In this article, we discuss 10 stocks that Jim Cramer is bearish on. Stocks plummeted for a fourth consistent trading week on December 19, crushed by rising recession fears. However, CNBC’s Jim Cramer noted that there could be a buying opportunity in the equity markets ahead of a potential rally. On December 19, Cramer told investors:
“The charts, as interpreted by Larry Williams, suggest that Christmas is not going to be canceled for Wall Street — he thinks we still have a Santa Claus rally coming, and the ideal time to buy is sometime around this Thursday.”
Cramer noted that the market’s latest plunge is the perfect opportunity for a Santa Claus rally, which refers to the stock market rising near the end of the year and the start of the new year. He reiterated his optimistic view of the equity market in the beginning on December as well, telling investors:
“As the year winds down, the holidays will become more and more of a focus. Right now, the forecast is cloudy – too many cross currents. But if the job market stays strong and inflation stays tame, we could be in for still one more very good week.”
While Cramer remains positive about the investing outlook in the near-term (see Cramer’s 10 Comeback Stocks), he is vocally opposed to crypto and stocks which do not have stable business models and are actively losing money. Although Cramer is an equity bull, he is bearish on multiple names and advises investors to steer clear of them. Some of these stocks include Roblox Corporation (NYSE:RBLX), Teladoc Health, Inc. (NYSE:TDOC), and Joby Aviation, Inc. (NYSE:JOBY).
Our Methodology
These stocks were picked keeping in mind the latest calls that Cramer made on these equities on CNBC’s Mad Money during December 2022. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Jim Cramer Is Bearish On These Stocks
10. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Number of Hedge Fund Holders: 15
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is an Israel-based provider of container shipping and related services in Israel and internationally. It provides door-to-door and port-to-port transportation services for various types of customers, including end-users, consolidators, and freight forwarders. On December 22, in a Lightning Round of CNBC’s Mad Money, Jim Cramer spoke about ZIM Integrated Shipping Services Ltd.:
“These dividends are variable and can go down, and I don’t want you to touch it.”
On November 18, Barclays analyst Alexia Dogani maintained an Equal Weight rating on ZIM Integrated Shipping Services Ltd. but lowered the price target on the shares to $26.50 from $63. The speed with which the container market is correcting weighs on the outlook for ZIM Integrated Shipping Services Ltd.’s earnings into fiscal 2023 and beyond, the analyst told investors. While the Q3 report was solid, the decline in demand, through sharp declines in rates and volumes, makes for a constrained backdrop, said the analyst.
According to Insider Monkey’s data, 15 hedge funds were long ZIM Integrated Shipping Services Ltd. at the end of Q3 2022, compared to 19 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a prominent stakeholder of the company, with 3.8 million shares worth $91.2 million.
In addition to Roblox Corporation, Teladoc Health, Inc., and Joby Aviation, Inc., Jim Cramer is bearish on ZIM Integrated Shipping Services Ltd..
Here is what Evermore Global Advisors has to say about ZIM Integrated Shipping Services Ltd. in its Q2 2021 investor letter:
“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.
There were several notable developments during the second quarter. Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 full year EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”
9. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 15
Lucid Group, Inc. (NASDAQ:LCID) is a California-based technology and automotive company that develops electric vehicle technologies. The company designs, engineers, and builds electric vehicles, EV powertrains, and battery systems. In a December 16 segment of Mad Money, Jim Cramer said about Lucid Group, Inc.:
“We don’t want to fool around with that. The thing just goes down and down. I see a trend … I think that one is just too dangerous.”
On November 8, Lucid Group, Inc. reported a Q3 GAAP loss per share of $0.40 and a revenue of $195.46 million, falling short of Wall Street estimates by $0.08 and $4.75 million, respectively. The revenue dropped 15.8% on a year-over-year basis.
BofA analyst John Murphy on December 15 initiated coverage of Lucid Group, Inc. with a Buy rating and a $21 price target after the company reported Q3 results and raised $1.5 billion of capital through a common stock sale. His rating is based on the view that Lucid Group, Inc. is “one of the most attractive among the universe of start-up electric vehicle automakers” and also a relative competitive threat to incumbent automakers, the analyst told investors.
According to Insider Monkey’s data, 15 hedge funds were bullish on Lucid Group, Inc. at the end of September 2022, compared to 16 funds in the prior quarter. The collective stakes by elite funds in Q3 2022 decreased to $99.5 million from $173.7 million in Q2 2022.
8. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Number of Hedge Fund Holders: 16
Star Bulk Carriers Corp. (NASDAQ:SBLK) is a Greek shipping company that engages in the ocean transportation of dry bulk cargoes worldwide. On November 16, Star Bulk Carriers Corp. declared a $1.20 per share quarterly dividend, a 27.3% decrease from its prior dividend of $1.65. The dividend was paid on December 12.
