25 Stocks Billionaires Are Selling
Billionaires and high-asset hedge funds have done lots of selling in 2021. Here are 25 stocks they unloaded in the first three months of the year.
The first quarter of 2021 saw America's billionaires modify a host of their stock holdings, whether they were adding or reducing positions. And many of the wealthiest insiders have been selling stock in large quantities so far this year.
According to a mid-May report from Bloomberg, corporate insiders have been especially busy selling holdings that appreciated significantly during the COVID-19 pandemic. Insiders of U.S.-listed public companies sold $24.4 billion worth of stock in 2021 through the first week of May. This compares to the sale of $30 billion between June 2020 and December 2020.
There's no denying investors have profited nicely during the pandemic. With inflation rearing its ugly head and President Joe Biden looking to take a financial bite out of some of America's wealthiest, it's accelerated the rate of selling by billionaires.
Jeff Bezos, for instance, has sold $6.7 billion in Amazon.com (AMZN) stock so far in 2021. That's roughly two-thirds of what he sold for the entire 2020.
In some cases, asset managers are selling to take profits. In other situations, it's more a matter of rotating assets into more appropriate investments based on the current economic environment. Bezos could be diversifying his investments outside of his large Amazon stake.
Here are 25 stocks the billionaire set sold off over the past few months. Every quarter, we look at 13F filings from institutional investors to discover not only some of the billionaire set's favorite stock picks – but also which investment ideas they're souring on. At least one billionaire (though in many cases, several) dumped anywhere between 20% to 100% of their holdings in the following 25 stocks.
Data as of June 16. WhaleWisdom.com and regulatory filings made with the Securities and Exchange Commission.
- Market value: $188.4 billion
- Billionaire investor: Warren Buffett (Berkshire Hathaway)
- Shares sold: 51,748,813 (-98%)
Warren Buffett did the unimaginable in the first quarter, selling off all but 675,054 of Berkshire's Wells Fargo (WFC, $45.57) shares. The holding was a staple of the Berkshire Hathaway equity portfolio for years.
As recently as the end of fiscal 2019, Wells Fargo was its sixth-largest stock by market value. As a result, Berkshire owned 8.4% of the California-based bank at the time. The billionaire continued to support WFC despite all its problems with corporate culture and proper banking selling practices.
"If you look at Wells, through this whole thing they're uncovering a whole lot of problems, but they aren't losing any customers to speak of," Buffett told the Financial Times in April 2019.
All good things must come to an end. On May 17, Berkshire filed its latest 13F holdings report. Buffett had reduced his stake in WFC to a $26.4 million position.
Wells Fargo isn't the only bank stock he's abandoned in recent quarters. In the fourth quarter, Berkshire exited positions it held in JPMorgan Chase (JPM), M&T Bank (MTB) and PNC Financial Services (PNC).
However, he remains committed to Bank of America. It is the holding company's second-largest position behind Apple (AAPL), accounting for almost 15% of its $270-billion equity portfolio.
- Market value: $360.6 billion
- Billionaire investor: Ruane Cuniff & Goldfarb
- Shares sold: 456,069 (-47%)
The investment manager cut its Mastercard (MA, $363.82) position during the first quarter from 3.7% of its $10.6-billion portfolio down to 1.7%. As a result, the second-largest payments processor in the world is no longer a top 20 holding.
Ruane Cuniff first bought Mastercard stock in the second quarter of 2006. It's done very well on its investment, paying an average price per share of just $6.67, according to WhaleWisdom.
Mastercard stock lost some of its shine in the first quarter. Its results included a 17% year-over-year decline in cross-border volumes, 600 basis points less than its larger rival, Visa (V).
According to an article in The Globe & Mail, Morningstar Senior Equity Analyst Brett Horn believes cross-border volumes are "the biggest headwind" for MA, as indicated in a note to clients. However, Mastercard CEO Michael Miebach believes that travel will improve in countries where vaccinations have been given to large segments of the population.
Overall, the payments processor had an excellent first quarter, processing 8% more transactions by dollar value than it did in Q1 2020. It had also had a per-share profit of $1.74 in the three-month period, 17 cents higher than the consensus analyst estimate.
It appears that Ruane Cuniff is merely taking some profits off the table and redeploying them into more favorable near-term segments of the economy.
- Market value: $64.2 billion
- Billionaire investor: Jim Simons (Renaissance Technologies)
- Shares sold: 5,385,073 (-62%)
Baidu (BIDU, $184.61) was one of the largest positions of stocks sold by Renaissance Technologies in the first quarter.
