In this article, we discuss the top 10 stock picks of Cinctive Capital Management.
Rich Schimel and Lawrence Sapanski founded Cinctive Capital Management in 2019 and the hedge fund’s assets have nearly quadrupled since it began operating. Sapanski and Schimel have been co-workers for 14 years. They worked for Steve Cohen’s SAC Capital Advisors in the early 2000s. They started Diamondback in 2005, and it eventually handled $5.8 billion. The company shut its doors in 2012 as a result of client withdrawals following the signing of a non-prosecution agreement connected to an insider trading probe. Schimel joined Ken Griffin’s Citadel in 2016 and served as the head of Aptigon Capital, one of the company’s equities investment divisions. Two years after he left, Aptigon was shut down.
Cinctive Capital Management, run by the pair, is a long-short hedge fund that employs various trading teams, each focusing on a different industry. The company’s portfolio management experts use exclusive quantitative methods supported by a robust risk management strategy. The fund saw a 2% loss in the fourth quarter of 2019. Many hedge fund firms initially neglected the harm that the coronavirus presented. Cinctive Capital Management identified possible issues before anybody else. The hedge fund asked the portfolio managers to minimize the gross exposure from the end of February to the beginning of March 2020, which helped the fund reduce its reliance on leverage or borrowing money to increase returns.
By trading more often, the disruption was thus made profitable. Its scepticism paid off – through April, Cinctive Capital Management recovered 4.6%, outperforming the 6.56% loss seen by the typical hedge fund. It also attempted to capitalize on market turmoil brought on by the coronavirus Omicron strain and worries about the Federal Reserve taking a tough stance in 2021. The hedge fund began a risk arbitrage plan. Schimel and Sapanski gave their investment teams wide latitude and let portfolio managers make investments in smaller companies. Holdings in small and midsize companies accounted for slightly more than 70% of the fund’s returns.
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Cinctive Capital Management invests in several sectors, including information technology, energy, industrials, consumer discretionary, industrials, finance, materials, healthcare, communications, transports, consumer staples, utilities and communications, and real estate. The hedge fund’s portfolio had a value of $2.69 billion at the end of the first quarter of 2022, up from $2.27 billion in the fourth quarter of 2021. Some of the most significant stocks in Cinctive Capital Management’s portfolio included Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and T-Mobile US, Inc. (NASDAQ:TMUS).
Our Methodology
Here is our list of top 10 stock picks of Cinctive Capital Management. The stocks were picked from the first-quarter regulatory filings of the hedge fund. Data from over 900 elite hedge funds tracked by Insider Monkey in Q1 2022 were used to calculate the number of hedge funds holding positions in each firm.
Top Stock Picks of Cinctive Capital Management
10. Salesforce, Inc. (NYSE:CRM)
Cinctive Capital Management’s Stake Value: $21,952,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.81%
Number of Hedge Fund Holders: 114
Salesforce, Inc. (NYSE:CRM) is a technology company in California that provides customer relationship management software. Cinctive Capital Management purchased 103,393 shares of Salesforce, Inc. (NYSE:CRM) in the first quarter of 2022, worth $21.95 million. Salesforce, Inc. (NYSE:CRM) is one of the prominent stocks in the portfolio of Cinctive Capital Management, along with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and T-Mobile US, Inc. (NASDAQ:TMUS).
Guggenheim analyst John DiFucci commenced coverage of Salesforce, Inc. (NYSE:CRM) on August 11, assigning the stock a ‘Sell’ rating and a $150 price target. According to the analyst, even software is sensitive to macro factors, and the near-term macro downturn will last longer than most investors think.
Among the hedge funds tracked by Insider Monkey, 114 were long Salesforce, Inc. (NYSE:CRM) in the first quarter of 2022, compared to 110 funds in the fourth quarter of 2021. Ken Fisher’s Fisher Asset Management is a notable shareholder of Salesforce, Inc. (NYSE:CRM), with 15.67 million shares worth $2.59 billion.