On December 19, Jim Cramer mentioned Star Bulk Carriers Corp. in Mad Money’s Lightning Round:
“I have not been in favor of the carriers. I’m not going to change my mind.”
Deutsche Bank analyst Amit Mehrotra on October 27 lowered the firm’s price target on Star Bulk Carriers Corp. to $33 from $40 and kept a Buy rating on the shares ahead of the company’s Q3 results.
According to Insider Monkey’s data, 16 hedge funds were long Star Bulk Carriers Corp. at the end of Q3 2022, compared to 18 funds in the prior quarter. Howard Marks’ Oaktree Capital Management is the largest stakeholder of the company, with 26 million shares worth $454.85 million.
Here is what Massif Capital has to say about Star Bulk Carriers Corp. in its Q3 2021 investor letter:
“We initiated one long position, one short position and exited one position during the third quarter. Our new long position was in Star Bulk Carriers (SBLK), a pure-play dry bulk operator with roughly 120 controlled vessels and 14 million tons of combined cargo capacity globally.
SBLK has one of the better management teams in the maritime shipping industry and the lowest cost structure among all dry bulk names. After announcing their new dividend policy in May, SBLK now has one of the best payout structures in shipping. The firm has paid out $0.3 and $0.7 per share in dividends for the first and second quarters of 2021. SBLK will most likely announce a dividend for the third quarter somewhere in the $1.15-$1.25 per share range, depending on movement in net working capital.
We believe the best way to look at this business is through cash generation potential and how much is returned to investors. The current equity valuation does not reflect current rates for shipping (earnings), partly because of the velocity of the move in rates and because shipping cycles turn, and it’s not clear whether this is a local top or the early innings of a multi-year cycle. Our belief is the latter. Part of our catalyst is the market re-rating the stock higher once the length of the increased earnings power becomes understood. It is a relatively strong catalyst in the sense that with a strong dividend policy, we can be patient for the market to underwrite this story as the cash is either returned to us via a high dividend yield if the market is either slow or chooses not to join our side of the trade.
Our estimates suggest a time-charter equivalent rate (net profit or loss of operating a vessel daily) of at least $30,000 for SBLK in Q4, with the firm earning a potential annual average of $26,000. Our base case is that this is a strong floor going into next year, with little need to articulate much more upside. If rates hold, which we expect them to do, we could see a 20+% annual dividend next year for SBLK. If the market priced the equity such that the dividend yield was 8%, that implies a $62 stock. Today our base case target for the firm is $37 per share. This is likely conservative as we know that third-quarter rates are higher than the second quarter, and third-quarter dividends will most likely reflect that. We are cautious about diving too deep into the sensitivities to the upside with this position as we are arriving at some pretty remunerative torque using current contracted values and seemingly conservative forecasts…” (Click here to see the full text)
7. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 17
AMC Entertainment Holdings, Inc. (NYSE:AMC) is a Kansas-based company engaged in the theatrical exhibition business. The company owns and operates theaters in the United States and Europe. On December 21, Jim Cramer spoke about AMC Entertainment Holdings, Inc. in a Mad Money Lightning Round:
“Going to take a pass on that. $5 is where it should be, and no higher.”
On December 22, AMC Entertainment Holdings, Inc. stock plummeted more than 25% in premarket trading as the company announced a number of financial transactions, including raising $110 million in equity, swapping debt for equity, and said it was considering converting preferred shares into common stock.
Citi analyst Jason Bazinet on November 25 lowered the price target on AMC Entertainment Holdings, Inc. to $1.10 from $1.20 and kept a Sell rating on the shares. The analyst updated his model to reflect the Q3 performance and continues to believe AMC Entertainment Holdings, Inc. shares are overvalued at present levels.
According to Insider Monkey’s data, 17 hedge funds were bullish on AMC Entertainment Holdings, Inc. at the end of September 2022, compared to 18 funds in the prior quarter. Philippe Laffont’s Coatue Management is a significant position holder in the company, with 751,238 shares worth $5.2 million.
6. Magna International Inc. (NYSE:MGA)
Number of Hedge Fund Holders: 18
Magna International Inc. (NYSE:MGA) was founded in 1957 and is headquartered in Aurora, Canada. The company designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide. It operates through four segments – Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles. On December 20, Jim Cramer mentioned Magna International Inc. in his Mad Money Lightning Round:
“MGA worries me. I would rather own an auto company directly. They’re very inexpensive.”