Before the sale, the Chinese internet search engine company accounted for 2.0% of Renaissance's $80.4 billion in assets. After the sale, Baidu was still its seventh-largest holding at a market value of $697.2 million, or 0.9%, of its portfolio. The hedge fund has held Baidu since Q1 2017, and paid an average price per share of $113.15.
Baidu reported its Q1 2021 results in mid-May. Revenues increased by 25% from the year prior to $4.4 billion. While ad sales accounted for 80% of core revenue during the quarter, non-advertising revenue grew by 70% over the three-month period. Within three years, BIDU expects non-advertising sales to exceed ad revenue. The increase in revenue from its cloud and artificial intelligence businesses certainly helped BIDU's top line.
Of the 36 analysts covering Baidu, 31 think it's a Buy or Strong Buy. Only one analyst believes it's a Sell. The remaining four have it at Hold. The median target price is 2,056.51 Chinese yuan or $321.37 per American depositary share.
Renaissance wasn't the only prominent seller of Baidu stock during the first quarter. Artisan Partners (APAM) sold 7.39 million shares during the quarter, reducing its position by 99% to just 0.02% of its $79.1-billion portfolio.
- Market value: $15.1 billion
- Billionaire investor: John Paulson (Paulson & Co.)
- Shares sold: 6,902,805 (-100%)
In mid-May, AT&T (T) announced it was spinning off its WarnerMedia subsidiary, which includes HBO and CNN, and merging it with Discovery Communications (DISCA, $30.46), whose properties include Food Network and HGTV.
Under the terms of the deal, AT&T shareholders will own 71% of the business, with Discovery shareholders owning the rest.
Is it possible that Paulson got wind of a pending deal and didn't like what he saw? After all, he sold his entire DISCA stake six weeks or more before the deal's announcement.
Discovery was a large part of the Paulson & Co. portfolio, accounting for almost 5% of its $4.4 billion in assets reported under its 13F. Paulson first owned DISCA in the fourth quarter of 2017, paying an average price of $24.32 per share for its holdings.
Whatever the reason, BofA Global Securities analyst David Barden believes the AT&T-DISCA deal is beneficial to both companies. More importantly, AT&T gets out of the media business and receives $43 billion in cash and securities to pay down its debt.
Some would say it's a wise play on a poor hand of cards.
- Market value: $34.9 billion
- Billionaire investor: Marshall Wace LLP
- Shares sold: 8,012,746 (-76%)
Marshall Wace reduced its position in Carnival (CCL, $29.28) from 1.2% of its $21.8-billion portfolio at the end of December to 0.3% at the end of March. Despite the sale – its largest of the first quarter by shares sold – it still owns 2.4 million shares of the cruise line stock.
The U.K.-based asset manager first owned Carnival's shares in the third quarter of 2020. This suggests that it was betting on the industry's recovery. It paid an average price of $19.97 per share for CCL stock, and the shares traded as high as $29 in March. It made an excellent return on investment over three quarters.
Some industry pros believe that Carnival's shares have more upside, suggesting Marshall Wace may have left some profits on the table.
"We are going to see cruise liners starting to sail again," Danielle Shay, director of options at Simpler Trading told CNBC on May 25. "The cruise liners are still beat down, which means that you still have some upside."
Shay stated that Carnival and its two biggest rivals are trading between 33% and 45% below their January 2020 highs, before the pandemic wiped out their businesses.
Should Carnival's three key U.S. ports resume sailing this summer as expected – Port Canaveral and Port Miami in Florida, and Port of Galveston in Texas – it's possible that its shares could move even higher.
Marshall Pace didn't have this information when it sold 76% of its Carnival stake in the first quarter.
- Market value: $315.8 billion
- Billionaire investor: David Tepper (Appaloosa Management)
- Shares sold: 350,000 (-66%)
While PayPal Holdings (PYPL, $268.82) is only Appaloosa's 37th largest position in a $7-billion portfolio, it was one of the more significant cuts on a percentage basis in the first quarter.
Appaloosa first started buying PayPal in Q2 2020. Over three quarters, it paid an average of $174.23 for its shares in the digital payments platform. It's possible the hedge fund simply wanted to take profits.
Alternatively, Appaloosa may have felt PayPal was barking up the wrong tree with its plans to develop a "super app" similar to Alipay, WeChat, Paytm or Grab. The company is looking to get into stock investing, high-yield savings accounts and all kinds of other financial services to gain more business from its core users.
