Top 10 Stock Picks of Dmitry Balyasny’s Hedge Fund

Published on September 30, 2022 at 9:19 am by Umar Farooq in Hedge Fund Analysis, Hedge Funds, News

In this article, we discuss the top 10 stock picks of Dmitry Balyasny’s hedge fund.

Dmitry Balyasny is the managing partner and chief investment officer of Balyasny Asset Management, which was established in December 2001. Dmitry serves as the Executive Committee’s chair and actively participates in daily corporate investing. He started his trading career in 1994 with Schonfeld Securities, LLC, and has been a regular contributor to the hedge fund industry since 1999. Dmitry graduated from Loyola University in Chicago with a bachelor’s degree in finance. He serves on the boards of both the Chicago chapter of the Ayn Rand Institute and Teach for America Chicago. Dmitry assists in promoting the Institute’s educational and community engagement initiatives across the greater Chicago area.

As of March 1, 2022, Balyasny Asset Management had approximately $14.8 billion in client assets on a discretionary basis. The hedge fund last reported 13F filing for Q2 2022 included $30.721 billion in managed 13F securities and a top 10 holdings concentration of 8.45%. Balyasny Asset Management’s largest holding is SPDR S&P 500 ETF TRUST, with 1,259,397 shares. Other notable stocks in the 13F portfolio of Dmitry Balyasny during Q2 include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Oracle Corporation (NYSE:ORCL).

Top 10 Stock Picks of Dmitry Balyasny's Hedge Fund

Dmitry Balyasny of Balyasny Asset Management

Our Methodology

At Insider Monkey, we cover the portfolios of 895 hedge funds, closely tracking the stocks they buy and sell. We selected the ten stocks discussed in this article based on the 13F regulatory filing submitted by Balyasny Asset Management with the SEC for the quarter ending June 30. These are the top ten stock picks from Balyasny’s latest portfolio.

10. Switch, Inc. (NYSE:SWCH)

Balyasny Asset Management’s Stake Value: $150.597 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.49%

Number of Hedge Fund Holders as of Q2, 2022: 31

Switch, Inc. (NYSE:SWCH) offers colocation space as well as related services through its subsidiary Switch, Ltd. It builds and manages data centers in Georgia, Michigan, and Nevada. The business provides services to the cloud, IT, and software suppliers as well as technology and digital media corporations, banks, governments, and other organizations. Switch, Inc. (NYSE:SWCH) was established in 2000 and it is based in Las Vegas, Nevada.

Brookfield Asset Management and Switch, Inc. (NYSE:SWCH) were in acquisition negotiations in May of this year, reported Bloomberg. However, DigitalBridge Group, Inc. (NYSE:DBRG) defeated Brookfield’s bid. Switch, Inc. (NYSE:SWCH) stated on May 11 that it had entered into a formal agreement with Australian infrastructure manager IFM and DigitalBridge Group, Inc. (NYSE:DBRG) to be acquired at $34.25 per share in an all-cash deal valued at around $11 billion. Switch, Inc. (NYSE:SWCH) has a solid dividend history. It has consistently paid a dividend to stockholders over the past three years. During this time, these payouts have also consistently increased.

According to the 13F filings for the second quarter of 2022, Balyasny Asset Management held 4.49 million shares of Switch, Inc. (NYSE:SWCH), amounting to more than $150.59 million. The company represented 0.49% of the hedge fund’s 13F portfolio. Pentwater Capital Management held the most prominent stake in Switch, Inc. (NYSE:SWCH), with 6.53 million shares worth $218.59 million.

09. Wells Fargo & Company (NYSE:WFC)

Balyasny Asset Management’s Stake Value: $153.219 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.49%

Number of Hedge Fund Holders as of Q2, 2022: 83

Wells Fargo & Company (NYSE:WFC), a diversified financial services company, provides banking, investment, mortgage, and consumer finance products and services in the United States and internationally. On September 12, Wells Fargo & Company (NYSE:WFC) price target was trimmed by Deutsche Bank analyst Matt O’Connor from $62 to $60 while maintaining a Buy rating for the stock. O’Connor informs investors in a research note that although there has been some reprieve in recent weeks, the banks have underperformed this year mostly due to recession fears. According to the analyst, banks are down approximately 25% since their January highs and are pricing in a 55%–60% likelihood of a moderate–to–severe recession.

