In this article, we discuss the 10 stocks that billionaire Philippe Laffont is selling. If you want to see more stocks that the billionaire discarded, click Billionaire Philippe Laffont is Selling These 5 Stocks.
Philippe Laffont’s Coatue Management suffered massive losses this year on the back of the market wide tech selloff, and as of May 2022, the hedge fund had lost 17% in value. Had Philippe Laffont not shifted his strategy in January, the losses would have reached 40% through May and put Coatue in the same league as other major funds like Melvin Capital and Tiger Global. However, Laffont has always dealt with market crashes by cutting down on equity exposure and accumulating higher cash reserves to survive. His portfolio, as of May 2022, consisted of 80% cash and 20% stock positions. One of Philippe Laffont’s strategies to generate gains for his hedge fund is to invest in private startups, and aim for massive returns when the firms go public.
Although the hedge fund posted double digit losses, it has fared better than the tech-heavy Nasdaq benchmark, which has declined almost 27% year to date as of July 26. The Q1 2022 portfolio of Coatue Management is worth $13.6 billion, down from $22.5 billion in the last quarter. The hedge fund focuses its investments in the healthcare, finance, information technology, consumer discretionary, and communications sectors.
Securities filings for the first quarter of 2022 reveal that billionaire Philippe Laffont bought 12 new stocks, made additional purchases in 20, sold out of 35 companies, and slashed existing stakes in 18 holdings. Some of the most notable stocks that Philippe Laffont discarded in Q1 2022 include Activision Blizzard, Inc. (NASDAQ:ATVI), Mastercard Incorporated (NYSE:MA), and Pfizer Inc. (NYSE:PFE).
Philippe Laffont of Coatue Management
Our Methodology
We used Philippe Laffont’s Coatue Management portfolio as of Q1 2022 for this analysis, selecting the 10 most prominent securities that the hedge fund disposed of during the quarter.
Billionaire Philippe Laffont is Selling These Stocks
10. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 54
Snap Inc. (NYSE:SNAP) is a California-based camera and social media company. On July 21, the company posted disappointing June quarter results. Snap Inc. (NYSE:SNAP) reported a GAAP loss per share of $0.21 and a revenue of $1.11 billion, below Street consensus by $0.05 and $23.09 million, respectively. On July 25, Argus analyst Jim Kelleher downgraded Snap Inc. (NYSE:SNAP) to Hold from Buy without a price target after the company announced Q2 results. The analyst sees signs of lower advertising spending “amid still-high costs”. He cited soft digital ad-spending trends, paired with changes to ad tracking on Apple iOS that have impacted advertiser flexibility and demand for the downgrade.
Billionaire Philippe Laffont owned 2.4 million Snap Inc. (NYSE:SNAP) shares in the fourth quarter of 2021, worth $113.78 million, representing 0.50% of the total 13F holdings. The hedge fund manager disposed of his stake entirely in the first quarter of 2022.
According to Insider Monkey’s data, 54 hedge funds were long Snap Inc. (NYSE:SNAP) in the first quarter of 2022, compared to 55 funds in the earlier quarter. Stephen Mandel’s Lone Pine Capital is the leading position holder in the company, with 18.4 million shares worth $664.4 million.
In addition to Activision Blizzard, Inc. (NASDAQ:ATVI), Mastercard Incorporated (NYSE:MA), and Pfizer Inc. (NYSE:PFE), billionaire Philippe Laffont gave up on Snap Inc. (NYSE:SNAP) in the March quarter.
Here is what Baron Opportunity Fund has to say about Snap Inc. (NYSE:SNAP) in its Q4 2021 investor letter:
“Snap Inc. is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-than anticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap is already developing a solution. Longer term, we continue to view Snap favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”
9. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 64
Global Payments Inc. (NYSE:GPN) is a Georgia-based payment technology firm that offers software solutions for digital payments. Philippe Laffont’s Coatue Management first invested in Global Payments Inc. (NYSE:GPN) in Q2 2019 and in the fourth quarter of 2021, the hedge fund held about 1.3 million shares of the company worth $174.8 million. In Q1 2022, Coatue Management dumped the stake entirely.
