In this article, we will be taking a look at the 8 latest stock picks in activist investor Paul Singer’s portfolio.
Once dubbed ‘the world’s most feared investor’, Paul Elliot Singer is the founder, president and co-CEO of Elliott Management. Known for his high-profile, and often combative, deal-making, his hedge fund has a reputation for seeking out and successfully exploiting market weakness. Having started Elliott Management in 1977, after a brief stint in corporate law, with $1.3 million in seed capital, Singer’s market ventures have been consistently successful, with average annual returns of almost 14%. Although the 78-year-old is not as flashy or public as activists such as Carl Icahn, his corporate ventures have spanned sectors from technology and telecommunications to entertainment, and energy, helping him amass a fortune worth roughly $4.3 billion, alongside a spot on the list of the richest people according to Forbes.
Elliott Management, since the day it was founded, has been focused on distressed securities. While it started as a hedge fund focusing on convertible arbitrage, Paul Singer slowly steered the fund’s focus toward companies and later countries facing financial trouble. In the 1990s, Paul Singer’s firm bought up troubled sovereign debt from countries including Peru and Argentina that brought in multi-million-dollar repayments. These methods, which sometimes included corporate debt plays, earned him the title of “doomsday investor” in a 2018 article by The New Yorker magazine. A more recent excursion came March this year amidst the chaos on the nickel market on March 8, 11 days after the outbreak of the conflict between Ukraine and Russia, where the activist fund founded by Paul Singer claimed more than $450 million in damages from the London Metal Exchange for having used an illegal method intended to interrupt trade.
Singer, who was born and raised in New Jersey, and studied psychology at the University of Rochester before getting a J.D. from the Harvard Law School in 1969, has been credited among those who accurately predicted the 2008 Financial Crisis — a period where he made significant profits from credit default swaps that bet leveraged companies would crash.
At the end of June, Singer’s Elliot Management reported managing $8.67 billion in its investment portfolio. The fund liquidated all of its holdings in 10 companies and reduced its stake in 4 companies. In contrast, the fund made 9 additions to its portfolio while increasing its stakes in 11 different names. Elliot Management’s top 10 holdings at the end of the second quarter included names like Marathon Petroleum Corp (NYSE:MPC), Peabody Energy Corporation (NYSE:BTU) and Suncor Energy Inc. (NYSE:SU).
Paul Singer of Elliott Management
Our Methodology
The following data is gathered from Elliott Management’s latest 13F filing with the SEC. At Insider Monkey, we track the portfolios of about 895 hedge funds as of the close of the second quarter of 2022. For this article, we selected the 8 stocks that Paul Singer added to Elliott Management’s most recent 13F filing with the SEC for the quarter ending June 30.
Activist Investor Paul Singer’s 8 Latest Stock Picks
8. Western Digital Corporation (NASDAQ:WDC)
Elliott Management’s Stake Value: $53.1 million
Percentage of Elliott Management’s 13F Portfolio: 0.61%
Number of Hedge Fund Holders: 43
Western Digital Corporation (NASDAQ:WDC) is an American computer hard disk drive manufacturer and data storage company that designs, manufactures and sells data technology products, including storage devices, data center systems and cloud storage services. The company sells its products under the following brands: Western Digital, G-Technology, SanDisk and WD. According to Elliot Management’s 13F filings, the fund owned 1.18 million shares of Western Digital Corporation worth $53.1 million at the end of Q2 2022, representing 0.61% of the investment firm’s portfolio.
On September 19, Barclays analyst Tom O’Malley lowered the price target on Western Digital Corporation to $40 from $55 and kept an Equal Weight rating on the shares. The analyst lowered global hard disk drive unit forecasts for both this year and next to reflect continued consumer weakness. Despite the overall weakness, the analyst believes that pricing has held up, which is a reflection of mix shift to nearline. However, while this is a near-term positive, O’Malley thinks that this is unlikely to persist.
According to the company’s Q4 earnings report released on August 5, Western Digital Corporation recorded earnings per share of $1.78, beating market estimates by $0.06. Additionally, the company’s revenue for the quarter came in at $4.53 billion.
