In this article, we discuss 10 stocks to sell according to Chase Coleman’s Tiger Global.
In April 2022, Chase Coleman’s flagship fund at Tiger Global posted a decline of 15%, which pushes the total 2022 loss up to 44%, or $17 billion in monetary terms. Coleman’s long-only fund slipped 25% in April and 52% during the first four months of 2022. Resultantly, the Tiger Global 13F portfolio shrunk from almost $46 billion in Q4 2021 to $26.6 billion in Q1 2022.
Chase Coleman took responsibility for the massive losses, stating that despite the volatile macro environment, his hedge fund will not offer excuses to investors for the dismal performance so far this year. His fund was hit by the broad tech selloff, and the fast-growing companies that once gave Tiger Global a competitive edge led to the steep decline in value.
Tiger Global was one of the top Wall Street hedge funds, posting annualized returns of more than 20% through 2020, with the fund down compared to the benchmark in only two years since its inception in 2001. According to the Bloomberg Billionaires Index, the 7% decline in 2021 and the beating Tiger Global has taken so far in 2022 shaved about $2.1 billion from Coleman’s personal wealth. The 46-year old hedge fund manager now has a net worth of around $9 billion.
According to Bloomberg, Chase Coleman told investors that the 34% drop in the first quarter of 2022 led him to rethink the fund’s strategies but he still remains confident about the future. Some of the most prominent stocks that were discarded by the hedge fund amid the tech selloff and market volatility included Airbnb, Inc. (NASDAQ:ABNB), Netflix, Inc. (NASDAQ:NFLX), and PayPal Holdings, Inc. (NASDAQ:PYPL).
Chase Coleman of Tiger Global
Our Methodology
We used the Q1 2022 portfolio of Chase Coleman’s Tiger Global for this article, listing the most prominent stocks that were disposed of by the hedge fund during the period. We have mentioned the hedge fund sentiment around the holdings as of Q1 2022, since imitating the stock picking strategies of elite funds is a wise idea for retail investors.
Stocks to Sell According to Chase Coleman’s Tiger Global
10. American Well Corporation (NYSE:AMWL)
Number of Hedge Fund Holders: 20
American Well Corporation (NYSE:AMWL) is a Massachusetts-based telehealth software company that assists in digital healthcare delivery. Chase Coleman’s Tiger Global added American Well Corporation (NYSE:AMWL) to its portfolio in Q3 2020. The hedge fund owned 400,000 shares of the company worth $2.4 million as of Q4 2021, which it discarded entirely in the first quarter of 2022.
On May 16, Piper Sandler analyst Sean Wieland cut the price target on American Well Corporation (NYSE:AMWL) to $5 from $7 and maintained an Overweight rating on the shares. He slashed his revenue growth and margin expansion estimates after the “mixed” Q1 results, but is positive on the data points and commentary on Amwell’s Converge platform. He is now forecasting FY23 to FY25 “more conservatively” and still sees American Well Corporation (NYSE:AMWL) meeting adjusted EBITDA breakeven in the second half of FY25, in-line with the management’s goal.
According to Insider Monkey’s Q1 data, American Well Corporation (NYSE:AMWL) was part of 20 hedge fund portfolios, down from 23 funds in the prior quarter. Richard Mashaal’s Rima Senvest Management held the largest stake in the company, with 7.65 million shares worth $32.2 million.
In addition to Airbnb, Inc. (NASDAQ:ABNB), Netflix, Inc. (NASDAQ:NFLX), and PayPal Holdings, Inc. (NASDAQ:PYPL), Chase Coleman’s Tiger Global sold off its American Well Corporation (NYSE:AMWL) stake in Q1 2022.
Here is what Baron Funds has to say about American Well Corporation (NYSE:AMWL) in its Q2 2021 investor letter:
“We exited modest positions in American Well Corporation during the quarter. We think that this sale exemplifies the merits of maintaining small initial position sizes. We were initially excited by the long-term opportunities represented by the business and the valuations at which we were able to deploy capital. However, our ongoing and iterative due diligence efforts surfaced concerns regarding the sustainability of competitive advantages over our investment horizon. Additionally, we observed changes to incentive structures that potentially foreshadowed a future misalignment with shareholders. We were easily able to exit these modest positions and reallocate that capital to investments in which we have greater conviction that we believe offer more attractive risk-adjusted returns.”
9. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 28
AppLovin Corporation (NASDAQ:APP) is a California-based company that offers a software platform for developers to boost the marketing and monetization of their apps in the United States and internationally. Tiger Global Management acquired a position in AppLovin Corporation (NASDAQ:APP) in Q2 2021, and in Q4, the hedge fund held 600,000 shares of the company worth $56.5 million. In Q1 2022, Chase Coleman disposed of his stake entirely.
On May 18, AppLovin Corporation (NASDAQ:APP) disclosed in a regulatory filing that its chief legal officer, Victoria Valenzuela, sold 90,000 shares of common stock on May 16. The total transaction size stood at $3.39 million.
BofA analyst Omar Dessouky on May 12 upgraded AppLovin Corporation (NASDAQ:APP) to Buy from Neutral with an unchanged price target of $43 after the company’s Q1 results. As per the analyst, AppLovin Corporation (NASDAQ:APP) boosted its FY22 Software segment revenue estimate by approximately $200 million to $1.2 billion. Since the analyst sees a better EBITDA trajectory and an attractive valuation, he believes there is controlled downside risk over the medium-term, with free annual cash flow expected to surpass $1 billion after 2022.
According to the first quarter database of Insider Monkey, 28 hedge funds were bullish on AppLovin Corporation (NASDAQ:APP), compared to 29 funds in the earlier quarter. In Q1 2022, Zachary Sternberg and Benjamin Stein’s Spruce House Investment Management held the biggest stake in the company, with 5.6 million shares worth $310.6 million.
Here is what Vulcan Value Partners has to say about AppLovin Corporation (NASDAQ:APP) in its Q1 2022 investor letter:
“AppLovin Corp was a material detractor during the quarter. AppLovin Corp. owns a portfolio of over 350 mobile games and operates a software platform that enables third-party gaming apps to advertise and monetize effectively. The two segments create a mutually beneficial relationship. AppLovin collects and uses data gathered from its own portfolio of gaming apps to enhance the ad placement capabilities of its software platform. AppLovin recently acquired Twitter’s MoPub monetization platform at a very attractive price, which will provide additional scale. The stock traded down after earnings due to weaker than expected guidance in the owned games segment and increased spending on new growth initiatives. However, software platform revenue is expected to increase at a high double-digit rate in its fiscal year 2022. Moreover, software is the company’s most profitable business with an 80% contribution margin. Shortly after earnings, the company announced a $750 million share repurchase authorization which we think is an excellent capital allocation decision.”
8. Asana, Inc. (NYSE:ASAN)
Number of Hedge Fund Holders: 23
Asana, Inc. (NYSE:ASAN) was incorporated in 2008 and is headquartered in San Francisco, California. The company runs a work management platform for individuals and businesses in the United States and internationally. Chase Coleman’s Tiger Global first invested in Asana, Inc. (NYSE:ASAN) in Q3 2020, and in the fourth quarter of 2021, the hedge fund held 1.95 million shares worth $145.7 million. Chase Coleman sold off his Asana, Inc. (NYSE:ASAN) stake entirely in Q1 2022.
On May 23, Jefferies analyst Brent Thill slashed the price target on Asana, Inc. (NYSE:ASAN) to $23 from $40 and kept a Hold rating on the shares. The analyst has lowered forecasts across 28 software companies he covers due to increasing economic challenges and the risk of recession. He told investors that the multiples embedded in his new price targets are 25% lower, though he believes there could be more downside to multiples if fundamentals weaken further.
Among the hedge funds tracked by Insider Monkey, 23 funds held long positions in Asana, Inc. (NYSE:ASAN) at the end of March 2022, down from 31 funds in the preceding quarter. John Overdeck and David Siegel’s Two Sigma Advisors held the largest position in Asana, Inc. (NYSE:ASAN), consisting of 1.70 million shares worth $68.20 million.
Here is what Carillon Eagle Small Cap Growth Fund has to say about Asana, Inc. (NYSE:ASAN) in its Q4 2021 investor letter:
“Asana is a work management software platform that helps teams collaborate and orchestrate work. Despite a stellar earnings report, the shares pulled back as the company failed to exceed consensus estimates by the same magnitude it had in the prior two quarters. The firm’s growth remains quite healthy, and with the CEO continuing to personally purchase substantial amounts of the firm’s stock in the open market, we are quite positive about Asana’s prospects.”
