In this article, we discuss 5 stocks that Warren Buffett is not giving up on despite losses. If you want to see more stocks in this selection, Warren Buffett Is Not Giving Up on These 10 Stocks Despite Losses.
5. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 42
YTD Share Price Decline as of August 19: 26.76%
Ally Financial Inc. (NYSE:ALLY) is based in Detroit, Michigan, operating as a digital financial-services company in the United States and Canada. Warren Buffett increased his position in Ally Financial Inc. (NYSE:ALLY) by 235% in Q2 2022. The Berkshire portfolio consisted of 30 million Ally Financial Inc. (NYSE:ALLY) shares worth $1 billion, representing 0.33% of the total holdings. The stock has fallen about 27% year to date as of August 19. The company reported on July 19 a Q2 EPS of $1.76 and a revenue of $2.08 billion, falling short of Wall Street consensus by $0.11 and $116.79 million, respectively.
Piper Sandler analyst Kevin Barker on July 25 downgraded Ally Financial Inc. (NYSE:ALLY) to Underweight from Neutral, lowering the price target from $45 to $34. The analyst cited auto market headwinds and higher funding costs for the downgrade, as well as the negative catalysts emerging for Ally Financial Inc. (NYSE:ALLY) given its towering leverage compared to peers.
According to the second quarter database of Insider Monkey, 42 hedge funds were bullish on Ally Financial Inc. (NYSE:ALLY). Harris Associates is a significant shareholder of the company, with 26.75 million shares worth $896.4 million.
Here is what Oakmark Fund has to say about Ally Financial Inc. (NYSE:ALLY) in its Q2 2022 investor letter:
“As for Ally Financial, fears of a recession drove the stock price down more than 20% for the period, but business fundamentals have remained strong and the shares now trade for just a mid-single-digit multiple of current earnings. We believe today’s price ignores the funding cost improvements and well-capitalized nature of Ally’s balance sheet. We continue to own both investments given their significant discounts to our estimates of business value.”
4. RH (NYSE:RH)
Number of Hedge Fund Holders: 59
YTD Share Price Decline as of August 19: 44.80%
RH (NYSE:RH) is a California-based retailer of home furnishings. The stock has plummeted about 45% year to date as of August 19. Warren Buffett’s Berkshire Hathaway owned 2.17 million shares of RH (NYSE:RH) in the second quarter of 2022, worth $460.60 million, representing 0.15% of the total 13F portfolio. It is one of the notable stocks that Buffett is not giving up on despite losses.
Citi analyst Steven Zaccone said on July 1 that key investor concerns after RH (NYSE:RH)’s second guidance cut in a month are impacting primary business and execution risk. The analyst has similar short-term concerns, but believes “a lot of damage is already priced in”. He maintained a Buy rating on RH (NYSE:RH) with a $338 price target.
Among the hedge funds tracked by Insider Monkey, Stephen Mandel’s Lone Pine Capital held a prominent stake in RH (NYSE:RH) at the end of the second quarter of 2022, with 1.7 million shares worth $376.35 million. Overall, 59 hedge funds were bullish on the stock at the conclusion of Q2 2022.
Here is what Polen US SMID Company Growth Fund has to say about RH (NYSE:RH) in its Q1 2022 investor letter:
“RH is a furniture store company with brand recognition and a unique business model. The company’s stock price fell sharply over the first three months of 2022 despite solid operating results, which resulted in what we believed to be an attractive opportunity to add to our position in the company. We are mindful that, on the margin, the company is certainly experiencing some early impact from record inflation and rising interest rates, and we feel comfortable in both the management team’s ability to navigate these challenges and the power of the company’s brand and its long-term potential.”
3. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 65
YTD Share Price Decline as of August 19: 53.43%
Snowflake Inc. (NYSE:SNOW) is a cloud computing data company. Warren Buffett’s Berkshire Hathaway owns 6.12 million shares of Snowflake Inc. (NYSE:SNOW) as of Q2 2022, worth about $852 million. Buffett has held a position in the company since Q3 2020, and despite a 53% year to date loss, the billionaire has not given up on Snowflake Inc. (NYSE:SNOW).
On August 16, Barclays analyst Raimo Lenschow raised the price target on Snowflake Inc. (NYSE:SNOW) to $210 from $158 and kept an Overweight rating on the shares. Investors are probably looking at Snowflake Inc. (NYSE:SNOW)’s consumption model and whether it will remain solid in a more challenging spending backdrop and he expects “another quarter of elevated volatility post earnings,” the analyst said in an earnings preview note. He sees “room for a modest raise to the back half of the year”.
