In this article, we discuss the value hedge funds winning in 2022 and the 15 stocks that helped them do it.
Elite hedge funds are often lauded as huge market-beating machines that have withstood the test of time. However, they are also criticized for limiting access to just a few high net worth individuals and charging ludicrously high fees. In a volatile marketplace, investors are eagerly looking towards hedge funds for advice. Growth-focused funds, like Tiger Global Management and RTW Investments, are down 52% and 34%, respectively, while value-focused funds like Greenlight Capital have gained over 20% year-to-date, per HFRX Global Hedge Fund Index.
The numbers indicate that rate hikes and soaring inflation have contributed to one of the worst starts to the year on record for growth-focused funds. HFR data shows that equity hedge funds in general, which manage $1.2 trillion in assets, are suffering amid the escalating crisis, and have lost, on average, at least 8% so far in 2022. Value funds have focused on investments in gold, macro bets and shorts on tech-driven small firms to protect themselves from the developing economic crisis and done much better.
Some of the top value stocks that hedge funds backed in 2022 include Berkshire Hathaway Inc. (NYSE:BRK-B), Wells Fargo & Company (NYSE:WFC), and General Motors Company (NYSE:GM). Morgan Stanley estimates that last month, hedge funds betting on US equities cut the difference between their long positions and their short positions to close to the lowest since 2010, a signal showing the caution around the stock market in the past few months, although these positions are starting to build up again.
Our Methodology
The stocks common to elite hedge funds that have won 2022 in light of their value investing strategy were identified. These were then sorted using the Price-to-Earning (PE) ratios. Stocks that have a PE ratio of less than 25 were preferred for the list. The Year-to-Date (YTD) increase in the share price of each firm is mentioned as well. The business fundamentals and analyst ratings of each company are also discussed to provide some additional context. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each company.
Value Hedge Funds are Winning in 2022 Thanks to These 15 Stocks
15. BP Prudhoe Bay Royalty Trust (NYSE:BPT)
Number of Hedge Fund Holders: 1
PE Ratio: 23.90
YTD Increase in Share Price as of June 16: 401.39%
BP Prudhoe Bay Royalty Trust (NYSE:BPT) operates as a grantor trust. The firm has a large interest in the Prudhoe Bay oil field in Alaska that contains 50,000 gross productive acres. The stock has gained in the past few weeks on the back of tightening supplies. Oil has registered a seventh straight week of gains as inflation climbs, with investment bank Goldman Sachs predicting that the prices would continue to rise as the supply was nowhere near enough to meet demand. Oil is near $5 per gallon in the US.
On April 7, BP Prudhoe Bay Royalty Trust declared a quarterly dividend of $1.0875 per share, up substantially from the prior dividend of $0.5812 per share. The forward yield was also an impressive 27.74%.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in BP Prudhoe Bay Royalty Trust with 131,700 shares worth more than $1.9 million.
Just like Berkshire Hathaway Inc., Wells Fargo & Company, and General Motors Company, BP Prudhoe Bay Royalty Trust is one of the stocks that hedge funds are monitoring as interest rates rise.
14. Adams Resources & Energy, Inc. (NYSE:AE)
Number of Hedge Fund Holders: 3
PE Ratio: 9.77
YTD Increase in Share Price as of June 16: 20.48%
Adams Resources & Energy, Inc. is an oil and gas firm. On May 16, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $1.39, beating market estimates by $0.01. The revenue over the period was $774 million, up more than 137% compared to the revenue over the same period last year and beating analyst expectations by $123 million. The firm also declared a quarterly dividend of $0.24 per share, in line with previous. The forward yield was 2.76%.
On March 17, B Riley analyst Liam Burke initiated coverage of Adams Resources & Energy, Inc. stock with a Buy rating and a price target of $45, noting that the firm operated with “best-in-class service and safety records”.
At the end of the first quarter of 2022, 3 hedge funds in the database of Insider Monkey held stakes worth $12 million in Adams Resources & Energy, Inc., compared to 4 the preceding quarter worth $9 million.