"There's too many apps on all of our phones – I can't have an app for my pharmacy, my grocery, for all the different retailers I have," PayPal CEO Dan Schulman told Bloomberg in May. "I can't have 40 to 50 different apps on my phone. I can't remember the passwords; I don't want to enter in all my info every time. There's really only eight to 10 apps that we use every single day or every single week. Those apps are going to morph into what we call super apps."
Analysts aren't so sure that PayPal will convince U.S. consumers to change the way they use products and services. A possible target audience could be the 25% of Americans who own a smartphone but remain unbanked.
Laboratory Corp. of America
- Market value: $25.3 billion
- Billionaire investor: Larry Robbins (Glenview Capital Management)
- Shares sold: 331,592 (-60%)
By no means is Laboratory Corp. of America (LH, $259.09) a significant position for Glenview. It represented 2.6% of its $5.9 billion in assets at the end of December. Now, after selling 60% of its holdings in one of America's largest owners of clinical labs, it has 220,595 shares in LH, or less than 1% of Glenview's portfolio. That makes it just the 28th-largest position.
The asset manager first bought LH stock in the second quarter of 2020, paying an average of $166.11 a share.
Lab Corp. has benefited over the past 15 months from the coronavirus. In March 2020, in an effort to get more Americans tested, private commercial labs such as Lab Corp. started doing COVID-19 testing. As a result, its revenues and profits exploded.
The company's Q1 2021 results showed sales grew by 50% year-over-year to $4.2 billion and adjusted earnings per share (EPS) spiked 271% to $8.79 per share. LH's COVID-19 testing accounted for a significant amount of its revenue growth during the quarter.
However, LH's guidance for all of 2021 calls for earnings from COVID-19 testing to fall by 35%-50% as the world gets back to normal. It's safe to assume that Glenview feels Lab Corp.'s pandemic-fueled gains are coming to an end.
- Market value: $5.6 billion
- Billionaire investor: Carl Icahn
- Shares sold: 8,018,886 (-100%)
Carl Icahn's infatuation with Herbalife Nutrition (HLF, $52.29) finally came to an end after first buying the stock in Q1 2013.
In the third quarter of 2020, the billionaire cut his stake in the multi-level-marketing nutrition firm to 20.5 million shares.
By the end of March 2021, Icahn whittled the holding down to 8.02 million shares, most repurchased by Herbalife in January at an average price of $48.05 a share. As part of that repurchase, Icahn agreed to relinquish the five seats on HLF's board his representatives held.
Icahn sold off the final amount between April 28 and May 6 at prices between $46 and $48. In May 2018, Icahn owned almost 24% of the company. Estimates put Icahn's profits from Herbalife at well over $1 billion.
Now that Icahn's moved on from HLF, his stake in Occidental Petroleum (OXY) is his second-largest holding behind Icahn Enterprises (IEP), his own holding company. Icahn owns 77.9 million shares, or 8.3%, of the oil-and-gas producer.
However, Icahn appears also to be reducing his investment in Occidental. In the first quarter, he sold 13.4 million shares, or 14% of his holdings. There could be more selling on the horizon, considering in mid-March, the billionaire investor indicated that he would sell up to 30 million of those OXY shares to reposition assets.
His third-largest holding is CVR Energy (CVI). His 71.2 million shares represent a 70.8% ownership stake in the oil refiner and nitrogen fertilizer manufacturer.
- Market value: $582.7 billion
- Billionaire investor: Baillie Gifford
- Shares sold: 11,088,110 (-40%)
Since the end of Q3 2020, Baillie Gifford has cut its stake in Tesla (TSLA, $604.87) by more than half to 16.2 million, with approximately 11.1 million shares sold in the first quarter of 2021 and 7.4 million in Q4 2020.
Despite the significant reduction, the electric vehicle (EV) stock remains Baillie Gifford's largest holding at 6% of its $178.7 billion in assets listed on its Q1 2021 13F. The investment manager's second-largest holding is Amazon.com at 5.1%.
According to WhaleWisdom, Baillie Gifford paid an average price of $41.89 for its TSLA shares since first buying in Q1 2013. In the first quarter of this year, Tesla's share price traded between a high of $900.40 in late January and a low of $539.49 in early March.
Assuming it sold at or near the high for the quarter, Baillie Gifford theoretically could have made more than 2,000% on the shares it sold in Q1 2021.
