Number of Hedge Fund Shareholders: 28
Rob Citrone appears to have made another bet on green energy during Q1, this time in the form of lithium miner Sociedad Química y Minera de Chile S.A. (NYSE:SQM). Discovery Capital bought 146,600 shares of SQM during the first quarter, shares which have gained an impressive 67% year-to-date. Just eight hedge funds were long SQM less than three years ago, a figure that has since jumped to 28.
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is well positioned to take advantage of skyrocketing lithium prices, which are off their record highs of April by about 20% but are still trading more than 6x higher now than they were the start of the year, at $62,000 per metric tonne. The majority of the company’s 2022 volumes are exposed to either spot prices or monthly benchmarks.
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) has also teased the possibility of expanding its lithium capacity, which could further entice hedge funds and other investors. The only near-term concern for the company may be the lockdowns in China, which could have an impact on its Q2 volumes. 42% of SQM’s lithium shipments during the 12-month period ended October 31, 2020 went to China.
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Value of Discovery Capital Management‘s 13F Position: $15.7 million
Number of Hedge Fund Shareholders: 83
Discovery Capital added a new stake of 150,480 shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to its 13F portfolio during Q1, being one of several hedge funds to go long the chipmaker during the quarter. Hedge fund ownership of TSM hit an all-time high during Q1 and is up by 24% over the past three quarters.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) shares are down by 41% this year but got a boost on July 7 when rival Samsung reported better than expected results that were heavily boosted by its chip sales. That proved to be a sigh of relief for chip companies and their investors, who just a week earlier were hit with weak forward guidance from Micron Technology (NASDAQ:MU), which cited weakening consumer demand.
The Baron New Asia Fund believes Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) will not only meet, but exceed its 15 to 20% revenue growth targets for the coming years, saying this about the company in its Q1 2022 investor letter:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Ltd. detracted in the first quarter due to rising geopolitical tensions, macroeconomic uncertainties, and concerns over softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver above its 15% to 20% revenue growth target over the next several years.”
1. T-Mobile US, Inc. (NYSE:TMUS)
Value of Discovery Capital Management‘s 13F Position: $49.4 million
Number of Hedge Fund Shareholders: 92
Closing out the list of Rob Citrone’s newest stock purchases is T-Mobile US, Inc. (NYSE:TMUS), which was far and away his biggest new purchase of Q1. Discovery Capital bought 384,809 shares of TMUS during the quarter, with the new position ranking as the fund’s fifth-largest 13F long position as of March 31. Tiger Cubs Andreas Halvorsen (Viking Global) and Daniel Sundheim (D1 Capital Partners) have two of the three largest stakes in TMUS among the select group of funds tracked by our database.
T-Mobile US, Inc. (NYSE:TMUS) grew its customer base to 109.5 million in the first quarter, adding 1.4 million customers from a year earlier. While rivals AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) have both hiked prices this year in the face of rising inflation, T-Mobile has said that it won’t, which is helping to drive customer acquisition. Once they’re in the fold, T-Mobile can attempt to drive revenue growth by enticing customers to adopt additional services. T-Mobile’s services revenue rose to $15.1 billion in Q1.
T-Mobile US, Inc. (NYSE:TMUS) is also becoming a more attractive carrier thanks to the breadth of its standalone 5G network, which has expanded to reach 315 million people in the U.S, while its ultra-capacity 5G now reaches 225 million people, with plans to push that to 300 million by the end of 2022.
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out Top 10 Stock Picks of Alec Litowitz and Ross Laser’s Magnetar Capital and Top 10 Stock Picks of Martin Whitman’s Third Avenue Management.
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Disclosure: None. 10 Stocks Billionaire Tiger Cub Rob Citrone is Buying is originally published at Insider Monkey.