According to Insider Monkey’s data, 65 hedge funds were bullish on Snowflake Inc. (NYSE:SNOW) at the end of June 2022, compared to 81 funds in the earlier quarter. Brad Gerstner’s Altimeter Capital Management is the biggest shareholder of the company, with 17 million shares worth $2.3 billion.
Here is what ClearBridge Aggressive Growth Strategy has to say about Snowflake Inc. (NYSE:SNOW) in its Q2 2022 investor letter:
“Snowflake operates a cloud-based data platform for small and medium-sized businesses and enterprise customers. The company is a key beneficiary of software spending moving to the cloud, as well as the increasing strategic importance of data. With the potential to address the large and growing market for data cloud, a roughly $250 billion plus opportunity by 2026, we see a long runway for growth ahead. Although the company is already profitable, we believe Snowflake still has significant room for free cash flow margin expansion.”
2. Charter Communications, Inc. (NASDAQ:CHTR)
Number of Hedge Fund Holders: 68
YTD Share Price Decline as of August 19: 30.27%
Charter Communications, Inc. (NASDAQ:CHTR) is a Connecticut-based broadband connectivity and cable operator company. The stock has dropped about 30% year to date as of August 19. However, Warren Buffett’s position in Charter Communications, Inc. (NASDAQ:CHTR) remained unchanged in Q2 2022 despite losses, comprising 3.8 million shares worth about $1.8 billion, representing 0.59% of the total 13F portfolio.
On August 15, Atlantic Equities analyst Hamilton Faber downgraded Charter Communications, Inc. (NASDAQ:CHTR) to Neutral from Overweight, slashing the price target to $477 from $755, after “much worse than expected” broadband results this quarter. He believes the pressures on broadband will not subside for about 18 months.
According to Insider Monkey’s Q2 data, 68 hedge funds were bullish on Charter Communications, Inc. (NASDAQ:CHTR), down from 73 funds in the earlier quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a notable stakeholder of the company, with 790,325 shares worth $370.2 million.
Here is what Andvari Associates has to say about Charter Communications, Inc. (NASDAQ:CHTR) in its Q2 2022 investor letter:
“Regarding Liberty Broadband, Andvari has owned it for the last 7+ years primarily because of its large stake in cable company Charter Communications (NASDAQ:CHTR). Given that Liberty also traded at a wide discount to its own net asset value, Andvari saw this as an even cheaper way to own Charter. We sold Liberty because we saw (too slowly) a violation of one of the core parts to our investment thesis: pricing power at Charter was not as great as we imagined. Charter has not been able to raise prices in line with inflation. To add insult to injury, the trade association for the U.S. cable industry started proudly advertising about how internet price increases have remained far behind the rate of inflation.”
1. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 75
YTD Share Price Decline as of August 19: 35.08%
General Motors Company (NYSE:GM) is an American multinational automotive company. Warren Buffett owns 52.8 million shares of General Motors Company (NYSE:GM) in the second quarter of 2022, worth $1.6 billion, representing 0.55% of the total 13F portfolio. Despite a 15% cut in the General Motors Company (NYSE:GM) stake in Q2, Buffett owns a sizable position in the firm although the stock is down 35% year to date as of August 19.
On August 19, General Motors Company (NYSE:GM) declared a $0.09 per share quarterly dividend. The dividend is distributable on September 15, for shareholders of record on August 31. The board raised the capacity of its share existing repurchase program to $5 billion, up from the $3.3 billion priorly remaining under the program.
Benchmark analyst Michael Ward on July 27 maintained a Buy recommendation on General Motors Company (NYSE:GM) but lowered the price target on the stock to $60 from $75 following the company’s Q2 report. He has slashed his 2023 earnings estimate to factor in higher interest costs at GM Financial and reduced his target multiple to the low end of his range.
According to Insider Monkey’s Q2 data, 75 hedge funds were bullish on General Motors Company (NYSE:GM), compared to 76 funds in the earlier quarter. Harris Associates is a prominent position holder in the company, with 43.6 million shares worth $1.38 billion.
Here is what Oakmark Global Fund has to say about General Motors Company (NYSE:GM) in its Q1 2022 investor letter:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are under-appreciated.”
You can also take a look at 10 Stocks That Billionaire Rob Citrone Is Selling and The 10 Stocks That Jim Cramer Is Talking About.