There was disagreement amongst the portfolio managers at Baillie Gifford about how much Tesla to sell. In February, Funds Insider reported that some of Baillie Gifford's open-end mutual funds had cut their positions by a significant amount while others such as the Baillie Gifford Positive Change fund remained large stakeholders. As of May 31, Tesla was the third-largest position held by that fund at 7.1%.
Whatever Baillie Gifford does with its remaining Tesla shares is bound to gain attention through the remainder of the year and into 2022.
Green Brick Partners
- Market value: $1.1 billion
- Billionaire investor: David Einhorn (Greenlight Capital)
- Shares sold: 6,700,000 (-27%)
Greenlight Capital sold 27% of its shares of Green Brick Partners (GRBK, $22.18) during the first quarter. However, the hedge fund's investment in the diversified homebuilder and land development company still accounts for 33.3% of its $1.4-billion portfolio.
David Einhorn first met Green Brick CEO Jim Brickman in 2002. Brickman invested with Greenlight, and together, the two men started buying up distressed real estate assets. In 2009, they formed Green Brick Partners. A few homebuilder acquisitions later, they took the company public via a reverse merger with Denver-based ethanol producer BioFuel Energy in October 2014.
At the merger, Greenlight and Brickman owned 49.9% and 8.4%, respectively, of the merged entity. Today, Einhorn remains chairman of Green Brick and owns 34.4% of the company.
In Greenlight Capital's Q1 2021 shareholder letter, Einhorn had good things to say about Green Brick.
"GRBK, as a business, had excellent results. Full year 2020 earnings per share were up 97%. More importantly, its backlog grew 86% and its lot position grew 61%. In early 2021, the business accelerated further, with new orders up 80% through February, ahead of last year's 76% growth in the comparable (pre-COVID) period," Einhorn wrote.
"Normally, the business is limited by sales. Currently, GRBK is limited by how many houses it is able to build and how quickly it is able to build them. This is what we call 'a high class problem.'"
At the time of the BioFuel merger, GRBK shares were trading around $7.25. That's a threefold return over six-and-a-half years or just less than 20% compounded annually.
- Market value: $6.0 billion
- Billionaire investor: David Einhorn (Greenlight Capital)
- Shares sold: 1,026,147 (-100%)
Greenlight's sale of its NCR (NCR, $46.18) position was included in this list of 25 stocks because it was the largest position (2.3% of portfolio) at the end of December that Einhorn completely sold in the first quarter.
According to WhaleWisdom, it first bought NCR shares in Q3 2020, paying an average price of $22.14 per share. The maker of ATMs, point-of-sale terminals and self-checkout systems has done well over the past year – up about 140% over the past 52 weeks – so it's not unusual for Einhorn to be taking profits.
If Einhorn didn't sell, NCR would likely be in Greenlight's top 10 holdings.
All of NCR's gains in 2021 have come in the past three months. On Jan. 25, it announced that it would acquire Cardtronics (CATM) for $2.5 billion in cash, or $39 per CATM share, including the assumption of debt. The deal strengthens the company's move toward the NCR-as-a-Service strategy it launched in December.
While NCR expects to find between $100 million and $120 million in annual operating cost synergies by the end of 2022, it wasn't enough to keep Einhorn invested. Cardtronics previously had agreed to an offer from private-equity firm Apollo Global Management (APO).
- Market value: $5.2 billion
- Billionaire investor: Apollo Global Management
- Shares sold: 9,360,000 (-41%)
Fisker (FSR, $17.74) is the second electric vehicle company to be sold heavily in the first quarter. If that's not a sign investors rotated out of clean energy at the start of 2021, nothing is.
Apollo sponsored Spartan Energy Acquisition Company, a special purpose acquisition corporation (SPAC) that went public in August 2018, raising $480 million from investors to find a target to combine within the energy industry. The SPAC's senior management were partners working at Apollo.
While the Apollo sponsor is currently losing money on the Fisker shares, it holds more than 9 million warrants to buy future shares of Fisker at $11.50 apiece. It paid $1.50 for each of the warrants.
After combining with Spartan Energy, Fisker's shares jumped by 13% on Oct. 30, 2020 – its first day of trading. FSR proceeded to rise to a 52-week high of $31.96 by early March. By the end of the month, though, its share price had fallen to $17. It's likely the shares Apollo did sell were sold when prices were at or near their all-time high.