7. DiDi Global Inc. (NYSE:DIDI)
Number of Hedge Fund Holders: 15
DiDi Global Inc. (NYSE:DIDI) was founded in 2012 and is headquartered in Beijing, China. The company operates a mobility technology platform that offers ride hailing and transport services in China, Brazil, Mexico, and internationally. Tiger Global Management first acquired a position in DiDi Global Inc. (NYSE:DIDI) in Q2 2021, and in Q4, the hedge fund owned a $9.96 million stake in the company. Chase Coleman’s fund disposed of its stake in the first fiscal quarter of 2022.
On May 23, DiDi Global Inc. (NYSE:DIDI) announced that it has notified the New York Stock Exchange that it is proceeding with the delisting of the company’s American Depositary Shares from the NYSE. The company plans to file a Form 25 with the U.S. SEC on or after June 2 for the delisting, which is expected to occur ten days after the Form 25 is processed.
Elite hedge funds pulled out of DiDi Global Inc. (NYSE:DIDI) in Q1 2022. The database of Insider Monkey suggests that 15 funds were bullish on the stock, down from 21 funds in the prior quarter. In the first quarter of 2022, Lei Zhang’s Hillhouse Capital Management was the biggest shareholder of the company, with 36.8 million shares worth $92 million.
Here is what Davis Global Fund has to say about DiDi Global Inc. (NYSE:DIDI) in its Q4 2021 investor letter:
“The second regulatory action took place shortly after the initial public offering of Didi Global, China’s ride-sharing leader, on the New York Stock Exchange (NYSE). In early July, the Cybersecurity Administration of China (CAC), implementing provisions from the new Data Security Law issued on June 10, announced that Didi will undergo a cybersecurity review, and further downloading of its app was suspended. Didi’s data privacy and collection policies, as well as data security considerations stemming from the company’s U.S. listing, were the focus of the review. On December 3, Didi announced that it planned to delist from the NYSE and relist in Hong Kong. The market understandably dislikes uncertainty, and it will take several months for the relisting process to be finalized. Over the long run, however, we believe a Hong Kong listing will resolve the CAC’s concerns around national data security, and it will provide a globally recognized primary listing venue, as it already does for other large Chinese internet companies such as Tencent and Meituan. Over time, the value of Didi, like any other company, will be determined by its business prospects and profitability rather than the location of its primary exchange listing.”
6. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 37
Sunrun Inc. (NASDAQ:RUN) is a California-based company that develops and installs residential solar energy systems in the United States. Chase Coleman’s Tiger Global first added Sunrun Inc. (NASDAQ:RUN) to its portfolio in the first quarter of 2018, and in Q4 2021, the hedge fund held more than 7 million shares worth $242.6 million. Chase Coleman disposed of his Sunrun Inc. (NASDAQ:RUN) stake in Q1 2022.
On May 5, Morgan Stanley analyst Stephen Byrd observed that Sunrun Inc. (NASDAQ:RUN) raised its 2022 installation guidance, which was “a significant positive surprise to the investment community”, especially due to the ongoing Department of Commerce AD/CVD investigation. The company’s updated guidance for over 25% growth in solar energy capacity installed in 2022 implies at least 990 MW of installments in 2022, which surpasses consensus and his estimate of approximately 950 MW, said the analyst. He also noted Sunrun Inc. (NASDAQ:RUN) posted “strong” net subscriber value guidance. He reiterated an Overweight rating and an $89 price target on the stock.
Insider Monkey’s Q1 2022 data suggests that 37 hedge funds were bullish on Sunrun Inc. (NASDAQ:RUN), up from 31 funds in the preceding quarter. William B. Gray’s Orbis Investment Management reported a leading position in the company, comprising 10.7 million shares worth $325.3 million.
Like Airbnb, Inc. (NASDAQ:ABNB), Netflix, Inc. (NASDAQ:NFLX), and PayPal Holdings, Inc. (NASDAQ:PYPL), Sunrun Inc. (NASDAQ:RUN) was sold off by Tiger Global in the first quarter of 2022.
Here is what Horizon Kinetics has to say about Sunrun Inc. (NASDAQ:RUN) in its Q2 2021 investor letter:
“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business on the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.