On July 25, Oppenheimer analyst Dominick Gabriele lowered the price target on Global Payments Inc. (NYSE:GPN) to $152 from $176 and maintained an Outperform rating on the shares. The analyst, keeping in mind the macro risk, has a cautious outlook on the spending patterns in the second half of 2022 and the first half of 2023. He sees incremental forex-related headwinds on both revenue growth and margins compared to Global Payments Inc. (NYSE:GPN)’s total 2022 EPS estimates. The diverse verticals of the Payments space can potentially survive the storm while mono-line startups could stumble, the analyst added. Credit Suisse analyst Timothy Chiodo on July 22 downgraded Global Payments Inc. (NYSE:GPN) to Neutral from Outperform with a price target of $145, down from $180, citing deteriorating macro conditions.
Among the hedge funds tracked by Insider Monkey, William B. Gray’s Orbis Investment Management featured as the leading position holder in the company, with 5.5 million shares worth about $763 million. Overall, 64 hedge funds were bullish on Global Payments Inc. (NYSE:GPN) at the end of Q1 2022, compared to 47 funds in the prior quarter.
Here is what Oakmark Fund has to say about Global Payments Inc. (NYSE:GPN) in its Q1 2022 investor letter:
“Global Payments (NYSE:GPN) is a leading provider of merchant acquiring services. The company is also one of the largest providers of payment processing and related technology solutions to credit card issuers. We believe Global Payments’ merchant acquiring business is well positioned given its strength in software-driven payments. This is one of the fastest growing parts of the industry as small business customers are increasingly recognizing the efficiency benefits of having payments seamlessly integrated into the software they use to run their businesses. In addition, Global Payments benefits from the broader secular shift away from cash and toward electronic payment methods. Together, these tailwinds have the potential to drive low-double-digit revenue growth and even faster earnings growth. With this strong outlook and with management returning a significant portion of free cash flow to shareholders via repurchase, we think the stock looks attractive at its current valuation of just 12.5x next year’s expected EPS.
8. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders: 68
Billionaire Philippe Laffont’s Coatue Management disposed of its Twitter, Inc. (NYSE:TWTR) stake in the first quarter of 2022. The hedge fund owned 34,753 shares of Twitter, Inc. (NYSE:TWTR) in Q4 2021, worth $1.5 million. Philippe Laffont first invested in the company in Q3 2017, and held the position consistently till Q4 2018. After that, the billionaire was inconsistent with his stake over the quarters.
On July 25, Baird analyst Colin Sebastian said Twitter, Inc. (NYSE:TWTR) will continue to be a highly challenged company as it makes its way through the cyclically shrinking ad market, while dealing with an ill-conceived acquisition deal, managing internal turmoil, and employee turnover, as well as simultaneously focusing on primary platform initiatives. The analyst reaffirmed his Neutral rating and a $33 price target, which reflects a 20% weighting of the deal concluding at the original offer price.
According to Insider Monkey’s data, 68 hedge funds were long Twitter, Inc. (NYSE:TWTR) at the end of Q1 2022, down from 83 funds in the preceding quarter. Paul Singer’s Elliott Management is the largest stakeholder of the company, with 10 million shares worth about $387 million.
Here is what RGA Investment Advisors has to say about Twitter, Inc. (NYSE:TWTR) in its Q4 2021 investor letter:
“Twitter had an eventful quarter. The company started the year seemingly ready to fly for the first time as a public company. Consensus estimates for 2023 revenue started the year at barely north of $5b and by the end of the year were just shy of $7.5b, a target the company offered at their first investor day in years. Unfortunately, it was a second target offered at that same investor day that did them in: 330 million mDAUs by the end of 2023. Typically stocks follow revenues, but mDAUs became the noose around the stock, and perhaps even Jack Dorsey’s tenure as CEO. With each quarter reported following the investor day, the mDAU target became increasingly harder to achieve as the user base grew below the run-rate required to get there in straight-line fashion. Although the company stated this would happen, investors were left wondering how an already lofty target could be achieved with a higher hurdle. Importantly, however, the revenue target continued to look increasingly achievable with each passing quarter. Taking a step back, people came into the year convinced Twitter had a monetization problem, but exited the year focused on their user base growth.