In mid-May, Fisker announced more details about its deal with Foxconn to make EVs in the U.S. The partners intend to open a manufacturing plant in 2023. Four states are said to be in the running, including Wisconsin, where Foxconn's current plant is. The plant will have the capacity to produce 150,000 vehicles when production on Fisker's second vehicle begins.
SPDR Gold Shares
- Assets under management: $63.7 billion
- Billionaire investor: Ray Dalio (Bridgewater Associates)
- Shares sold: 1,252,684 (-41%)
Despite Bridgewater's 41% reduction in SPDR Gold Shares (GLD, $171.11) during the first quarter, GLD is still the hedge fund's eighth-largest holding. It accounts for 2.4% of Bridgewater's $11.3 billion in assets reported on its latest 13F.
In early May, Dalio admitted that he owned some Bitcoin. In combination with the 41% reduction in Bridgewater's gold play, his hedge fund may continue to rotate out of the precious metal and into cryptocurrencies.
"The more we create savings in [bitcoin], the more you might say, 'I'd rather have bitcoin than the bond.' Personally, I'd rather have bitcoin than a bond," Dalio said in an interview with CoinDesk. "And then the more that happens, then it goes into bitcoin and it doesn't go into credit, then [governments] lose control of that."
Gold, along with Bitcoin, might be more highly regulated in the future as investors try to move out of debt investments such as bonds and into these less-regulated stores of value.
A point of interest: Of Bridgewater's top 10 additions or new positions in the first quarter, five were consumer discretionary or consumer staples stocks. This means Bridgewater sees volatile markets ahead and has opted to rotate into traditionally safer stocks when inflation is a potential issue.
- Market value: $60.0 billion
- Billionaire investor: John Overdeck and David Siegel (Two Sigma Investments)
- Shares sold: 11,536,774 (-51%)
Of the stocks reduced or closed out by Two Sigma in the first quarter, Ford (F, $15.02) was one of its largest holdings. Even after selling 11.5 million shares, it still owned 10.8 million at the end of the first quarter, worth $132 million.
Two Sigma is thought to have paid an average of $8.58 per share for its Ford stock. It only started to accumulate shares in the maker of the Mustang, Bronco and F-150 in Q3 2020. Based on 22.4 million shares held at the end of December, it's likely made $95 million, or 49%, on its investment in just three quarters.
In late May, Ford, as part of its broader Ford+ plan, promised to increase spending on electric vehicles by $8 billion to $30 billion over the next nine years. Additionally, the company has set a goal to make EVs account for 40% of its global production by 2030. In addition, it plans to stop selling internal combustion engine-powered vehicles by 2035.
"This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T," Ford CEO Jim Farley said about the initiative.
As part of its vertically integrated electrification plans, Ford is opening two North American factories with Korean battery maker SK Innovation. The joint venture will manufacture electric batteries for approximately 600,000 EVs per year.
- Market value: $646.6 billion
- Billionaire investor: Eagle Capital Management
- Shares sold: 2,412,173 (-33%)
In the big picture, the sale of 2.4 million shares of Berkshire Hathaway (BRK.B, $283.11) by Eagle Capital isn't news for either company. Berkshire is only the asset manager's 14th-largest position out of 52 stocks held. BRK.B accounted for 5.2% of its $32.4 billion in assets before the sale, and 3.7% after.
Eagle Capital has owned Berkshire since Q2 2006. It's estimated to have paid $115.80 per share on average over the past 15 years. Berkshire's Class B shares are up 22.1% year-to-date. If this performance were to hold up for the remainder of the year, it would be the holding company's best annual return since 2014.
Of the institutional investors selling Berkshire stock in the first quarter, Eagle Capital was the fifth-largest seller of shares. The largest sale in terms of total shares came at the hands of Norges Bank, the central bank of Norway and the country's pension fund manager. It sold 7.6 million shares during the quarter.
Another big seller of Berkshire Hathaway during the first three months of the year was the Bill & Melinda Gates Foundation Trust. It sold 5 million BRK.B shares in Q1 2021, reducing the holding company's weighting from 43.7% of the trust to 38.2%. However, it is still the trust's largest position by a considerable margin.
- Market value: $91.8 billion
- Billionaire investor: Chase Coleman III (Tiger Global Management)
- Shares sold: 6,859,687 (-24%)
Chase Coleman III, who runs Tiger Global Management, is one of the so-called "Tiger Cubs" because he once worked for Julian Robertson, the famed investor who ran the hedge fund for many years. Earlier this year, Tiger Global raised almost $4 billion for its thirteenth venture capital fund.
