In this article, we discuss the top 5 stocks to dump now according to hedge funds as they brace for impact. If you want to see more stocks in this list, click Hedge Funds Brace for Impact: Top 10 Stocks to Dump Now.
5. Paramount Global (NASDAQ:PARA)
Number of Hedge Fund Holders in Q1 2022: 40
Number of Hedge Fund Holders in Q4 2021: 64
Paramount Global (NASDAQ:PARA) is a New York-based multinational mass media and entertainment company. Wolfe Research analyst Peter Supino on June 2 downgraded Paramount Global (NASDAQ:PARA) to Underperform from Outperform, slashing the price target to $24 from $49. The analyst observed that Paramount Global (NASDAQ:PARA) was late to join streaming with a broad-based DTC service, and it is “playing catch-up” to attain market share in a highly competitive environment. Along with that, its content is believed to be a tier below the “top 3 must-haves” – Netflix, Inc. (NASDAQ:NFLX), The Walt Disney Company (NYSE:DIS), and Warner Bros. Discovery, Inc. (NASDAQ:WBD), the analyst added.
In addition to the recent ratings downgrade, Paramount Global (NASDAQ:PARA) also lost popularity among elite hedge funds in the beginning of 2022. According to Insider Monkey’s Q1 data, 40 hedge funds placed long bets on Paramount Global (NASDAQ:PARA), compared to 64 funds in the preceding quarter. Warren Buffett’s Berkshire Hathaway opened a new position in Paramount Global (NASDAQ:PARA) during Q1 2022, comprising about 70 million shares worth $2.60 billion.
4. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders in Q1 2022: 29
Number of Hedge Fund Holders in Q4 2021: 47
Rivian Automotive, Inc. (NASDAQ:RIVN) is a California-based automotive company that deals in electric vehicles, batteries, EV charging, and vehicle insurance. The stock price has fallen more than 72% year-to-date as of June 27. Similarly, Rivian Automotive, Inc. (NASDAQ:RIVN) has lost the favor of elite hedge funds. In Q1 2022, the number of long hedge fund positions declined to 29 from 47 in the prior quarter.
On June 27, Mizuho analyst Vijay Rakesh slashed the price target on Rivian Automotive, Inc. (NASDAQ:RIVN) to $70 from $80 and kept a Buy rating on the shares. The analyst “conservatively lowered” unit delivery estimates for Q2 and the second half of 2022 to account for Shanghai lockdowns and supply chain challenges. However, he forecasts robust EV demand regardless of soaring prices, with larger lead times, as production stabilizes and new models are introduced.
According to Insider Monkey’s Q1 database, Philippe Laffont’s Coatue Management held the biggest stake in Rivian Automotive, Inc. (NASDAQ:RIVN), with 30.8 million shares worth $1.5 billion.
Here is what Baron Global Advantage Fund has to say about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q1 2022 investor letter:
“Rivian Automotive, Inc. designs, manufactures, and sells consumer and commercial electric vehicles. Shares of Rivian continued its volatile trading following the stock’s IPO in late 2021, declining 52% in the first quarter as investors rotated out of fast-growing long-duration stocks and as industry wide supply-chain issues delayed Rivian’s production ramp. In addition, even while other automotive companies raised prices due to inflationary pressures, Rivian launched a price increase campaign that was not well communicated and, as a result, was met with dissatisfaction by existing reservation holders. While this was an unforced error, the company quickly corrected course, reversing its decision to raise prices for existing reservations, while maintaining the increase on new buyers (which has not caused a material impact to demand). We retain conviction in the shares given management’s vision, Rivian’s product positioning, the company’s relationship with Amazon.com, and the company’s strong balance sheet, which will help it overcome the current challenges while taking advantage of the long-term opportunity as the market transitions to electric vehicles.”
