In this article, we present the list of the top 10 stocks to sell now according to billionaire Dan Loeb.
Intel Corporation (NASDAQ:INTC), Meta Platforms, Inc. (NASDAQ:FB), and Visa Inc. (NYSE:V) were among the largest holdings that billionaire money manager Dan Loeb sold off during the fourth quarter of 2021.
Dan Loeb’s Third Point Management is one of the most successful hedge funds in the world, entering LCH Investments’ list of the 20 Great Money Managers for the first time at the end of 2021. According to the report, New York-based Third Point has delivered net gains of $18.8 billion since its inception in 1993, including hefty $3.3 billion gains last year.
The report credited Third Point’s flexible and opportunistic investment approach, as well as some of its recent private equity/venture capital successes for its rise into the top 20. In addition to its value-oriented investment philosophy, Third Point is also a prominent activist investor, searching out and pushing for catalysts that could spark positive change at targeted companies and unlock shareholder value.
Third Point’s flagship Offshore fund lost 5.4% in Q4, but still finished the year up 22.7% thanks in part to the remarkable performance of Upstart Holdings, Inc. (NASDAQ:UPST), which gained 271% in 2021, ranking it as the most successful single-year performance of any holding in Third Point’s history. The fund capitalized on those gains by unloading just over two-thirds of its stake in the company during Q4.
Third Point didn’t find as much success with some of the other holdings it sold off during Q4, including Paysafe Limited (NYSE:PSFE), which tumbled by 49% in Q4 and lost 74% for the year. According to the fund’s Q4 investor letter, a copy of which can be downloaded here, it sold off PSFE after the release of the company’s Q3 earnings report.
Third Point manages $17.3 billion in assets as of June 30, 2021, which rose above $18 billion by the end of Q3 according to the fund’s 13F filing for that quarter. In the fourth quarter, Dan Loeb unloaded several large holdings, lowering the value of Third Point’s 13F portfolio to $14.33 billion.
We’ll take a look at the largest positions unloaded by Dan Loeb during Q4 in this article.
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The following ten stocks were sold off completely by Dan Loeb’s Third Point during the fourth quarter according to the fund’s 13F filing for the December 31 reporting period. The rankings are based on the size of Third Point’s former position in those stocks.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
Top 10 Stocks to Sell Now According to Billionaire Dan Loeb
10. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Fund Shareholders: 34
Canadian oil and natural gas producer Suncor Energy Inc. (NYSE:SU) is the first of ten stocks to sell now according to Dan Loeb, as Third Point unloaded its entire 7-million share stake in the company during Q4. Hedge fund ownership of Suncor bottomed out in the third quarter of 2020 and has steadily rebounded since then.
Suncor Energy Inc. (NYSE:SU) does have some positives going for it, including a 4.45% dividend yield that is made possible by the company’s low-cost oil sands operations. In addition to its crude oil operations, Suncor is also developing some cleaner energy initiatives, with plans to hit zero net emissions by 2050.
Suncor Energy Inc. (NYSE:SU) set a quarterly record for AFFO in Q4, coming in at $2.17 on a per share basis, 11% higher than its previous record set all the way back in 2014. Suncor also took steps to improve its balance sheet and return more cash to shareholders last year, reducing its net debt by $4 billion and returning close to $4 billion in cash to shareholders through buybacks and dividends.
Nonetheless, Suncor joins Intel Corporation (NASDAQ:INTC), Meta Platforms, Inc. (NASDAQ:FB), and Visa Inc. (NYSE:V) as some of the stocks that Dan Loeb dumped in Q4.
9. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Shareholders: 69
Numerous hedge funds have sold off their stakes in video game developer Activision Blizzard, Inc. (NASDAQ:ATVI) over the last two years, including Dan Loeb in Q4. Third Point sold off all 2 million of its ATVI shares during the quarter, joining a list of 35 net funds that have axed the stock since early 2020.
Activision Blizzard, Inc. (NASDAQ:ATVI) is set to be acquired by Microsoft Corporation (NASDAQ:MSFT) in a deal that should be considered a blessing for the troubled game developer, prominent employees of which have been hit with sexual harassment allegations. The company’s culture has also been lambasted by the press, impacting the company’s ability to hire and retain talent. The completion of the deal is not a given, however, as it could face antitrust challenges.