In November 2020, Tiger Global took Root (ROOT) public at $27 per share. It's lost around 60% of its value since.
Tiger Global's traditional investment portfolio had $43.5 billion in assets listed in its 13F for the first quarter. This included 20.8 million shares of Uber Technologies (UBER, $48.89) after selling down its position by 24%.
The investment firm first acquired shares of Uber in Q2 2019 at an average price of $42.27 per share. It's made a decent, if not spectacular, return in the six quarters since.
The biggest problem Uber faces at the moment is finding drivers. As a result, the average ride-hailing fares in March and April were 37% and 40% higher, respectively, from the year prior.
"We have not seen driver supply keep up with the demand growth in the U.S.," Uber CEO Dara Khosrowshahi said at the J.P. Morgan Technology, Media & Communications Conference in May, as reported by Gizmodo.
As a result of its sale of Uber stock in the first quarter, Uber is no longer one of Tiger Global's top 10 holdings, sitting in the 11th spot. Chinese e-commerce name JD.com (JD) remains its biggest holding with a 9.9% weighting.
- Market value: $214.4 billion
- Billionaire investor: Winslow Capital Management
- Shares sold: 1,942,514 (-100%)
Winslow Capital Management closed out nine stocks in the first quarter, including the sale of its entire position in Eli Lilly (LLY, $220.76), the Indianapolis-based pharmaceutical company. Of the stocks it closed out, only Tesla, at 1.5%, represented a more prominent position than LLY in the investment fund's $23.7-billion portfolio.
Winslow hadn't owned Eli Lilly for very long. It first bought shares in Q1 2020. It paid an average price per share of $146.49. Considering LLY remained near or above $200 for most of the first quarter, it's understandable why the firm sold in the first three months of the year.
Also on the mind of Winslow portfolio managers may have been the increased government scrutiny faced by the company. On May 27, Reuters reported that the U.S. Department of Justice (DoJ) is investigating LLY on allegations of record tampering and manufacturing irregularities at a plant in New Jersey.
The DoJ investigation stems from an April incident in which LLY plant workers alleged a former executive altered documents required by the U.S. Food and Drug Administration (FDA).
An internal investigation found no wrongdoing on the part of the Eli Lilly, but the company said it is fully cooperating with the Justice Department probe.
Fidelity National Information Services
- Market value: $90.0 billion
- Billionaire investor: Dan Loeb (Third Point)
- Shares sold: 2,136,422 (-100%)
Dan Loeb and the rest of the team at Third Point were busy selling stocks in the first quarter. The hedge fund closed out 32 positions during the quarter, with Fidelity National Information Services (FIS, $144.42) being the second-largest position unloaded by the firm, behind only Alibaba Group (BABA).
Third Point first bought shares of the payment services provider in Q3 2019, paying an estimated average price of $133.12 per share. If that's accurate, Third Point made a small profit on the trade.
Interestingly, it appears the activist investor has attracted some activism of its own. Third Point has a closed-end fund (CEF) – Third Point Offshore Investors – that trades on the London Stock Exchange (LSE). Asset Value Investors, who own 10% of the fund, believe that Loeb isn't doing enough to deliver for shareholders.
According to Asset Value Investors, the CEF has persistently traded at a 14% discount to net asset value in recent years, compared to a median average discount of just 4% for closed-end funds on the LSE. To date, the measures proposed by Third Point haven't gained much excitement from investors. The tables have indeed turned.
Analysts have a high opinion of FIS. Of the 34 covering the stock, 25 rate it a Buy or Strong Buy, with no outright Sell ratings. Further, it has a median target price of $171.79, well above its current share price.
- Market value: $6.3 billion
- Billionaire investor: Dan Loeb (Third Point)
- Shares sold: 2,305,900 (-100%)
Another one of the 32 positions Third Point sold out of in the first quarter was Planet Fitness (PLNT, $73.02). The fitness chain had a weighting of 1.4% at the end of the fourth quarter. That makes it the fifth-largest position completely exited by the hedge fund.
PLNT wasn't a long hold for Loeb. It first owned shares of the gym chain in Q3 2020, paying an average price of $72.77 per share. The hedge fund doesn't see much upside with the stock.
A possible clue is a recent Barron's article suggesting Planet Fitness shares could drop by 50% due to slowing growth. PLNT got hammered in the March 2020 stock market correction, falling from $88 to $24, before rebounding over the past year.