As always, the Street is incredibly myopic about the company, but we are far more sanguine. The user base will exit the year growing at what we thought was a more appropriate quarterly run-rate (6-7 million quarterly new users), consistent with the acceleration that began before the COVID-induced bump in Q1-Q2 of 2020. As it stands today, Twitter is trading near its lowest multiples as a public company (on both EV/S at ~4.5x forward and EV/EBITDA at ~18x), at a time when it will report its fastest growth rate as a public company and over the next two years is expected to report two of its next three fastest growing years. Altogether, the years 2021-2023 should be the company’s fastest three-year CAGR period by a lot, meanwhile the last time Twitter traded at multiples this low was in 2017 when revenue actually contracted 3.41% during the year. There is little that can actually justify such a disconnect where the company’s growth is as swift as ever, but its multiple is consistent with negative growth periods. Twitter remains drastically under monetized, has a long runway of opportunity ahead on both the user growth side and monetization, and has optionality in pursuing subscription, data and/or service extensions of the core offering.”
7. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 72
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company. Billionaire Philippe Laffont’s Coatue Management initially invested in Shopify Inc. (NYSE:SHOP) in the second quarter of 2017. The hedge fund has been largely consistent with its position over the years, apart from one quarter. In Q4 2021, Philippe Laffont owned 2.3 million Shopify Inc. (NYSE:SHOP) shares, worth $321.60 million, representing 1.42% of the total holdings. The billionaire disposed of his stake entirely in Q1 2022.
On July 26, Oppenheimer analyst Ken Wong assumed coverage of Shopify Inc. (NYSE:SHOP) with an Outperform rating and a price target of $45, down from $50. Shopify Inc. (NYSE:SHOP) is optimally positioned to capitalize on the ongoing shift towards digital consumer spending via personalized channels, the analyst observed.
According to Insider Monkey’s data, 72 hedge funds were bullish on Shopify Inc. (NYSE:SHOP) at the end of Q1 2022, down from 86 funds in the earlier quarter. Christopher Lyle’s SCGE Management is the leading stakeholder of the company, with 932,000 shares worth about $630 million.
Here is what Rowan Street has to say about Shopify Inc. (NYSE:SHOP) in its Q2 2022 investor letter:
“Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO
When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify – a platform that made it easy for anyone to open up an online store.
Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just slightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Market is offering us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO.”
6. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) is a California-based company that offers manufacturing equipment and software to the semiconductor, display, and related industries. Billionaire Philippe Laffont’s hedge fund owned about 1.8 million Applied Materials, Inc. (NASDAQ:AMAT) shares worth $297.2 million in Q4 2021, representing 1.31% of the total securities. The fund sold off its stake completely in Q1 2022.
On July 25, Barclays analyst Blayne Curtis lowered the price target on Applied Materials, Inc. (NASDAQ:AMAT) to $95 from $125 and maintained an Equal Weight rating on the shares. The current semiconductor rally should fade as it is “way too early to buy the dip,” the analyst informed investors. The analyst believes the sector is still in for a “substantial reset” and he toned down wafer fab equipment estimates.
According to Insider Monkey’s data, 74 hedge funds were bullish on Applied Materials, Inc. (NASDAQ:AMAT) at the end of the first quarter of 2022, down from 78 funds in the earlier quarter. David Blood and Al Gore’s Generation Investment Management is the leading shareholder of the company, with 4.25 million shares worth about $561 million.
Like Activision Blizzard, Inc. (NASDAQ:ATVI), Mastercard Incorporated (NYSE:MA), and Pfizer Inc. (NYSE:PFE), Philippe Laffont pulled out of Applied Materials, Inc. (NASDAQ:AMAT) in 2022.
Here is what Davis Opportunity Fund has to say about Applied Materials, Inc. (NASDAQ:AMAT) in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
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Disclosure: None. Billionaire Philippe Laffont is Selling These 10 Stocks is originally published on Insider Monkey.