Another fund that recently exited its Activision Blizzard, Inc. (NASDAQ:ATVI) position, though not one that is included in our database of 900+ elite funds, was Merion Road Capital Management, which detailed why it chose to sell its stake in Activision Blizzard in its Q4 2021 investor letter:
“The largest detractor for the year was our position in Activision (“ATVI”). ATVI took multiple legs down during the year as they became the defendants of a sexual harassment lawsuit and faced a wave of incriminating pressfrom journalists. To make matters worse, it became apparent that ATVI wasstruggling in their response to the crisis at hand. While I find such actions truly deplorable, my job as an investor is to assess the situation and determine whether or not the company’s valuation accurately reflects these associated risks. Unfortunately, I miscalculated the impact that these factors would have on the company. My initial rationale was that sexual harassment lawsuits are not uncommon and would be settled with compensation – given ATVI’s size and balance sheet, this would not be a crippling event. Furthermore, with a deep catalog of proven games, ATVI’s earnings stream is predictable and less reliant on new hits.
What I did not properly consider was that the company’s true asset is not its catalog but rather its employee base. Video games are a form of art and need creative developers to build stories that draw users in and keep them engaged. Whether it is brand new content or an iteration of a previously successful title, the quality of the work, and therefore bench of developers / creators, matters. It is clear that the culture at ATVI was unhealthy. Changing that will not be easy. It will make it difficult for the company to attract new talent and retain key employees. From a financial perspective this could lead to delays in game production and perhaps less successful products. I exited our position given these risks.”
8. TE Connectivity Ltd. (NYSE:TEL)
Number of Hedge Fund Shareholders: 44
Dan Loeb’s hedge fund also sold off 1.31 million shares of TE Connectivity Ltd. (NYSE:TEL) during Q4, closing the position it had opened during the first quarter of 2020. 44 funds were long TEL on December 31, owning a collective $2.48 billion worth of shares.
TE Connectivity Ltd. (NYSE:TEL) is experiencing solid growth and demand across many of its segments, driven by the increasing adoption of electric vehicles, a boost in capital spending on factories and in the communications sector, and thanks to the continued proliferation of cloud services globally. TE Connectivity managed 16% organic growth in its fiscal Q4 2021 despite supply chain issues hampering some of its segments, and hit $3.82 billion in revenue in its fiscal Q1 2022, topping estimates by nearly $100 million.
Madison Funds is bullish on TE Connectivity Ltd. (NYSE:TEL)’s opportunity in the electric vehicle space, having this to say about the company in its Q3 2021 investor letter:
“TE Connectivity is the most exposed to global automotive trends of any company in the portfolio. Its highly engineered and customized electrical connectors generate an average of $65 in content sold for a high proportion of cars produced globally. For TE, the move to EVs equates to a step up to $120 in content per vehicle. In its most recent quarterly report, TE’s automotive revenue was 13% higher than the like 2019 quarter despite global auto production approximately 15% lower than in 2019. The difference can only be market share gains and mix gains via EV content. We are optimistic that TE Connectivity can grow this business nicely as global auto production recovers and EVs account for increasing proportions of the mix.”
7. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Shareholders: 46
Third Point unloaded its entire 1.3-million share stake in Aptiv PLC (NYSE:APTV) during Q4, closing the position one year after initiating it. Billionaire Louis Bacon also unloaded his stake in Aptiv during the quarter, though overall hedge fund ownership rose by a net total of two funds.
Aptiv PLC (NYSE:APTV) is another company that operates in the EV and autonomous vehicle spaces, which Dan Loeb appears to still be bullish on in general given his $408 million stakes in Rivian Automotive, Inc. (NYSE:RIVN) following that company’s Q4 IPO.
Loeb’s sale of Aptiv potentially came just weeks before the company announced the acquisition of Wind River for $4.3 billion in cash, a move that wasn’t received overly well by the market. Aptiv PLC (NYSE:APTV)’s Q4 results and 2022 guidance were also mixed, with cost pressure driving down the company’s margins in Q4.