Davis Opportunity Fund, in its Q4 2021 investor letter, mentioned Wells Fargo & Company (NYSE:WFC) and discussed its stance on the firm. Here is what the fund said.

“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo.”

08. Eli Lilly and Company (NYSE:LLY)

Balyasny Asset Management’s Stake Value: $155.582 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.5%

Number of Hedge Fund Holders as of Q2, 2022: 70

Eli Lilly and Company (NYSE:LLY) discovers, develops, and markets human pharmaceuticals worldwide. The latest data shows that the hedge fund led by Balyasny owned 479,851 shares in Eli Lilly and Company (NYSE:LLY) at the end of the second quarter of 2022, worth close to $155 million, representing 0.5% of the portfolio. Ken Fisher’s Fisher Asset Management is the leading shareholder of Eli Lilly and Company (NYSE:LLY) during Q2, holding 5.9 million shares worth $1.92 billion.

On September 22, Eli Lilly and Company (NYSE:LLY) was raised by UBS analyst Colin Bristow from Neutral to Buy with a $363 price target, up from $335. Eli Lilly and Company (NYSE:LLY) is now seen by the analyst to be the large-cap pharmaceutical company with the highest potential for growth. On September 26, the Equal Employment Opportunity Commission filed a lawsuit against Lilly USA, a division of Eli Lilly (NYSE:LLY), over claims of widespread age discrimination. The Commission is of the opinion that the Indianapolis-based business deliberately broke the law by refusing to hire elderly workers.

In its Q2 2022 investor letter, Baron Health Care Fund mentioned Eli Lilly and Company (NYSE:LLY) and explained its insights for the company. Here is what the fund said:

“Eli Lilly and Company is a global pharmaceutical company focused on discovering, developing, and selling medicines for patients in the therapeutic areas of diabetes, oncology, immunology, and neuroscience. Stock performance was strong due to positive study results for Eli Lilly’s drug Tirzepatide (subsequently branded Mounjaro), which delivered up to 22.5% weight loss in adults with obesity. We think Tirzepatide is in the early innings of adoption in a large obesity market where penetration of anti-obesity medications is currently low. We continue to think Eli Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to solid revenue and earnings growth over many years.”

07. Allegion plc (NYSE:ALLE)

Balyasny Asset Management’s Stake Value: $157.046 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.51%

Number of Hedge Fund Holders as of Q2, 2022: 33

Allegion plc (NYSE:ALLE) is a global manufacturer and distributor of mechanical and electrical security devices and systems. The company was founded in 2013. It currently has a $7.82 billion market capitalization. The stock fell 34% in the past 12 months. On September 21, Mizuho analyst Brett Linzey cut his price target on Allegion plc (NYSE:ALLE) to $114 from $125 and reiterated a Buy rating on the shares.

Allegion plc manufactures and sells mechanical and electronic security products and solutions worldwide. Allegion plc (NYSE:ALLE) was incorporated in 2013 and is based in Dublin, Ireland. Nicolai Tangen’s Ako Capital is holding the largest stake in Allegion plc (NYSE:ALLE) during Q2, holding 2.46 million of its shares worth $241.75 million.

At the end of the second quarter of 2022, 33 hedge funds in the database of Insider Monkey held stakes worth $1.176 billion in Allegion plc (NYSE:ALLE), compared to 28 in the preceding quarter worth roughly $777 million. Just like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Oracle Corporation (NYSE:ORCL), Allegion plc (NYSE:ALLE) is one of the best stocks to buy, according to Balyasny Asset Management.

06. Lululemon Athletica Inc. (NASDAQ:LULU)

Balyasny Asset Management’s Stake Value: $158.685 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.51%

Number of Hedge Fund Holders as of Q2, 2022: 50

Lululemon Athletica’s (NASDAQ:LULU) Q2 comparable sales and margin performance surprised analysts, who now have a generally bullish outlook on the sports apparel firm. On September 16, analyst Matthew Boss with JPMorgan boosted his price target for Lululemon Athletica Inc. (NASDAQ:LULU) from $396 to $464 while maintaining an Overweight rating on the stock.