Vulcan Value Partners mentioned Salesforce, Inc. (NYSE:CRM) in its first-quarter 2022 investor letter. Here is what the fund said:
“Salesforce.com Inc. is the dominant provider of customer relationship management software and technology. Salesforce has high retention rates, pricing power, high free cash flow, and a competitive moat. The company continues to execute well. Margins decreased slightly during the fourth quarter but continue to be on path for material expansion over the long term. Salesforce is seeing increased spending as employees are returning to the office, and we believe the global pandemic has only improved its prospects.”
9. Imperial Oil Limited (NYSE:IMO)
Cinctive Capital Management’s Stake Value: $24,070,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.89%
Number of Hedge Fund Holders: 16
Imperial Oil Limited (NYSE:IMO) is a Canadian petroleum corporation with a market valuation of $29.38 billion that is owned about 70% by Exxon Mobil Corporation (NYSE:XOM). On July 29, Imperial Oil Limited (NYSE:IMO) reported C$17.31 billion in revenue in its second quarter of 2022, reflecting a 115% growth from the second quarter of 2021. It was caused by a precarious supply/demand equilibrium for processed items like oil, natural gas, and natural gas, increasing natural gas realizations and refining margins significantly over the last ten years.
On August 10, Credit Suisse analyst William Janela initiated coverage of Imperial Oil Limited (NYSE:IMO), rating the stock as ‘Neutral’ and a price target of C$72. In the first quarter, 16 hedge funds monitored by Insider Monkey were bullish on Imperial Oil Limited (NYSE:IMO). These funds’ investments are worth $606.71 million.
According to the 13F filings for the first quarter of 2022, Cinctive Capital Management purchased 496,589 shares of Imperial Oil Limited (NYSE:IMO), amounting to more than $24.07 million and representing 0.89% of the fund’s portfolio value. Jean-Marie Eveillard’s First Eagle Investment Management owned a $1.17 million position in Imperial Oil Limited (NYSE:IMO) at the end of the first quarter, making it a notable stakeholder of the company.
In its second quarter 2021 investor letter, Artisan Partners mentioned Imperial Oil Limited (NYSE:IMO) and discussed its stance on the firm. Here is what the fund said:
“Imperial Oil is Exxon’s Canadian subsidiary. The company owns worldclass oil mining assets that are efficient, operate at large scale with low cash costs and have long useful lives. The company’s share price has recovered from last year’s lows, prompted by a significant increase in the price of oil. In addition, the company’s decision to focus on its existing assets has paid off in terms of improved volume production and free cash flow generation. The share price increased by 27% during the quarter.”
8. JPMorgan Chase & Co. (NYSE:JPM)
Cinctive Capital Management’s Stake Value: $24,197,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.89%
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) finalized its previously announced acquisition of Global Shares, a prominent cloud-based supplier of share plan administration software, on August 11. JPMorgan Chase & Co. (NYSE:JPM) is now a market-leading supplier of cutting-edge employee ownership solutions to both private and public firms throughout the globe as a consequence of its most recent acquisition.
Investors were recently seen buying JPMorgan Chase & Co. (NYSE:JPM) shares. At the close of the first quarter, 110 hedge funds were bullish on the stock, compared to 107 in the previous quarter. With about 7.99 million shares valued at $899.69 million, Fisher Asset Management is the biggest shareholder of JPMorgan Chase & Co. (NYSE:JPM).
JPMorgan Chase & Co. (NYSE:JPM) is a new arrival in Cinctive Capital Management’s portfolio, as it bought about 177,498 shares of the company, worth $24.20 million. Although JPMorgan Chase & Co. (NYSE:JPM) worked in a challenging environment, Berenberg analyst Peter Richardson upgraded the company on July 18 from ‘Sell’ to ‘Hold’ with a price target of $120 on July 18.