6. The Estee Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Shareholders: 45
Closing out the first part of the list is The Estee Lauder Companies Inc (NYSE:EL), which Third Point owned 1 million shares of on September 30. Those shares were sold off during Q4, closing the position Dan Loeb’s fund had opened a year earlier. Third Point hasn’t been the only hedge fund selling off shares of the cosmetics company, as hedge fund ownership of EL has fallen by 27% over the past three quarters.
The Estee Lauder Companies Inc (NYSE:EL) got strong contributions across many of its brands during its fiscal Q2 2022, with 11 different brands achieving double digit organic sales growth during the quarter. Overall organic net sales rose by 11% year-over-year, including by 19% in the Americas, while adjusted diluted earnings per share were 15% higher.
Harding Loevner’s Global Equity Fund also sold off its position in The Estee Lauder Companies Inc (NYSE:EL) during Q3, citing the stock’s rising valuation as a prime reason for closing the position according to its Q3 2021 investor letter:
“We sold cosmetic producer Estée Lauder, which we bought last March. At the time, the market reflected a dire outlook for retail demand, especially tourist-related; however, we found its Chinese business attractive and admired its agility across social media and other digital channels. As the stock has appreciated, the resulting valuation now leaves no room for error, such as a potential shift of Chinese consumers’ tastes away from US brands.”
Intel Corporation (NASDAQ:INTC), Meta Platforms, Inc. (NASDAQ:FB), and Visa Inc. (NYSE:V) are some of the most prominent stocks sold off by Dan Loeb in Q4, all of which will be discussed in the second half of this article.
5. Paysafe Limited (NYSE:PSFE)
Number of Hedge Fund Shareholders: 32
Dan Loeb’s Third Point was one of several hedge funds that dumped Paysafe Limited (NYSE:PSFE) during Q4, as hedge fund ownership of the fintech company fell by 24% at the tail end of a rather dismal year for the company and its shares. It was the second straight quarter that saw a steep drop in hedge fund ownership.
Loeb sold off 39.47 million shares of Paysafe Limited (NYSE:PSFE), closing the position he had owned since the company went public at the end of Q1. Early investor enthusiasm for the stock quickly waned through the year with each successive quarterly financial report the company released, as its revenue growth disappointed and its operating losses grew.
Loeb shared some of the details of why he unloaded his Paysafe Limited (NYSE:PSFE) investment in Third Point’s Q4 investor letter, stating the company failed to execute on the plans it had laid out in its IPO. His comments can be read below:
“The top five losers for the quarter (includes) Paysafe Ltd. The fourth quarter marked the beginning of a market rotation from growth to value that accelerated into January of 2022. One of the most stinging losses for the quarter was our investment in Paysafe Ltd, which was down 49% in Q4 and 74% for the year due to its failure to execute the plan articulated in its 2020 IPO (via a SPAC transaction, in which we participated.) We exited the position in its entirety following the company’s Q3 earnings report, and the shares have languished since then.”
4. Visa Inc. (NYSE:V)
Number of Hedge Fund Shareholders: 146
Dan Loeb also dumped another payment processor in Q4, though a much more established one in Visa Inc. (NYSE:V), selling out of his 1.4-million share position in the company. Hedge fund ownership of Visa fell by 15% during 2021.
Unlike Paysafe, Visa Inc. (NYSE:V) is still generating impressive net revenue growth, as that figure rose by 24% year-over-year during the company’s fiscal Q1 2022, while non-GAAP EPS grew by 27%. Visa has grown its payment transactions volume by 26% over the past two years, topping $60 billion during the quarter for the first time.
Polen Capital’s Polen Global Growth fund is still a big fan of Visa Inc. (NYSE:V) saying in its Q4 2021 investor letter that it expects mid-teens or greater EPS growth for the foreseeable future:
“Visa is also experiencing COVID-related pressures, primarily due to rolling lockdowns and the fact that international travel is yet to return to pre-pandemic levels. The lack of travel relative to before the pandemic has specifically impacted Visa’s cross-border business, which represents roughly 10% of payment volume, but approximately 25% of gross revenues. Like Autodesk, how the near-term unfolds is hard to predict, but we are confident that international travel will return eventually.