At the close of Q2 2022, 43 hedge funds were bullish on Western Digital Corporation. These funds held collective stakes worth $894.4 million in the company. This is compared to 45 positions in the previous quarter with stakes of $1.03 billion. Lyrical Asset Management was the most significant shareholder in Western Digital Corporation at the end of Q2, with a stake value of $177.15 million.
Marathon Petroleum Corp, Peabody Energy Corporation and Suncor Energy Inc. are some of the significant names along with Western Digital Corporation that Paul Singer added to his portfolio.
7. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Elliott Management’s Stake Value: $33 million
Percentage of Elliott Management’s 13F Portfolio: 0.38%
Number of Hedge Fund Holders: 66
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is an American video game holding company that operates as a developer, publisher, and marketer of interactive entertainment for consumers around the globe. Based in New York City, it owns two major publishing labels, Rockstar Games and 2K, which operate internal game development studios. The stock was a new addition to Paul Singer’s Q2 2022 portfolio. His hedge fund held a stake worth approximately $33 million by the close of the quarter.
According to BofA analyst Omar Dessouky, the leaked footage of Grand Theft Auto 6 is “slightly negative” for shares of Take-Two Interactive Software, Inc. because it provides further proof that the game is still not ready for a 2023 release. Additionally, Dessouky suggests that valuable intellectual property from Rockstar may have been stolen in the leaks as well. He kept a Neutral rating on the shares of the company, alongside a $130 price target.
As of Q2 2022, 66 of the 895 hedge funds tracked by Insider Monkey were bullish on Take-Two Interactive Software, Inc., holding shares worth $2 billion. Simon Sadler’s Segantii Capital was the largest shareholder with ownership of 23,500 shares valued at $287.94 million.
Here is what Madison Funds specifically said about Take-Two Interactive Software, Inc. in its Q2 2022 investor letter:
“Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a leading publisher of video games. Take-Two has a reputation for the high quality of its games, having published industry favorites such as Grand Theft Auto and NBA2K.
The video game industry itself has shed much of its boom-and-bust patterns to become a steadier, more predictable business with high barriers to entry, established title franchises, and high levels of recurring, in-game revenue streams. The company has been investing heavily to step up the number of new title launches over the next few years, a favorable set-up which we believe is not fully reflected in its stock price.”
6. Polestar Automotive Holding UK PLC (NASDAQ:PSNY)
Elliott Management’s Stake Value: $13.8 million
Percentage of Elliott Management’s 13F Portfolio: 0.15%
Number of Hedge Fund Holders: 12
Polestar Automotive Holding UK PLC (NASDAQ:PSNY) is a holding company for the Swedish automotive brand Polestar, which was established in 1996 by Volvo Cars’ partner Polestar Racing, and acquired in 2015 by Volvo. The electric vehicle maker delivered 21,185 cars during the first six months of 2022 vs. 9,510 for the same period in 2021, while its gross profit increased 49% for the period as the result of higher sales of Polestar 2, partially offset by product and market mix. Activist investor Paul Singer reported holding roughly 1.56 million PSNY shares at the close of Q2 2022, worth around $13.8 million.
Earlier this August, Deutsche Bank analyst Emmanuel Rosner initiated coverage of Polestar Automotive Holding UK PLC with a Hold rating and $10 price target. The analyst believes Polestar’s key strength lies in its “intimate partnership” with Geely and Volvo, which created an asset-light business model, thus reducing manufacturing and supply risk, and ultimately allowing the company to focus on design, expansion and brand building. The analyst adds that Polestar Automotive Holding UK PLC, unlike many other start-ups, has already delivered more than 50,000 vehicles worldwide since its start of production the previous year.
On August 16, Polestar Automotive Holding UK PLC confirmed plans to put the Polestar electric roadster concept into production. The production car is expected to launch in 2026 as the Polestar 6 electric performance roadster. Previously revealed in March, the electric roadster concept builds on the design and technology laid out by the Polestar Precept.
Alongside Marathon Petroleum Corp, Peabody Energy Corporation and Suncor Energy Inc., Polestar Automotive Holding UK PLC is a stock held by Paul Singer’s Elliot Management at the end of the second quarter.