Balyasny Asset Management upped its stake in Lululemon Athletica’s (NASDAQ:LULU) during Q2 by a whopping 832%. The fund currently holds 582,095 of Lululemon Athletica’s (NASDAQ:LULU) shares worth $158.68 million. Out of the 895 hedge funds that Insider Monkey was following, 50 had Lululemon Athletica Inc. (NASDAQ:LULU) holdings at the end of the second quarter of 2022, with a total market value of $1.266 billion. When compared to the previous quarter, there were 44 hedge funds that held stakes totaling about $763 million.

Along with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Oracle Corporation (NYSE:ORCL), Lululemon Athletica Inc. (NASDAQ:LULU) is one of the best stocks to buy, according to Balyasny Asset Management.

05. Trane Technologies plc (NYSE:TT)

Balyasny Asset Management’s Stake Value: $178.611 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.58%

Number of Hedge Fund Holders as of Q2, 2022: 38

Trane Technologies plc (NYSE:TT) was founded in 1885 and is situated in Swords, Ireland. Trane Technologies plc (NYSE:TT), together with its subsidiaries, engages in the designing, manufacturing, selling, and servicing of solutions for heating, ventilation, air conditioning, and transport refrigeration.

After Trane Technologies plc (NYSE:TT) Q2 earnings beat and narrowed outlook, BMO Capital analyst Joel Tiss, on August 15, raised his price target for the company to $180 from $155 and kept an Outperform rating on the shares. The company’s industry-leading HVAC franchisees and strong management team continue to excite the analyst. According to Tiss, Trane Technologies plc (NYSE:TT) “appears increasingly well suited” to gain from increased efforts toward air-quality tests and retrofits.

In its Q1 2022 investor letter, ClearBridge Investments Sustainability Leaders Strategy mentioned Trane Technologies plc (NYSE:TT) and explained its insights for the company. Here is what the fund said:

“Trane Technologies (NYSE:TT), another energy efficiency play in the industrials sector that should benefit from trends highlighted in the REPowerEU energy security plan, was a top detractor for the quarter, mainly due to continued supply chain headwinds raising costs. We think there is a strong secular tailwind for the cost and emissions savings Trane provides: the company makes products that help reduce energy consumption and emissions for residential and commercial HVAC and transport refrigeration, the minimization of food waste and other perishable goods and the increased productivity for Trane’s customers. Trane estimates ~15%-25% of all greenhouse gas emissions in the world are emitted through HVAC systems and buildings.”

04. The Boeing Company (NYSE:BA)

Balyasny Asset Management’s Stake Value: $178.632 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.58%

Number of Hedge Fund Holders as of Q2, 2022: 51

Balyasny Asset Management increased its stake in The Boeing Company (NYSE:BA) during Q2 by 345%, holding 1.3 million shares of The Boeing Company (NYSE:BA), worth $178.632 million. The shares of The Boeing Company (NYSE:BA) continue to have an Overweight rating from Morgan Stanley analyst Kristine Liwag, who raised his price target for the stock from $215 to $233 on September 8.

Meridian Funds discussed The Boeing Company (NYSE:BA) in the second quarter investor letter. Here is what the fund said:

“We similarly remained invested in largely out-of-favor The Boeing Company (NYSE:BA), a global leader in developing and producing commercial jet aircraft. Due to some self-inflicted wounds and a bit of bad luck, as well as dramatic declines in air travel early in the pandemic, investor sentiment for this company has simply been awful. As part of our contrarian thinking, however, we view the business as critical to global transportation needs and see multiple catalysts to improve sentiment. In addition to the current surge in air travel worldwide, ramped up production of the 737 MAX aircraft and the pending restart of 787 Dreamliner deliveries should help turn broader sentiment. Additionally, we anticipate a meaningful inflection in cash flow as Boeing starts delivering aircraft currently in storage as well as the eventual expansion of its production in both core platforms.”