On December 14, Wells Fargo analyst Colin Langan downgraded Magna International Inc. to Equal Weight from Overweight with an unchanged price target of $62. Auto makers and suppliers have rallied since the end of Q3 but most earnings drivers have weakened, except currency, the analyst told investors. The analyst trimmed the 2023 global light vehicle production forecast to 1.8% from 7.1%, below the S&P’s 4.0%.
According to Insider Monkey’s Q3 data, 18 hedge funds were bullish on Magna International Inc., compared to 20 funds in the prior quarter. Israel Englander’s Millennium Management is the largest stakeholder of the company, with 1.02 million shares worth $48.3 million.
Like Roblox Corporation, Teladoc Health, Inc., and Joby Aviation, Inc., Magna International Inc. is one of the stocks that Jim Cramer is bearish on.
Here is what Vltava Fund has to say about Magna International Inc. in its Q4 2021 investor letter:
“Of course, not all of our companies are doing better than we expected. Magna fell somewhat short of our expectations last year. In the cases of Magna, reasons are disruptions in the supply and logistics chains. Magna, as a major automotive supplier, suffers indirectly from the same chip shortages as does BMW, for example. In Magna’s case, the trouble is that it does not have the same kind of pricing power vis-à-vis its customers as does BMW, and the lower and irregular production is negatively reflected in its profitability.”
5. Joby Aviation, Inc. (NYSE:JOBY)
Number of Hedge Fund Holders: 19
Joby Aviation, Inc. is a California-based vertically integrated air mobility company that specializes in manufacturing electric vertical takeoff and landing aircrafts optimized to deliver air transportation as a service. Joby Aviation, Inc. is one of the stocks that Jim Cramer is lately bearish on. He mentioned the company in a December 16 Lightning Round, saying:
“Joby Aviation … is like a Jules Verne story … Let’s leave it like a story and not think of it as a stock.”
On December 14, Joby Aviation, Inc. announced the conclusion of its second of four System Reviews required by the Federal Aviation Administration as part of the company’s aircraft type certification program. This indicates that the company is on the path of certifying its electric vertical take-off and landing aircraft.
Deutsche Bank analyst Edison Yu on November 16 lowered the price target on Joby Aviation, Inc. to $6 from $7 and reiterated a Hold rating on the shares following the Q3 results. Joby Aviation, Inc. confirmed that FAA certification would drag on into late 2024, meaning commercial operations would start in 2025, the analyst wrote in a research note.
According to Insider Monkey’s third quarter database, 19 hedge funds were long Joby Aviation, Inc., compared to 20 funds in the earlier quarter. The collective stakes in Q3 2022 decreased to $21.4 million from $30 million in Q2 2022.
4. Laredo Petroleum, Inc. (NYSE:LPI)
Number of Hedge Fund Holders: 20
Laredo Petroleum, Inc. (NYSE:LPI) is an Oklahoma-based independent energy company that specializes in the acquisition, exploration, and development of oil and natural gas properties in the Permian Basin of West Texas. About Laredo Petroleum, Inc., Cramer said in a December 21 Lightning Round:
“Laredo is a second-rate oil producer. I prefer very much that you buy Pioneer, PXD, which I think is much stronger and the Charitable Trust owns it.”
On December 12, Raymond James analyst John Freeman lowered the price target on Laredo Petroleum, Inc. to $63 from $75 and maintained an Outperform rating on the shares. Laredo Petroleum, Inc. did not have the best quarter after experiencing some operational challenges, and subsequently shifted production guidance for the year lower due to offset fracs causing lackluster performance, the analyst told investors in a research note.
According to Insider Monkey’s Q3 data, 20 hedge funds were bullish on Laredo Petroleum, Inc., compared to 24 funds in the last quarter. Israel Englander’s Millennium Management is the biggest position holder in the company, with 576,157 shares worth $36.2 million.
3. PagSeguro Digital Ltd. (NYSE:PAGS)
Number of Hedge Fund Holders: 23
PagSeguro Digital Ltd. (NYSE:PAGS) is headquartered in São Paulo, Brazil, and the company provides financial technology solutions and services for consumers, individual entrepreneurs, and small and medium-sized companies in Brazil and internationally. On December 22, Jim Cramer spoke about PagSeguro Digital Ltd., noting:
“We have to remember it’s from Brazil, so therefore it’s politically unstable. I hate to just be so broad-sweeping as that … These are political issues.”
On November 23, PagSeguro Digital Ltd. stock traded around 19% lower after reporting a Q3 revenue of $4.04 billion, which climbed 45.3% year-over-year but fell short of analysts’ estimates.