At less than 30x earnings, we don’t think we’re paying much for this eventuality. Further, despite continued advances in fintech and the increased popularity of cryptocurrencies, Visa and MasterCard continue to invest to protect and even expand their competitive advantages. Fintech remains a dynamic space, but we continue to believe that Visa and Mastercard’s scale and “network of networks” approach provides both companies a formidable competitive position within the payments ecosystem. We expect mid-teens or greater earnings per share growth for many years to come.”
3. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Shareholders: 229
Meta Platforms, Inc. (NASDAQ:FB) is another company that hedge funds have been fleeing recently, and that was even before the company’s disastrous Q4 earnings report. Hedge fund ownership of Facebook and Instagram’s parent company has fallen by 16% over the past two quarters. Third Point was one of several funds to unload Meta Platforms during Q4, selling off all 1 million of its shares.
Meta Platforms, Inc. (NASDAQ:FB) suffered the worst single-day loss in stock market history following its latest earnings report, losing $232 billion in value. The company expects its revenue growth to slow considerably this year, while its much-ballyhooed metaverse initiative lost a staggering $10 billion during the quarter. iOS privacy changes have also had a material impact on Meta’s ad revenue.
Nonetheless, Meta Platforms, Inc. (NASDAQ:FB) continues to grow its daily active users at a strong pace and is well-positioned to capitalize on the continued migration of ad spending to digital channels. The stock now trades at its lowest price-to-FCF ratio in the last five years, providing a cheap and compelling entry point into the stock.
2. Endeavor Group Holdings, Inc. (NYSE:EDR)
Number of Hedge Fund Shareholders: 27
Dan Loeb’s hedge fund sold off 12.5 million shares of Endeavor Group Holdings, Inc. (NYSE:EDR) during Q4, closing its position that was previously the third-largest among hedge funds. Third Point’s sale was counter to the broader hedge fund industry, with ownership of the stock climbing by 35% during the quarter.
Endeavor Group Holdings, Inc. (NYSE:EDR), which owns the UFC and represents some of the world’s top athletes, delivered strong Q3 results, with outperformance across all three of its segments. The company also helped deliver its balance sheet with the sale of an 80% stake in Endeavor Content for $775 million.
ClearBridge Investments was bullish on Endeavor Group Holdings, Inc. (NYSE:EDR)’s IPO in anticipation of the return of live sporting events, having this to say about the company in its Q2 2021 investor letter:
“In addition to these disruptors, we added exposure in evolving opportunities through the IPO of Endeavor Group. Endeavor owns sports leagues like UFC and Pro Bull Riders which should benefit from the return of live events as well as leading sports agency IMG and its IMG Academy training franchise. Streaming companies are hungry for content and rights prices for programming owned by Endeavor are rising. Endeavor, as a representative to many of the world’s most well-known athletes, should also benefit from soaring sports salaries.”
1. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Shareholders: 74
Topping the list is chipmaker Intel Corporation (NASDAQ:INTC), which Dan Loeb’s hedge fund sold 9 million shares of during Q4, representing the largest holding that Third Point sold off during Q4. Hedge fund ownership of INTC has dropped by 13% in 2022.
Intel Corporation (NASDAQ:INTC) has big expectations about its longer term growth trajectory, anticipating double digit revenue growth by 2026. However, the near-term isn’t quite as rosy, as revenue is expected to decline by 4% this year. Despite that, Intel could be an intriguing addition to a dividend portfolio given its 3.1% yield and future growth prospects.
And even though Dan Loeb sold off his stake in Intel Corporation (NASDAQ:INTC), he talked up the company in Third Point’s Q4 investor letter, stating that he believed their prospects had finally turned the corner. His full comments can be read below:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Undervalued Dividend Kings To Buy In 2022 and 10 Stocks to Buy Now According to Hari Hariharan’s NWI Management.
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Disclosure: None. Top 10 Stocks to Sell Now According to Billionaire Dan Loeb is originally published at Insider Monkey.