5. Pinterest, Inc. (NYSE:PINS)
Elliott Management’s Stake Value: $90.8 million
Percentage of Elliott Management’s 13F Portfolio: 1.04%
Number of Hedge Fund Holders: 41
Pinterest Inc. (NYSE:PINS) is a social media company that provides image-sharing services. Paul Singer’s hedge fund added Pinterest, Inc. to its portfolio in the second quarter of 2022 with a stake worth about $90.8 million, representing 1.04% of the total 13F portfolio.
On September 7, Wolfe Research analyst Deepak Mathivanan upgraded Pinterest, Inc. to Outperform from Peer Perform with a $28 price target. The analyst believes that the company has “significant runway” on both user growth and monetization over the long-term, in addition to “several positive catalysts” ahead including monthly active user growth, margin expansion, and product launches. Overall, Mathivanan believes the stock’s risk/reward “skews positively at current levels.”
According to Insider Monkey’s data, Pinterest, Inc. was part of 41 hedge fund portfolios at the end of the second quarter of 2022, down from 56 funds in the prior quarter. Harris Associates, with approximately 29.75 million shares worth $540.30 million, is the largest shareholder of Pinterest, Inc. as of Q2.
Here is what Meridian Funds specifically said about Pinterest, Inc. in its Q2 2022 investor letter:
“We took advantage of early-2021 volatility in Pinterest, Inc. (NYSE:PINS) to establish a hedged position in a well-established firm that we believe occupies a unique space in the social media landscape. Through its visual-first offering, users build portfolios of photos, videos, and inspirations around their hobbies and interests, which we believe will become increasingly valuable to advertisers. We believe our exposure is protected to a degree by the company’s high net cash balance and its underappreciated core franchise value. Furthermore, since we initiated our position, the company hired a new CEO with a relevant track record of success at both PayPal and Google.”
4. PayPal Holdings, Inc. (NASDAQ:PYPL)
Elliott Management’s Stake Value: $69.84 million
Percentage of Elliott Management’s 13F Portfolio: 0.8%
Number of Hedge Fund Holders: 97
PayPal Holdings, Inc. (NASDAQ:PYPL) is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers. Elliot Management added PayPal Holdings, Inc. to its portfolio in Q2 2022, holding 1 million shares worth $69.84 million, representing 0.8% of the total portfolio.
Raymond James analyst John Davis upgraded PayPal Holdings, Inc. to Outperform from Market Perform with a $123 price target on September 14. After suffering through several consecutive challenging quarters of meaningful negative estimate revisions, the analyst finally sees PayPal’s depressed multiple to grind higher as estimates appear to rise. Davis also states that the Street’s estimates do not necessarily reflect the incremental revenue from rising rates within OVAS, which could potentially offset any macro related transaction revenue weakness in the coming year.
On September 21, BofA analysts added PayPal Holdings, Inc. to the firm’s “US 1 list”. The list represents a collection of the firm’s best investment ideas that are drawn from the universe of Buy-rated, U.S.-listed stocks covered by BofA Global Research.
PayPal Holdings, Inc. was found in the 13F holdings of 97 hedge funds in the second quarter. Their total stake value in the company was $5.2 billion. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in PayPal Holdings, Inc., with 17 million shares worth more than $1.2 billion.
Mayar Capital, an asset management firm, mentioned Paypal Holdings, Inc. in its second quarter 2022 investor letter. Here’s what they said:
“This quarter, we bought shares in PayPal, the payments platform. PayPal has been one of the more high-profile victims of the market’s brutal ruthlessness over the past few months, and the stock fell by over two thirds between its peak in July to the beginning of March this year. As we progressed PayPal through the Mayar Checklist Process, we identified a business with a leadership position in a structurally growing market.
The company benefits from certain network effects, and faces several competitive threats at the same time. As the business profited from the move to online retail during the pandemic, as well as from the stimulus cheques handed out in the US, the stock price soared to absurd levels. As so often happens, however, the market had overcorrected by February and this quarter was offering prospective shareholders prices that assumed essentially zero growth in the business. When life gives you irrational sellers, make lemonade!”
3. Endeavor Group Holdings, Inc. (NYSE:EDR)
Elliott Management’s Stake Value: $61.68 million
Percentage of Elliott Management’s 13F Portfolio: 0.71%
Number of Hedge Fund Holders: 29
Founded in April 2009 after the merger of the William Morris Agency and the original Endeavor Talent Agency, Endeavor Group Holdings, Inc. (NYSE:EDR) is an American holding company for talent and media agencies with its primary offices in Beverly Hills, California. Paul Singer added Endeavor Group Holdings, Inc. to his portfolio in the second quarter, with 3 million shares valued at $61.68 million.