Many Americans decided the home workout isn't a bad thing. As a result, some estimates suggest as many as 25% of gyms could go out of business in the next few quarters.
However, not everyone is convinced the gym is a thing of the past.
And that's especially true if you happen to own a Planet Fitness franchise. They have fat margins relative to the rest of the industry, while the typical franchisee owns an average of 20 locations. These are not mom-and-pop businesses.
In May, Planet Fitness reported that it added 600,000 net new members in the first quarter of 2021, with all three months experiencing net member growth over the previous month. Business is coming back.
However, since going public in 2015, PLNT stock has rarely managed to stay above $80 for any period.
- Market value: $118.0 billion
- Billionaire investor: Theleme Partners
- Shares sold: 15,110,000 (-100%)
It's possible that London-based Theleme Partners unloaded 100% of its 5.4% position in General Electric (GE, $13.44) because of CEO Larry Culp's $124-million payday. A payday that wouldn't have happened if not for the industrial conglomerate's board cutting his targets in half last year due to the pandemic.
At GE's annual meeting in early May, more than 50% of GE shareholders voted against the company's executive compensation plan. Unfortunately, because the vote was non-binding, it's unlikely that the board will do anything about it.
It's not the first time Culp's made off like a bandit. At Danaher (DHR), where he left in 2015, he made more than $300 million in cash and stock in his role as CEO. There's a lot of money to be made by executives these days.
However, it's also possible Theleme sold because it made a nice short-term profit on its investment.
The hedge fund first acquired GE shares in the fourth quarter of 2020 at an average price of $10.80 per share. In March, it was trading well over $14. A sale at that point would have delivered a 29% return – not bad for two quarters.
Recent contracts secured by GE's renewable energy and power businesses could be helpful in GE stock reaching the $16.68 price target for Culp to get all of his long-term compensation. However, in order for the CEO to get paid, the shares also need to stay there for 30 consecutive trading days.
Bank of America
- Market value: $356.7 billion
- Billionaire investor: Steadfast Capital Management
- Shares sold: 6,400,957 (-100%)
The hedge fund reported $9.6 billion in assets on its 13F for the first quarter. It finished March with 53 holdings after selling out entirely from 10 stocks, including Bank of America (BAC, $41.62), which had a weighting of just under 2% at the end of 2020.
The hedge fund's largest holding is Fidelity National Information Services, a stock closed out by Third Point in the first quarter.
Steadfast first owned Bank of America in Q2 2015. It is estimated to have paid an average price per share of $30.31 in the six years since. Of the stocks closed out by the firm in the first quarter, it had owned the BAC the longest. The second-longest holding period of position closed out during the quarter is Autodesk (ADSK). The hedge fund had owned the software company since Q1 2016.
As the pandemic recovery continues, BAC bulls believe that the bank stock has more gains in store despite the stock surging more than 64% over the past year. One factor that might provide a tailwind for the bank is rising demand for business loans.
According to the Equipment Leasing and Finance Association (ELFA), loans for capital investments in April were $9.8 billion, 19% higher than a year earlier and up 5% sequentially from March.
"What we see so far in terms of capital equipment investment is indeed encouraging as we head into the summer months," Ralph Petta, CEO of ELFA, stated on May 25, as reported in The Globe and Mail.
While Steadfast was selling in the first quarter, stats like this help explain why others were likely buying.
- Market value: $71.2 billion
- Billionaire investor: Generation Investment Management
- Shares sold: 110,070 (-59%)
For those unaware, Generation Investment Management is the asset management firm co-founded by former Vice President Al Gore in 2004. Seventeen years later, it's grown to become a firm with $32.9 billion in assets under management, operating in 22 languages with 101 employees and partners in London and San Francisco.
Generation's fundamental philosophy is to allocate capital to "businesses that deliver positive, productive change," focusing on ESG (environmental, social and corporate governance) investing.
In the first quarter, Generation sold 59% of its shares in MercadoLibre (MELI, $1,427.23), Latin America's largest e-commerce company. The asset manager first owned MELI in the fourth quarter of 2017. It is estimated the average price paid per share is $300.39.
MercadoLibre's valuation is rich. It currently trades at 15.1 times sales. By comparison, Amazon.com is valued at 4.2 times sales.
Mercado Libre wasn't a significant holding of Generation. At the end of December, it accounted for just 1.4% of its $23.9 billion in assets reported on its 13F.