ClearBridge Investments mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here is what the fund said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
7. NRG Energy, Inc. (NYSE:NRG)
Cinctive Capital Management’s Stake Value: $24,616,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.91%
Number of Hedge Fund Holders: 31
NRG Energy, Inc. (NYSE:NRG) is a US-based integrated power supplier. It owned and leased 25 facilities with a total capacity of about 18,000 megawatts in energy generation as of December 31, 2021. With 16.53 million shares valued at $630.97 million, Pzena Investment Management is a prominent shareholder of NRG Energy, Inc. (NYSE:NRG).
On August 4, NRG Energy, Inc. (NYSE:NRG) posted earnings for the second quarter of 2022. The $7.28 billion revenue for the period was up 38.9% year-over-year. On July 21, NRG Energy, Inc. (NYSE:NRG) declared a quarterly dividend of $0.35, in line with the previous.
Cinctive Capital Management bought 68,183 shares of NRG Energy, Inc. (NYSE:NRG) in the fourth quarter of 2020. At the end of the first quarter of 2022, the hedge fund held 641,698 shares of NRG Energy, Inc. (NYSE:NRG), worth about $24.62 million. At the end of the first quarter, 31 hedge funds owned stakes in NRG Energy, Inc. (NYSE:NRG), with a combined value of $1.54 billion. This is in contrast to 28 hedge funds a quarter ago.
6. Exxon Mobil Corporation (NYSE:XOM)
Cinctive Capital Management’s Stake Value: $25,112,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.93%
Number of Hedge Fund Holders: 83
Cinctive Capital Management strengthened its position in Exxon Mobil Corporation (NYSE:XOM) by 160%. This made its stake in Exxon Mobil Corporation (NYSE:XOM) total 304,060 shares worth $25.11 million. Besides Exxon Mobil Corporation (NYSE:XOM), the hedge fund also has substantial positions in Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and T-Mobile US, Inc. (NASDAQ:TMUS).
Credit Suisse analyst William Janela initiated coverage of Exxon Mobil Corporation (NYSE:XOM) on August 10, assigning the stock an ‘Outperform’ rating and a $125 price target. On July 29, Exxon Mobil Corporation (NYSE:XOM) reported solid earnings in the second quarter of 2022, with earnings per share of $4.14, exceeding estimates by $0.25. In addition, the company declared revenue of $115.68 billion, beating predictions by $4.01 billion.
Irving Kahn’s Kahn Brothers held a significant stake in Exxon Mobil Corporation (NYSE:XOM) at the end of the first quarter of 2022, equalling $1.90 billion. In addition, Insider Monkey spotted 83 hedge funds that were long Exxon Mobil Corporation (NYSE:XOM) at the end of Q1 2022. The collective stakes of these hedge funds totaled $8.56 billion, compared to $5.39 billion a quarter ago, with 71 positions.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its “Amana Funds” fourth-quarter 2021 investor letter. Here is what the firm said:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
5. General Motors Company (NYSE:GM)
Cinctive Capital Management’s Stake Value: $26,479,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 0.98%
Number of Hedge Fund Holders: 76
General Motors Company (NYSE:GM) is an automobile manufacturer. It has been attempting to increase the number of electric vehicles it offers over the past couple of years. Volcon, Inc. (NASDAQ:VLCN) declared on August 12 that it would use General Motors Company (NYSE:GM)’s proven and tested electric propulsion systems in all of its off-road utility terrain vehicles. Volcon, Inc. (NASDAQ:VLCN) is the first all-electric off-road power sports firm.
Among the hedge funds being tracked by Insider Monkey, Ric Dillon’s Diamond Hill Capital is a significant shareholder of General Motors Company (NYSE:GM), with a $358.63 million stake in the company. At the end of the first quarter, 76 hedge funds were bullish on General Motors Company (NYSE:GM), compared to 90 in the previous quarter.
On July 27, Wedbush analyst Daniel Ives maintained an ‘Outperform’ rating while lowering his price objective on General Motors Company (NYSE:GM) from $50 to $42. The analyst said that a number of supply chain issues contributed to General Motors’ inconsistent Q2 results and hindered the Detroit-based giant’s performance, which he believed to be a short-term roadblock.