Earlier this August, Credit Suisse analyst Douglas Mitchelson lowered his price target on Endeavor Group Holdings, Inc. to $33 from $40 due to higher interest rates and his refreshed model changes. The analyst maintained an Outperform rating on the shares following quarterly results that were well ahead of estimates due primarily to pull forwards from the second half of 2022.
With roughly 91.97 million shares worth $1.89 billion, Silver Lake Partners is the leading shareholder of Endeavor Group Holdings, Inc. at the end of Q2 2022. Overall, 29 hedge funds were long Endeavor Group Holdings, Inc. at the close of the second quarter, with combined holdings worth $3.01 billion.
2. Electronic Arts Inc. (NASDAQ:EA)
Elliott Management’s Stake Value: $60.82 million
Percentage of Elliott Management’s 13F Portfolio: 0.7%
Number of Hedge Fund Holders: 46
Electronic Arts Inc. (NASDAQ:EA) is an American video game and interactive entertainment software company that delivers games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets. Elliot Management holds 500,000 shares in Electronic Arts Inc., worth $60.82 million, representing 0.7% of the fund’s portfolio.
At the close of the second quarter of 2022, Electronic Arts Inc. was spotted on 46 investment portfolios. The combined stakes of these funds in the company amounted to $800.12 million. Jim Simons’ Renaissance Technologies was the dominating stakeholder in Electronic Arts Inc. at the end of June 2022, with stakes valued at $182.63 million
On September 13, Jefferies analyst Andrew Uerkwitz reiterated a Buy rating and $130 price target on Electronic Arts Inc. shares. Speaking on the company’s projects, the analyst stated that he is “getting a little worried” about the timing of “Need for Speed,” arguing that with a December quarter launch window, this title is most at risk to be delayed among the company’s major game projects.
Here is what Mayar Capital has to say about Electronic Arts Inc. in its Q2 2022 investor letter:
“Electronic Arts is also developing as we would expect. The business enjoyed strong engagement last year with players of EA games spending 20% more time than even during 2020, helped by the delayed sales of the PS5 console. A potentially important development is the ongoing negotiation between EA and FIFA regarding the licensing of the FIFA brand for the EA football game. Strongly worded public statements have been slung from both parties as part of the negotiation process, but this could certainly be an opportunity for EA.”
1. Aerojet Rocketdyne Holdings Inc. (NYSE:AJRD)
Elliott Management’s Stake Value: $121.8 million
Percentage of Elliott Management’s 13F Portfolio: 1.4%
Number of Hedge Fund Holders: 26
Aerojet Rocketdyne Holdings Inc. (NYSE:AJRD) is an American manufacturer of rocket, hypersonic, and electric propulsive systems for space, defense, civil and commercial applications. As of June 30, Elliot Management’s stakes in the company sit at $121.8 million, representing 1.4% of the fund’s investment portfolio.
On August 16, Aerojet Rocketdyne Holdings Inc. officially opened its Center of Excellence for Undersea Propulsion to support the U.S. Navy’s next generation torpedoes. The facility will be used to produce the company’s Stored Chemical Energy Propulsion System, or SCEPS, and the entire torpedo afterbody. Although the company will manufacture SCEPS boilers, produce tail cones and fully assemble the torpedo afterbodies, the new manufacturing facility will also be used to support production for existing Aerojet Rocketdyne contracts.
Insider Monkey found 26 hedge funds bullish on Aerojet Rocketdyne Holdings Inc. at the close of Q2 2022. The total stakes of these hedge funds amounted to $772 million. This is compared to 29 positions in the previous quarter with stakes worth $730 million. New York-based hedge fund Steel Partners is the most prominent investor in Aerojet Rocketdyne Holdings Inc. and has stakes worth $160.35 million in the company.
You can also take a look at 10 Best Aerospace Stocks to Buy Now and Billionaire Mario Gabelli’s Top 10 Stock Picks.
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This article is originally published at Insider Monkey.
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