To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.
Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise.
If, 10 years from now, Sunrun is ultimately valued at 25x net income, and if today’s $9.5 billion valuation is appropriate, that would require $380 million of net income ($9,500 million ÷ 25).
Let’s say Sunrun will have the same net profit margin as the average S&P 500 company, which is 10%. That means it would need $3,800 million of sales to generate that level of earnings ($380 mill ÷ 10%).
Since sales are now $920 million, they would have to rise by 4.1x in the next 10 years. That would require annual sales growth of 15.2%.
You see how neatly that all works: investors accept the company’s 10-year, 15% annual sales growth projections, and if a 10% net profit margin and a P/E of 25x earnings are reasonable, then the company will have a $9.5 billion market cap at that time. Except that is the current price. That means a 10-year return of zero.
In order to get a 10% annualized return from the stock, Sunrun would need to be priced at a P/E of 65x its earnings 10 years from now, if at a 10% net margin. Or it would have to have some combination of lower P/E and higher growth and/or higher profit margin.
In the meantime, this is Sunrun’s recent pattern of revenue growth and profitability (the company did recently increase its estimate of installed-capacity growth in 2021 from 20-25% to a new estimate of 25% to 30%).
For the time being, Sunrun loses an extraordinary amount of money, an amount that has been getting larger. Perhaps there are economies of scale that will manifest in the future,so that it will attain profitability. Perhaps from the roughly one-half of Sunrun’s revenues that are from long-term customer service agreements that run up to 25 years. For now, though, the company would seem to require a lot of external financing, and that is one of the greatest business risks.”
5. Dynatrace, Inc. (NYSE:DT)
Number of Hedge Fund Holders: 43
Dynatrace, Inc. (NYSE:DT) is a Massachusetts-based company that operates a software intelligence platform for multi-cloud work environments. Chase Coleman added Dynatrace, Inc. (NYSE:DT) to his portfolio in the third quarter of 2019, and in Q4 2021, the billionaire owned a $30 million stake in the company. In Q1 2022, Tiger Global disposed of his position in Dynatrace, Inc. (NYSE:DT) completely.
JMP Securities analyst Erik Suppiger on May 20 slashed the price target on Dynatrace, Inc. (NYSE:DT) to $50 from $80 to account for a “sharp compression” in market multiples but maintained an Outperform rating on the shares after its Q1 earnings beat. The analyst also cited the company extending its relationship with Deloitte, which represents a “key catalyst” for Dynatrace, Inc. (NYSE:DT) since it can use Deloitte as a stepping stone to pursue further partnerships with other global companies.
According to the database of Insider Monkey, 43 hedge funds held bullish positions in Dynatrace, Inc. (NYSE:DT) at the end of March 2022, with collective stakes worth $1.74 billion. Gabriel Plotkin’s Melvin Capital Management held a leading position in the company, comprising 7.2 million shares worth $342.6 million.
Here is what U.S. SMID Company Growth Fund has to say about Dynatrace, Inc. (NASDAQ:DUOL) in its Q3 2021 investor letter:
“Dynatrace outperformed during the quarter as the company reported earnings results that handily beat expectations. The company continues to increase its customer base and has expanded net revenues with existing customers.”
4. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 61
MongoDB, Inc. (NASDAQ:MDB) is a New York-based firm that offers on-demand commercial database servers for enterprise customers. Chase Coleman’s Tiger Global has held a position in MongoDB, Inc. (NASDAQ:MDB) since Q4 2017, except for a minor break in Q4 2018. In the fourth quarter of 2021, Tiger Global held 82,000 shares of the company worth $43.4 million. The hedge fund disposed of its stake in Q1 2022.
Barclays analyst Raimo Lenschow lowered the firm’s price target on MongoDB, Inc. (NASDAQ:MDB) to $330 from $410 and reiterated an Overweight rating on the shares on May 20. The analyst’s software reseller survey results illustrate that demand trends and expectations “took a step back from the prior quarter”. He prefers Intuit, Splunk, and Workday for the off-cycle Q1 earnings.
According to Insider Monkey’s first quarter data, 61 hedge funds placed long calls on MongoDB, Inc. (NASDAQ:MDB), up from 56 funds in the preceding quarter. Alex Sacerdote’s Whale Rock Capital Management is a notable shareholder of the company, with 493,588 shares worth about $219 million.