Though Cinctive Capital Management reduced its stake in General Motors Company (NYSE:GM) by 2% during the first quarter, the company remained the fund’s fifth-largest holding. Rich Schimel and Lawrence Sapanski’s Cinctive Capital Management owned 605,363 shares of General Motors Company (NYSE:GM) in Q1 2022, worth about $26.48 million.
In its first-quarter 2022 investor letter, Diamond Hill Capital mentioned General Motors Company (NYSE:GM). Here is what the fund said:
“General Motors—and the auto industry in general—continues to face headwinds related to supply chain disruptions and raw material cost inflation. In addition, uncertainty surrounding global energy markets due to inflation and the conflict in Ukraine has created a greater economic burden on consumers, which tends to slow automotive sales.”
4. Vistra Corp. (NYSE:VST)
Cinctive Capital Management’s Stake Value: $27,598,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 1.02%
Number of Hedge Fund Holders: 40
Texas-based Vistra Corp. (NYSE:VST), a Fortune 275 integrated retail electricity and power-producing firm, announced a quarterly dividend of $0.184 per share, up 4% from its previous dividend of $0.177. For the fiscal second quarter of 2022, Vistra Corp. (NYSE:VST) reported a revenue of $1.59 billion, down 37.9% year over year.
On July 26, BofA’s analyst Julien Dumoulin-Smith removed Vistra Corp. (NYSE:VST) from Bank of America’s US1 List but maintained a ‘Buy’ rating and a price target of $28. The company, which was trading at an appealing 25%+ free cash flow, was one of the best options for benefiting from the commodities cycle’s favorable trends.
Cinctive Capital Management began building its stake in Vistra Corp. (NYSE:VST) in the fourth quarter of 2019. In the first quarter of 2022, it held 1.19 million shares of Vistra Corp. (NYSE:VST). These were worth $27.60 million and accounted for 1.02% of its portfolio. Vistra Corp. (NYSE:VST) is the fourth-largest holding of Rich Schimel and Lawrence Sapanski’s Cinctive Capital Management.
According to Insider Monkey’s Q1 data, 40 hedge funds were bullish on Vistra Corp. (NYSE:VST), with combined stakes of $1.64 billion, compared to the same number of funds in the earlier quarter, holding stakes in the company valued at $1.55 billion.
3. CenterPoint Energy, Inc. (NYSE:CNP)
Cinctive Capital Management’s Stake Value: $30,319,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 1.12%
Number of Hedge Fund Holders: 23
In the second quarter earnings published on August 2 by CenterPoint Energy, Inc. (NYSE:CNP), a holding company for public utilities, the EPS totaled $0.31, beating estimates by $0.04. In the first quarter of 2022, Cinctive Capital Management held 989,530 shares of CenterPoint Energy, Inc. (NYSE:CNP), which amounted to $30.32 million. CenterPoint Energy, Inc. (NYSE:CNP) occupied 1.12% of the hedge fund’s total portfolio.
Jim Simons’ Renaissance Technologies held a significant stake in CenterPoint Energy, Inc. (NYSE:CNP) at the end of the first quarter of 2022, equaling $21.83 million. Insider Monkey spotted 23 hedge funds that were long CenterPoint Energy, Inc. (NYSE:CNP) at the end of Q1 2022. The collective stakes of these hedge funds totaled $234.93 million, compared to $165.94 million a quarter ago with 25 positions.
Barclays analyst Eric Beaumont maintained an ‘Overweight’ rating on CenterPoint Energy, Inc. (NYSE:CNP) on July 18 while lowering his price objective to $33 from $36. Analysts revised their pricing predictions for the North American power and utilities segment to indicate a lower group multiple than originally assumed.