By contrast, Charles Schwab (SCHW) was the largest position trimmed by the firm in the first quarter. It was cut by 180 basis points to a weighting of 4.8%. Generation first bought SCHW in Q1 2016 at an estimated average price of $40.15.
Over the past three years, MELI has had an annualized total return of 67.5%, three times the return of the entire U.S. market over the same period. Perhaps the fact that it's down so far in 2021 is reason enough for Al Gore's firm to sell after holding for more than three years.
Philip Morris International
- Market value: $155.7 billion
- Billionaire investor: Veritas Asset Management
- Shares sold: 3,374,013 (-91%)
Veritas Asset Management is a London-based hedge fund that was founded in 2003. The firm has two investment groups: Global and Asia. According to its 13F, Veritas had $18.3 billion invested at the end of March.
One of those holdings is Philip Morris International (PM, $99.92). Philip Morris is one of the world's largest cigarette producers. It owns the Marlboro brand outside the U.S.
The company is in the middle of its transformation to become a smoke-free company. To date, Philip Morris has invested more than $8 billion in this transformation. IQOS is the company's heated tobacco system that uses electronics to heat the tobacco rather than burn it.
Despite all its progress toward a smoke-free world, Veritas decided to sell 91% of its PM stock during the first quarter. As a result of the sale, its weight in the portfolio went from 1.8% at the end of December to 0.2% by March 31.
Veritas first owned PM in the third quarter of 2018. Its estimated price paid per share is $67.83. That's significantly below where it currently trades, so the hedge fund has profited from the trade over the years.
Philip Morris stock has appreciated nicely in recent months. It has a total return of almost 34% over the past year. Much of this appreciation is related to its growing market share for IQOS. The company said its market share in areas where IQOS is sold increased by 170 basis points to 7.6% in the first quarter.
- Market value: $317.3 billion
- Billionaire investor: Philippe Laffont (Coatue Management)
- Shares sold: 4,974,143 (-44%)
According to Coatue Management's Form ADV, the company had $48.6 billion in assets under management as of April 19. Its Q1 2021 13F reported that it sold 44% of its Walt Disney (DIS, $174.66) holdings in the quarter.
Despite the sale of almost 5 million shares, Disney remained the asset manager's third-largest holding with a weighting of 5.9%. Coatue first owned Disney in Q2 2019, paying an average of $121.98 per share.
This would suggest that the sale was more about trimming its largest positions rather than abandoning the entertainment company at a time when its Disney+ video streaming platform is winning a significant number of new subscribers.
Coatue founder Philippe Laffont has ridden technology to some outsized returns in recent years. The portfolio manager also is a graduate of Julian Roberson's firm. Laffont founded the hedge fund in 1999.
"I truly believe that in every portfolio you need to ask yourself what is going to be more relevant 5 to 10 years versus today," Laffont stated at a 2018 conference in Las Vegas, as reported by Forbes. "The most interesting trend is that technology, which used to be mostly software and semiconductors and obscure things, it's coming everywhere, it's the future of cars and the future of transportation and every sector."
If you look at Coatue's top 10 holdings at the end of the first quarter, all 10 have a significant technology component in their businesses, including Disney.
- Market value: $42.7 billion
- Billionaire investor: Southeastern Asset Management
- Shares sold: 2,599,162 (-100%)
Southeastern closed out four positions in the first quarter. DuPont de Nemours (DD, $80.19) was one of them. The specialty chemicals company was also the largest position sold with a weighting of 4.1% at the end of December.
The asset manager didn't own DD for too long. It first bought the stock in Q1 2020, paying an average price per share of $34.10, well below its quarter-end closing price of $77.28.
DuPont was Southeastern's 11th-largest position according to its Q1 2021 13F. The firm's number one holding at the end of the first quarter was telecom Lumen Technologies (LUMN) – formerly CenturyLink – at 14.2%.
Of the 23 analysts covering DuPont, 13 rate it a Strong Buy, one says Buy and nine have it as a Hold. There are currently no Sell ratings. The median target price is $90.80, modestly above where it's trading at the moment. Based on the consensus analyst estimate for 2022 EPS of $4.38, DD is trading at 18.3 times forward earnings.
DuPont unveiled Q1 2021 results in early May that were better than expected, with all three reporting segments seeing organic sales increases during the quarter. Overall, organic sales rose 7% in the first quarter to $4.0 billion. As a result, DuPont raised its full-year sales outlook to between $15.7 billion and $15.9 billion in 2021.