13. Sendas Distribuidora S.A. (NYSE:ASAI)
Number of Hedge Fund Holders: 7
PE Ratio: 13.26
YTD Increase in Share Price as of June 16: 29.50%
Sendas Distribuidora S.A. (NYSE:ASAI) is a Brazilian firm that sells food products. At the end of March 2022, the company operated 216 stores under the Assaí banner. It also runs 13 distribution centers. Some of the industries it serves include restaurants, schools, small businesses, religious institutions, hospitals, and hotels. In October last year, the company had purchased Assai stores worth $946 million from another Brazilian food retailer.
The firm sells products through stores as well as through telesales. It was founded in 1974 and employs over 60,000 people. It is headquartered in Rio De Janeiro. On May 5, Sendas Distribuidora S.A. declared a dividend of $0.124 per share.
At the end of the first quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $24 million in Sendas Distribuidora S.A., compared to 6 in the previous quarter worth $13 million.
12. Arcos Dorados Holdings Inc. (NYSE:ARCO)
Number of Hedge Fund Holders: 13
PE Ratio: 15.16
YTD Increase in Share Price as of June 16: 15.06%
Arcos Dorados Holdings Inc. (NYSE:ARCO) is a Uruguay-based firm that operates as a franchisee of McDonald’s restaurants. The firm owns and runs the restaurant in around 20 countries in Latin America and the Caribbean. Some of these include Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, and Ecuador. At the end of 2021, the company owned and ran 2,261 restaurants across the region.
On June 15, Bradesco BBI analyst Richard Cathcart upgraded Arcos Dorados Holdings Inc. stock to Outperform from Neutral with a price target of $12, noting that the company had strong post-pandemic momentum.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Moerus Capital Management is a leading shareholder in Arcos Dorados Holdings Inc. with 6 million shares worth more than $49 million.
11. Adecoagro S.A. (NYSE:AGRO)
Number of Hedge Fund Holders: 16
PE Ratio: 6.20
YTD Increase in Share Price as of June 16: 19.43%
Adecoagro S.A. (NYSE:AGRO) operates as an agro-industrial firm. The company plants and harvests gains and oilseeds. It also engages in the sale of other agricultural products and land transformation activities. Some of the products it markets include sugar, ethanol, wheat, corn, soybeans, peanuts, cotton, and sunflowers. The firm owns 219,850 hectares of land, including 18 farms in Argentina, 8 farms in Brazil, and 1 farm in Uruguay, as well as a total of 241 megawatts of installed cogeneration capacity.
On May 12, Adecoagro S.A. posted earnings for the first quarter of 2022, reporting a revenue of around $201 million, up more than 18% compared to the revenue over the same period last year.
Among the hedge funds being tracked by Insider Monkey, Delaware-based investment firm Route One Investment Company is a leading shareholder in Adecoagro S.A. with 14.3 million shares worth more than $173 million.
10. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH)
Number of Hedge Fund Holders: 17
PE Ratio: 19.47
YTD Increase in Share Price as of June 16: 35.13%
Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is a biopharma firm based in California. On May 9, the company posted earnings for the first quarter of 2022, reporting a revenue of more than $120 million, up close to 17% compared to the revenue over the same period last year. On May 24, the firm had announced that it obtained approval for a new drug application of Regadenoson, a treatment for those unable to undergo adequate exercise stress.
On March 15, Wells Fargo analyst Jacob Hughes maintained an Equal Weight rating on Amphastar Pharmaceuticals, Inc. stock and raised the price target to $32 from $23, appreciating the solid quarterly results of the company.
At the end of the first quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $51 million in Amphastar Pharmaceuticals, Inc., compared to 13 the preceding quarter worth $28 million.
9. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 19
PE Ratio: 9.16
YTD Increase in Share Price as of June 16: 11.67%
BHP Group Limited (NYSE:BHP) is a diversified metals and mining firm. On May 19, the shareholders of energy firm Woodside Petroleum approved the merger of the business with the petroleum arm of BHP Group, a deal that advances a plan by the latter to transition away from fossil fuels. Per Australian brokerage Barrenjoey, the company could gain around $10 billion from the sale of the petroleum business this year.
On June 7, Jefferies analyst Christopher LaFemina upgraded BHP Group Limited stock to Buy from Hold and raised the price target to $82 from $72, noting that the mining sector was “undervalued and poised to outperform as China recovers”.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in BHP Group Limited, compared to 25 in the previous quarter worth $2 billion.
8. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 19
PE Ratio: 12.41
YTD Increase in Share Price as of June 16: 11.35%
British American Tobacco p.l.c. (NYSE:BTI) provides tobacco and nicotine products. The firm has an impressive dividend history stretching back twelve years. In the past three years, the payouts have registered consistent growth. On February 17, the company declared a quarterly dividend of $0.735 per share, an increase of 1.4% from the previous dividend of $0.725 per share. The forward yield was 6.26%.
On June 7, investment advisory Barclays maintained an Overweight rating on British American Tobacco p.l.c. (NYSE:BTI) stock and raised the price target to GBP 4,400 from GBP 4,200. Analyst Gaurav Jain issued the ratings update.
At the end of the first quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in British American Tobacco p.l.c. (NYSE:BTI), compared to 18 in the preceding quarter worth $1.4 billion.
In its Q4 2021 investor letter, Motiwala Capital, an asset management firm, highlighted a few stocks and British American Tobacco p.l.c. (NYSE:BTI) was one of them. Here is what the fund said:
“British American Tobacco p.l.c. (NYSE:BTI) is one of the largest tobacco companies in the world. In 2021, BTI should have generated $37B in revenues and $10B in net income. The company is paying down debt while continuing to invest in new categories. BTI pays a high dividend payout that is well covered by free cash flow. British American Tobacco p.l.c. (NYSE:BTI) traded at 10 PE and 8% yield at purchase. The shares should appreciate as EPS grows, company pays down debt and continues to increase dividends.”
7. Caleres, Inc. (NYSE:CAL)
Number of Hedge Fund Holders: 21
PE Ratio: 5.93
YTD Increase in Share Price as of June 16: 12.38%
Caleres, Inc. (NYSE:CAL) makes and sells footwear in the United States, Canada, China, and Guam. Some of the brands that the company retails include Nike, Skechers, adidas, Vans, Converse, Crocs, Puma, Birkenstock, New Balance, Asics, New Balance, Under Armour, and Bearpaw. On May 24, the firm posted earnings for the first fiscal quarter of the year, reporting earnings per share of $1.32 and a revenue of $735 million.
Caleres, Inc., which has been paying a dividend to shareholders consistently for the past twenty-two years, declared a quarterly dividend of $0.07 per share on May 25. The forward yield was 1.02%.
At the end of the first quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $60 million in Caleres, Inc., compared to 20 in the previous quarter worth $58 million.
6. AAR Corp. (NYSE:AIR)
Number of Hedge Fund Holders: 22
PE Ratio: 22.68
YTD Increase in Share Price as of June 16: 3.11%
AAR Corp. (NYSE:AIR) is an aerospace and defense firm based in Illinois. On April 5, the company announced that it had secured a $365 million contract for F-16 Systems Program Office Support from the US Air Force. Under the terms of the deal, the company will overhaul the F-16 depot work and Service Life Extension Program. The work on the program is expected to be completed by March 2033.
On March 23, RBC Capital analyst Ken Herbert maintained an Outperform rating on AAR Corp. stock and raised the price target to $56 from $50, noting that the quarterly results of the firm showed steady improvement in sales.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Rubric Capital Management is a leading shareholder in AAR Corp. with 1.5 million shares worth more than $76 million.
In addition to Berkshire Hathaway Inc., Wells Fargo & Company, and General Motors Company, AAR Corp. is one of the stocks that elite investors are keeping their eye on as inflation soars.
5. Alpha Metallurgical Resources, Inc. (NYSE:AMR)
Number of Hedge Fund Holders: 30
PE Ratio: 4.14
YTD Increase in Share Price as of June 16: 142.26%
Alpha Metallurgical Resources, Inc. (NYSE:AMR) operates as a mining firm. On May 5, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $20.52, beating market estimates by $1.48. The revenue over the period was $1.07 billion, up 177% compared to the revenue over the same period last year and beating analyst expectations by more than $125 million.
On May 6, B. Riley analyst Lucas Pipes maintained a Buy rating on Alpha Metallurgical Resources, Inc. stock and raised the price target to $181 from $155, appreciating the strong first quarter results of the company.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Hudson Bay Capital Management is a leading shareholder in Alpha Metallurgical Resources, Inc. with 859,597 shares worth more than $113 million.
4. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 42
PE Ratio: 15.17
YTD Increase in Share Price as of June 16: 16.87%
Archer-Daniels-Midland Company (NYSE:ADM) makes and sells agricultural commodities and related products. The stock has climbed in the past few days after US President Joe Biden announced a new $700 million aid program for biofuel producers that is set to benefit Archer-Daniels. Under the program, the company is set to receive around $50 million from the government to cover losses at 45 facilities across the country.
On April 27, Baird analyst Ben Kallo maintained an Outperform rating on Archer-Daniels-Midland Company stock and raised the price target to $108 from $73, noting the firm was benefiting from dislocation across the agriculture supply chain.
At the end of the first quarter of 2022, 42 hedge funds in the database of Insider Monkey held stakes worth $625 million in Archer-Daniels-Midland Company, compared to 41 in the preceding quarter worth $481 million.
3. APA Corporation (NASDAQ:APA)
Number of Hedge Fund Holders: 46
PE Ratio: 6.51
YTD Increase in Share Price as of June 16: 50.32%
APA Corporation (NASDAQ:APA) is an oil and gas exploration and production firm. On May 4, the firm posted earnings for the first quarter of 2022, reporting a revenue of $2.6 billion, up close to 43% compared to the revenue over the same period last year and beating analyst expectations by $230 million. The firm had free cash flow of $675 million during the first three months of 2022, up 39% from the previous quarter.
On June 14, Barclays analyst Jeanine Wai maintained an Overweight rating on APA Corporation stock and raised the price target to $62 from $54, noting the overall sentiment around the oil and gas sector was constructive.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Harris Associates is a leading shareholder in APA Corporation with 19.5 million shares worth more than $806 million.
In its Q1 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and APA Corporation was one of them. Here is what the fund said:
“Our oil holding, APA Corporation (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
2. Bunge Limited (NYSE:BG)
Number of Hedge Fund Holders: 55
PE Ratio: 8.33
YTD Increase in Share Price as of June 16: 7.37%
Bunge Limited (NYSE:BG) operates as an agribusiness and food company. The company has a solid track record in the dividend space with a history stretching to more than two decades. On May 12, the firm declared a quarterly dividend of $0.625 per share, an increase of 19% from the previous dividend of $0.525 per share. The forward yield was 2.28%. The dividend is payable to shareholders by early September.
On April 28, investment advisory Credit Suisse maintained an Outperform rating on Bunge Limited stock and raised the price target to $140 from $120. Analyst Robert Moskow issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Millennium Management is a leading shareholder in Bunge Limited with 1.6 million shares worth more than $183 million.
In its Q1 2022 investor letter, Old West Investment Management, an asset management firm, highlighted a few stocks and Bunge Limited was one of them. Here is what the fund said:
“Bunge Limited (pronounced BUN-GEE) Ltd is one of the biggest agribusinesses and food companies in the world. There are four worldwide companies that dominate the sector, the others being Archer-Daniels-Midland Cargill, and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw the Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman actually write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.
Heckman was a long time executive at Conagra Foods who obviously sensed opportunity at Bunge Limited. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…” (Click here to see the full text)
1. CF Industries Holdings, Inc. (NYSE:CF)
Number of Hedge Fund Holders: 67
PE Ratio: 11.88
YTD Increase in Share Price as of June 16: 27.60%
CF Industries Holdings, Inc. (NYSE:CF) is a fertilizer and agricultural chemicals firm. On June 8, the company announced that it would be shutting down operations at the Ince manufacturing facility in the United Kingdom as part of a larger restructuring of the firm in the country that will result in a shifting of manufacturing operations to the Billingham plant, the largest ammonia, ammonium nitrate and carbon dioxide facility in the UK.
On May 31, Piper Sandler analyst Charles Neivert maintained an Overweight rating on CF Industries Holdings, Inc. stock and raised the price target to $132 from $120, noting that grain prices will “both remain elevated and reset the standard for midcycle levels going forward”.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Soroban Capital Partners is a leading shareholder in CF Industries Holdings, Inc. with 2.6 million shares worth more than $269 million.
You can also take a peek at 10 High-Yield Dividend Stocks with Payout Ratio Less than 55% and 10 Stocks to Buy Today According to British Billionaire David Harding.
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This article is originally published at Insider Monkey.