Cantor Fitzgerald analyst Josh Siegler on December 23 lowered the price target on PagSeguro Digital Ltd. to $14 from $20 and kept an Overweight rating on the shares. The analyst expects the merchant acquiring industry to come under pressure in 2023 due to the high inflationary environment and slower consumer spending in Brazil.
According to Insider Monkey’s Q3 data, 23 hedge funds were long PagSeguro Digital Ltd., compared to 24 funds in the prior quarter. Daniel Patrick Gibson’s Sylebra Capital Management is the largest stakeholder of the company, with 10.60 million shares worth $140.3 million.
Here is what Artisan Mid Cap Fund has to say about PagSeguro Digital Ltd. in its Q1 2021 investor letter:
“We also reduced our position in PagSeguro. PagSeguro is making good progress establishing a fast-growing digital bank and expanding its Brazilian payments business despite the pandemic. However, the company’s growth initiatives will require another year of heavy investment spending in 2021. This comes as Brazil’s progress combatting COVID-19 trails many major economies’, casting a cloud over the broader economic outlook. Given these potential headwinds, we trimmed our position to fund higher conviction holdings.”
2. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 27
Teladoc Health, Inc. is a New York-based company that provides virtual healthcare services in the United States and internationally. Jim Cramer is recently bearish on Teladoc Health, Inc., and he mentioned the company in his December 22 segment of Mad Money’s Lightning Round:
“I’ve used the product, I like it very much, but it is not a good situation.”
Although Teladoc Health, Inc.’s Q3 2022 financial results outperformed on both the top and bottom lines, the company lowered its full-year 2022 revenue outlook to $2.395 billion-$2.41 billion from a prior outlook of $2.4 billion-$2.5 billion and a consensus of $2.41 billion. It is also forecasting a net loss per share of $61.40-$61.10.
On December 23, Truist analyst Jailendra Singh maintained a Hold rating and a $29 price target on Teladoc Health, Inc.. While investors have inquired about the cause of its 8.5% drop on December 22, which was attributed to weak quarter-to-date trends in BetterHelp Website traffic, the credit card data, app downloads, and MAUs for BetterHelp suggest that the overall trends are not different from what the management indicated in its Q3 earnings call, the analyst told investors in a research note.
According to Insider Monkey’s data, 27 hedge funds were long Teladoc Health, Inc. at the end of Q3 2022, compared to 32 funds in the prior quarter. Cathie Wood’s ARK Investment Management is the biggest position holder in the company, with 20.85 million shares worth $528.75 million.
Greenhaven Road Capital made the following comment about Teladoc Health, Inc. in its Q3 2022 investor letter:
“At the end of last year and the beginning of this year, I sold two of our highest multiple holdings and invested in Teladoc Health, Inc., believing that swapping out of the highest multiple holdings into a lower multiple holding would provide protection in the event of multiple compression. However, the reality is that the multiple compression on currently loss-making (unprofitable) companies has been severe regardless of starting multiple, and TDOC’s lower relative starting point afforded us far less protection than I expected. We are no longer shareholders today but continue to follow the business and may return someday given its market size, product portfolio, and valuation.”
1. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 38
Roblox Corporation is a California-based company that allows developers and creators to build, publish, and offer digital 3D experiences, including Roblox Client, Roblox Education, and Roblox Cloud. Roblox Corporation is one of the stocks that Jim Cramer has been bearish on. He spoke about the company in a December 20 segment of Mad Money:
“Roblox is too expensive … Not making money, too.”
On December 22, Roblox Corporation shares dropped nearly 8%, approaching its 52-week low, as investors continued to sell-off the stock after it posted weaker-than-anticipated November bookings earlier this month. Over the past month, Roblox Corporation shares have plummeted more than 16% and have sunk more than 73% year-to-date.
Wolfe Research analyst Gal Munda on December 21 downgraded Roblox Corporation to Underperform from Peer Perform with a $24 price target. The company’s “disappointing” November metrics potentially provide concern in company execution, the analyst wrote in a research note.
According to Insider Monkey’s data, Roblox Corporation was part of 38 hedge fund portfolios at the end of Q3 2022, and Jim Simons’ Renaissance Technologies is the biggest position holder in the company, with 10.6 million shares worth $380.6 million.
Tao Value mentioned Roblox Corporation in its Q4 2021 investor letter. Here is what the firm said:
“Roblox (RBLX) got significant more attention from both institutional & retail investors after Facebook announced to rename itself as Meta Platforms. I believe the price appreciation is largely attributed to the increased attention. On the business side, Roblox rolled out a few successful music events and also partnered with Netflix on testing long-form media consumption in the virtual world. Apple in its iOS 14.5 rolled out an impactful change for the digital advertising landscape by requiring all apps to ask users to “opt in”.
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This article is originally published at Insider Monkey.
