Below is the list of 5 stocks David Tepper’s Appaloosa Management sold before entering 2022. For a detailed discussion about David Tepper’s investment philosophy and portfolio management strategies please see David Tepper’s Appaloosa Management Sold These 10 Stocks Before Entering 2022.
5. Twitter, Inc. (NYSE:TWTR)
Number of hedge fund holders: 83
Shares of Twitter, Inc. (NYSE:TWTR) have been under pressure over the last twelve months amid slower than expected growth. The company’s fourth-quarter revenue of $1.57 billion missed analysts’ expectations by $6 million while earnings per share missed the target by $0.01 per share. According to the latest 13F filings, Appaloosa Management sold its entire stake in the company. Moreover, several other hedge funds also dumped their position in the social media platform. It was in 83 hedge funds’ portfolios as of December compared to 94 positions in the previous quarter.
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of hedge fund holders: 75
Tepper’s hedge fund also closed out its stake in QUALCOMM Incorporated (NASDAQ:QCOM) during the December quarter after holding a position for the past four quarters. QUALCOMM is a semiconductor company and its shares remained under pressure in 2021 due to supply chain dynamics. The San Diego-based chipmaker reported first-quarter earnings per share of $3.23 on $10.7 billion in revenue. Despite strong first-quarter results, some market analysts are showing concerns over seasonal decline for the core chipset business in the second quarter.
As of December, 75 hedge funds were bullish about the company compared to 70 in the previous quarter. Alkeon Capital Management and Matrix Capital Management were among the leading stakeholders in the company.
3. Paysafe Limited (NYSE:PSFE)
Number of hedge fund holders: 32
Shares of Paysafe Limited (NYSE:PSFE) have been sliding amid easing social distancing policies and expectations for slower revenue growth. Paysafe provides digital commerce solutions to online businesses. The commerce fintech expects fiscal 2021 revenue in the range of $1.47 billion-$1.48 billion compared to previous estimates of $1.53 billion-$1.55 billion.
It is among the stocks David Tepper’s Appaloosa Management sold before entering 2022. The firm sold its stake in the company during the December quarter. The number of long hedge fund positions also fell to 32 as of December compared to 42 positions in the previous quarter, according to data tracked by Insider Monkey.
2. Beachbody Company, Inc. (NYSE:BODY)
Number of hedge fund holders: 14
Beachbody Company, Inc. (NYSE:BODY) lost almost 80% of its value in the past twelve months. The selloff in its share price is attributed to easing social distancing policies. Beachbody is a worldwide leading digital fitness and nutrition subscription company. David Tepper also sold its stake in the company during the December quarter. Moreover, market analysts have lowered their rating for the company amid near-term challenges. For instance, Guggenheim and Baird dropped their rating on Beachbody to Neutral from Buy. Out of the 924 hedge funds tracked by Insider Monkey, Beachbody was in 14 portfolios as of December.
1. Ovintiv Inc. (NYSE:OVV)
Number of hedge fund holders: 44
Shares of Ovintiv Inc. (NYSE:OVV) has been rallying at a robust pace since the beginning of 2021 amid growth in commodity prices. It is a hydrocarbon exploration and production company. Tepper sold its stake in Ovintiv in the December quarter just after initiating a position in the previous quarter.
In the fourth quarter investor letter, Miller Value Partners, an investment management firm, mentioned a few stocks including Ovintiv Inc. (NYSE:OVV). Here is what Miller Value Partners stated:
“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.
We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently.
One new name that illustrates the potential we see is Ovintiv (OVV), an oil and gas producer. We’ve seen a huge shift in the industry away from growth towards returns on capital, cash generation, and capacity discipline. OVV exemplifies the change.
OVV’s new CEO Brendan McCracken says: “We are at the forefront of driving innovation to produce oil and gas from shale both profitably and sustainably. We will generate superior returns and free cash flow by continuously improving capital efficiency and expanding margins while driving down emissions. We will deliver that value to our shareholders through disciplined capital allocation.”
Based on crude at $65 (well below the current $83.82 as of 1/14/22), the company guides to free cash flow generation of $11B over the next 5 years and $21B in the next 10 years. The company’s market cap is currently $10B and its enterprise value is $16B. It’s returning a significant portion of the capital to shareholders. If crude averages $70 in 2022, the company will return $700M to shareholders (in addition to paying down a significant amount of debt), which implies a yield of 7% at the current $39.53 price. In other words, there’s a good shot the company will return nearly its entire market cap to shareholders over the next 5 years.”
You can also take a look at the Billionaire Ken Griffin Is Loading Up on These 10 Stocks and 10 Best Pharmaceutical Stocks to Buy in 2022.