3. Rollins, Inc. (NYSE:ROL)
Number of Hedge Fund Holders in Q1 2022: 20
Number of Hedge Fund Holders in Q4 2021: 36
Rollins, Inc. (NYSE:ROL) is based in Atlanta, Georgia, offering consumer and commercial services. The company operates in the pest control and extermination industries via multiple wholly owned subsidiaries.
RBC Capital analyst Ashish Sabadra on April 11 raised the price target on Rollins, Inc. (NYSE:ROL) to $40 from $33 but reiterated a Sector Perform rating on the shares. The analyst stated that his Q1 forecasts were ahead of consensus given the solid momentum in Commercial Pest control, however, he also thinks that Rollins, Inc. (NYSE:ROL)’s organic growth will potentially moderate in Q1 and weaken more in Q2 as comparisons get more difficult. He also pointed out that technology adoption should enhance efficiency and partially offset the fuel costs.
According to Insider Monkey’s Q1 database, 20 hedge funds were bullish on Rollins, Inc. (NYSE:ROL), down from 36 funds in the last quarter. Select Equity Group is the leading stakeholder of the company, with 10.4 million shares worth $367.5 million.
Here is what Baron Asset Fund has to say about Rollins, Inc. (NYSE:ROL) in its Q1 2022 investor letter:
“Rollins, Inc. (NYSE:ROL) is a leading provider of pest and termite control services. Shares contributed to performance as the company reported solid fourth quarter earnings and continued to grow its market share and modestly increase its pricing. We believe Rollins has a strong brand operating in an attractive and defensive end market (cockroaches will outlive us all) that should enable the company to compound its profitability for many years.”
2. bleuacacia ltd (NASDAQ:BLEU)
Number of Hedge Fund Holders in Q1 2022: 6
Number of Hedge Fund Holders in Q4 2021: 29
bleuacacia ltd (NASDAQ:BLEU) is a New York-based special purpose acquisition company that was incorporated in 2021 to effect a merger, capital stock exchange, asset acquisition, corporate reorganization, and related business combinations in the premium branded consumer retail sector.
In Q1 2022, 6 hedge funds held long positions in bleuacacia ltd (NASDAQ:BLEU), with collective stakes worth $13.7 million, down from 29 funds in the preceding quarter, holding stakes in the company valued at $135 million.
1. Sonos, Inc. (NASDAQ:SONO)
Number of Hedge Fund Holders in Q1 2022: 30
Number of Hedge Fund Holders in Q4 2021: 45
Sonos, Inc. (NASDAQ:SONO) was incorporated in 2002 and is headquartered in Santa Barbara, California, operating as a manufacturer and distributor of audio products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Sonos, Inc. (NASDAQ:SONO) stock has declined about 34.5% YTD as of June 27.
On June 14, Morgan Stanley analyst Katy Huberty downgraded Sonos, Inc. (NASDAQ:SONO) to Equal Weight from Overweight, lowering the price target to $28 from $38. The analyst told investors that luxury consumer spending intentions are deteriorating, and with the stock market down roughly 22% year-to-date, consumer confidence is at a 10-year low while inflation remains at a 40-year high.
Among the hedge funds tracked by Insider Monkey, Coliseum Capital is the biggest Sonos, Inc. (NASDAQ:SONO) shareholder as of Q1 2022, with approximately 4 million shares worth $112.30 million. Overall, 30 hedge funds were bullish on the stock at the conclusion of the March quarter, down from 45 funds in the last quarter.
Here is what Aristotle Capital Management Small Cap Equity has to say about Sonos, Inc. (NASDAQ:SONO) in its Q1 2022 investor letter:
“Sonos (NASDAQ:SONO), a consumer electronics company with proprietary multi-room smart speaker technology, was added to the portfolio on the belief that strong consumer demand for the company’s differentiated product offering plus a multi-year pipeline of upcoming new product introductions are expected to drive shareholder value for the next several years.”
You can also take a look at Bill Gates’ Latest Stock Portfolio: Top 10 Picks and 10 Stocks to Profit From Inflation.