3. PagerDuty, Inc. (NYSE:PD)
Number of Hedge Fund Holders: 26
PagerDuty, Inc. (NYSE:PD) is headquartered in San Francisco, California, running a digital operations management platform in the United States and internationally. Tiger Global owned a $5.2 million stake in PagerDuty, Inc. (NYSE:PD) in the fourth quarter of 2021, which it sold off completely in Q1 2022.
On March 17, Craig-Hallum analyst Chad Bennett slashed the price target on PagerDuty, Inc. (NYSE:PD) to $45 from $52 given the compression in peer multiples, while maintaining a Buy rating on the shares. The analyst argued that PagerDuty, Inc. (NYSE:PD) is proving that its return of more than 30% growth in mid-2022 was not a result of lenient comps or a demand pull-forward. Rather, it is a sustainable level of growth for the company that puts it on a path towards $1 billion of annual recurring revenue.
In Q1 2022, Cathie Wood’s ARK Investment Management was the biggest shareholder of PagerDuty, Inc. (NYSE:PD), with 10.2 million shares worth $351 million. Overall, 26 hedge funds were bullish on the stock at the end of March 2022, with combined stakes of $673.8 million.
2. XP Inc. (NASDAQ:XP)
Number of Hedge Fund Holders: 31
XP Inc. (NASDAQ:XP) is a Brazilian company that offers financial products and services such as securities brokerage, private pension plans, commercial, and investment banking products. Tiger Global acquired a stake in XP Inc. (NASDAQ:XP) in Q4 2019. The hedge fund sold its $5.7 million position in the company in the first quarter of 2022.
Citi analyst Gabriel Gusan upgraded XP Inc. (NASDAQ:XP) on May 9 to Buy from Neutral with a price target of $26, down from $31, stating that its core performance indicators may have bottomed and also noted what he calls an “appealing valuation” with shares down 53% over the past year.
According to Insider Monkey’s Q1 2022 data, 31 hedge funds were long XP Inc. (NASDAQ:XP), compared to 33 funds in the earlier quarter. Billionaire Andreas Halvorsen’s Viking Global reported a prominent position in the company, with 9.4 million shares worth $284.2 million.
Here is what Harding Loevner Emerging Markets Equity Fund has to say about XP Inc. (NASDAQ:XP) in its Q4 2021 investor letter:
“Shares of another new Brazilian holding, XP, the country’s premier online investment platform, also sold off as tough economic conditions outweighed management’s optimism about prospective growth from new business lines in pensions, credit cards, and loans. Performance was helped by stock selection and our underweight in China.”
1. Duolingo, Inc. (NASDAQ:DUOL)
Number of Hedge Fund Holders: 14
Duolingo, Inc. (NASDAQ:DUOL) is an American company that offers a language-learning website and mobile application. Duolingo, Inc. (NASDAQ:DUOL) was added to Chase Coleman’s Tiger Global portfolio in Q3 2021. In the fourth quarter, the hedge fund owned an approximately $16 million stake in the company, which it discarded entirely in the first quarter of 2022.
Evercore ISI analyst Mark Mahaney observed that Duolingo, Inc. (NASDAQ:DUOL) “posted another Clean Beat & Raise quarter”, after which he removed the stock from the firm’s “Tactical Outperform” list, stating “with the stock up 13% in the after-market, our trading work here is done”. However, he remains bullish on the long-term outlook, and “modestly” boosted estimates after the company’s Q1 results. He maintained a $120 price target and Outperform rating on Duolingo, Inc. (NASDAQ:DUOL) shares on May 13.
According to Insider Monkey’s Q1 data, 14 hedge funds held long positions in Duolingo, Inc. (NASDAQ:DUOL), up from 12 funds in the last quarter. Henry Ellenbogen’s Durable Capital Partners held the largest stake in the company, consisting of 3.2 million shares worth about $309 million.
You can also take a look at 10 Best Stocks to Buy Now According to Billionaire Nicholas Pritzker’s Tao Capital and Top 10 Small-Cap Stocks Added to Billionaire Mario Gabelli’s Portfolio.
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Disclosure: None. 10 Stocks to Sell According to Chase Coleman’s Tiger Global is originally published on Insider Monkey.