In its Q3 2021 investor letter, Miller Howard Investments highlighted a few stocks, and CenterPoint Energy, Inc. (NYSE:CNP) was one of them. Here is what the fund said:
“In late August, we increased the portfolio’s cyclical exposure by trimming utilities after a period of relative outperformance and reallocating the capital to midstream energy, which had pulled back over the summer. Additionally, we trimmed CenterPoint Energy, Inc. (NYSE:CNP) after periods of relative strength. We had previously increased our positions in late 2020 and February 2021, respectively, after periods of relative weakness.”
2. Antero Midstream Corporation (NYSE:AM)
Cinctive Capital Management’s Stake Value: $37,696,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 1.4%
Number of Hedge Fund Holders: 17
Antero Midstream Corporation (NYSE:AM) is an oil and gas transportation and storage company that operates via its Gathering and Processing and Water Handling divisions. With about 1.95 million shares valued at $21.2 million, Shah Capital Management is a prominent shareholder of Antero Midstream Corporation (NYSE:AM) as of Q1 2022.
On July 20, Barclays analyst Marc Solecitto reduced his price objective on Antero Midstream Corporation (NYSE:AM) to $9 from $10 and maintained an ‘Underweight’ rating on the stock. The analyst predicted strong Q2 midstream earnings and believed the business would do better than other energy subsectors under challenging trade conditions.
On July 27, Antero Midstream Corporation (NYSE:AM) posted earnings for the second quarter, reporting earnings per share of $0.20, missing market estimates by $0.03. In addition, revenue for the quarter was $228.91 million, below the analysts’ forecast by $9.37 million.
17 hedge funds reported having bullish bets on Antero Midstream Corporation (NYSE:AM) as of the end of the first quarter, with aggregate stakes worth $115.89 million. According to its 13F filings for the first quarter of 2022, Cinctive Capital Management held over 3.47 million shares of Antero Midstream Corporation (NYSE:AM), amounting to more than $37.70 million and representing 1.4% of the fund’s 13F portfolio. In addition, the hedge fund increased its stake in the firm by 11% during Q1.
1. Phillips 66 (NYSE:PSX)
Cinctive Capital Management’s Stake Value: $49,788,000
Percentage of Cinctive Capital Management’s 13F Portfolio: 1.85%
Number of Hedge Fund Holders: 41
Phillips 66 (NYSE:PSX) is one of the significant American refiners, with a crude throughput capacity of 2 million bpd. Its four business segments are Midstream, Chemicals, Refining, Marketing, and Specialties. According to Insider Monkey’s first quarter database, 41 hedge funds placed long bets on Phillips 66 (NYSE:PSX). The total stakes owned in the first quarter amounted to $1.38 billion.
On July 29, Phillips 66 (NYSE:PSX) announced an increase in second-quarter earnings as the American refiner benefited from soaring demand for gasoline and refined goods in the face of limited supply. As a result, realized refining margins increased from $10.55 per barrel in the first quarter to $28.31 per barrel in the second quarter. In addition, Phillips 66 (NYSE:PSX)’s EPS came in at $6.77, beating the market predictions by $1.01.
Jim Simons’ Renaissance Technologies is a prominent shareholder of Phillips 66 (NYSE:PSX), with 2.29 million shares worth approximately $187.81 million. In addition, Cinctive Capital Management loaded up on Phillips 66 (NYSE:PSX) in the first quarter, increasing its hold on the company by an impressive 246%. The hedge fund owns 576,315 shares of the company, worth $49.79 million.
On July 6, Theresa Chen of Barclays boosted her price objective on Phillips 66 (NYSE:PSX) from $95 to $113 while maintaining an ‘Overweight’ rating. The analyst raised her Q2 earnings per share prediction to $6.11, above the consensus of $4.81, owing mostly to a much larger contribution from refining.
You can also take a peek at Top 10 Stock Picks of Mark Gallogly’s Centerbridge Partners and Top 10 Stock Picks of Eli Casdin’s Casdin Capital.
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Disclosure: None. Top 10 Stock Picks of Cinctive Capital Management is originally published on Insider Monkey.