03. TransDigm Group Incorporated (NYSE:TDG)

Balyasny Asset Management’s Stake Value: $180.966 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.58%

Number of Hedge Fund Holders as of Q2, 2022: 66

TransDigm Group Incorporated (NYSE:TDG) was founded in 1993 and is based in Cleveland, Ohio. TransDigm Group Incorporated (NYSE:TDG) designs, produces, and supplies aircraft components in the United States and internationally.

Balyasny Asset Management upped its stake in TransDigm Group Incorporated (NYSE:TDG) during Q2 by 254%. It held 337,202 shares of TransDigm Group Incorporated (NYSE:TDG), at the end of Q2, having a total worth of $180.966 million.

In its Q2 2022 investor letter, Vulcan Value Partners mentioned TransDigm Group Incorporated (NYSE:TDG) and explained its insights for the company. Here is what the fund said:

“TransDigm Group Inc. is an aerospace manufacturing firm that provides highly engineered, niche components for use on commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales of sole-sourced products. The company produces high levels of free cash flow and has an effective, shareholder-oriented management team who are good capital allocators. Despite the company’s strong results during the quarter and solid outlook, its stock price declined.”

02. L3Harris Technologies, Inc. (NYSE:LHX)

Balyasny Asset Management’s Stake Value: $191.710 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.62%

Number of Hedge Fund Holders as of Q2, 2022: 34

The company was formerly known as Harris Corporation and changed its name to L3Harris Technologies, Inc. in June 2019. L3Harris Technologies, Inc. (NYSE:LHX) was founded in 1895 and is based in Melbourne, Florida. L3Harris Technologies, Inc. (NYSE:LHX), an aerospace and defense technology company, provides mission-critical solutions for government and commercial customers worldwide.

On September 28, L3Harris Technologies, Inc. (NYSE:LHX) was downgraded by Wells Fargo analyst Matthew Akers to Equal Weight from Overweight with a $238 price target, down from $272. The analyst believes that a considerable increase in U.S. military activity would be required for defense equities to rise above their current levels, which he sees as being unlikely in the foreseeable future. Akers anticipates continued supply chain delays and is unsure of “what might excite investors again” in regards to L3Harris Technologies, Inc. (NYSE:LHX).

Balyasny Asset Management is bullish on L3Harris Technologies, Inc. (NYSE:LHX) during Q2 as it increased its stake by 53%. At the end of Q2, Balyasny Asset Management held 793,174 shares of L3Harris Technologies, Inc. (NYSE:LHX), worth roughly $191.710 million.

01. Raytheon Technologies Corporation (NYSE:RTX)

Balyasny Asset Management’s Stake Value: $226.017 million

Percentage of Balyasny Asset Management’s 13F Portfolio: 0.73%

Number of Hedge Fund Holders as of Q2, 2022: 45

Raytheon Technologies Corporation (NYSE:RTX) is based in Waltham, Massachusetts. Raytheon Technologies Corporation (NYSE:RTX), an aerospace and defense company, provides systems and services for commercial, military, and government customers worldwide.

Ken Fisher’s Fisher Asset Management is the leading shareholder of Raytheon Technologies Corporation (NYSE:RTX) during Q2, holding 8.4 million of its shares worth $808.3 million. Hedge fund sentiment around Raytheon Technologies Corporation (NYSE:RTX) has decreased in the second quarter of 2022, with 45 hedge funds long the stock, compared to 51 in Q1 2022. Balyasny Asset Management holds 2.3 million shares of Raytheon Technologies Corporation (NYSE:RTX), valued at $226.017 million.

In its Q1 2022 investor letter, Carillon Eagle Growth & Income Fund mentioned Raytheon Technologies Corporation (NYSE:RTX) and explained its insights for the company. Here is what the fund said:

“Raytheon (NYSE:RTX) outperformed along with other defense contractors on rising geopolitical concerns. Military sales account for more than half of revenue. Key franchise programs include the Patriot Missile and F-35 engine, which have provided visible support through most of the decade.”

You can also take a peek at Top 10 Stock Picks of Roberto Mignone’s Bridger Management and Top 10 Stock Picks of John Hempton’s Bronte Capital.

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