25 Stocks That Billionaires Are Selling
Billionaires and high-asset hedge funds have done plenty of selling in 2020. Here's what they've been unloading most recently, and why.
The third quarter of 2020 saw America's billionaires modify a host of their stock holdings, where it was adding or reducing positions, adding new stakes and hitting the exits.
Not every billionaire shuffled around, of course. Tesla (TSLA) CEO Elon Musk says he owns just one public stock – his own – and that's working out well for him. He recently surpassed Bill Gates to become the world's second-richest person with an estimated net worth of $127.9 billion due mainly to 2020's surge in Tesla stock. Musk started 2020 as the 35th wealthiest person on the Bloomberg Billionaires Index, but has been helped by a 600% year-to-date return in TSLA shares.
As for the entire cohort of billionaires on Bloomberg's list, they've collectively gained $1.3 trillion so far in 2020 – an increase of 23%.
That includes one particular subset of billionaires: operators of hedge funds and investment management firms, who have also seen their wealth increase. Naturally, then, we're curious about the most recent moves they've made.
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 their favorite investing ideas – but also which stocks 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.
Prices are as of Nov. 29. Data is courtesy of S&P Global Market Intelligence, WhaleWisdom.com and regulatory filings made with the Securities and Exchange Commission. Stocks listed in reverse order of the percentage selloff by the selected billionaire during the third quarter of 2020.
- Market value: $2.0 trillion
- Billionaire investor: Warren Buffett (Berkshire Hathaway)
- Shares sold: 36,326,710 (-3%)
The lone exception to the 20% threshold is Apple (AAPL, $116.59). Warren Buffett sold off just 3% of his holding in the iPhone maker during the third quarter.
But it was no small transaction, and thus worthy of inclusion here. Estimates put the Q3 2020 proceeds from the sale of AAPL between $3.5 billion and $5.2 billion.
When you have so much invested in one stock – a Buffett trait of keeping a narrow focus – it's not unusual to see a little trimming from time to time. And Apple indeed was and remains the largest position in the Berkshire Hathaway equity portfolio, finishing September with Apple at 47.8% of its equity portfolio, well ahead of No. 2 Bank of America (BAC) at 10.6%.
AAPL shares delivered a total return (price plus dividends) of nearly 59% between Jan. 1 and Sept. 30. That's an important stat because it enabled Berkshire's Apple weighting to go from 44.2% at the end of June to 47.8% at the end of September, despite selling 32 million shares of its stock.
Buffett isn't going anywhere. He knows a good thing when he sees it. Earlier this year, he talked about how he considers the Apple stock as a "third business," along with its insurance and railroad interests.
"It's probably the best business I know in the world," Buffett told CNBC in February.
- Market value: $25.9 billion
- Billionaire investor: Ruane Cuniff & Goldfarb
- Shares sold: 633,438 (-21%)
Although investment manager Ruane Cuniff & Goldfarb sold out of several different stocks during the third quarter, few of these sales generated significant proceeds.
Its largest sale in terms of shares sold during the quarter was Wayfair (W, $260.68), the online furniture and household goods retailer that came alive during COVID-19.
Ruane Cunniff sold 633,438 shares during the quarter. Based on a high of $349.08, a low of $196.30 and a midpoint of $272.69, the investment manager netted approximately $172.7 million. The investment manager first started buying W shares during the fourth quarter of 2018. It paid an average price of $94.08 for its shares, which means its latest sale generated approximately $113 million.
If you're long Wayfair, you needn't worry. The stock remains Ruane Cuniff's largest position with a weighting of 8.1% and a market value of $599 million.
In early November, Wayfair reported net income of $173.2 million, its second consecutive quarter of profitability after suffering under years of losses. Wayfair was one of the biggest winners from the pandemic as homeowners have spruced up their homes during COVID-19. And shares, up 189% year-to-date, reflect that.
Once the vaccines arrive, however, experts wonder if a return to more normal sales (along with Wayfair's traditionally high advertising expenditures) will send it back into the loss column in 2021.
Zoom Video Communications
- Market value: $134.1 billion
- Billionaire investor: Jim Simons (Renaissance Technologies)
- Shares sold: 2,008,176 (-27%)
Of all the sales done in the third quarter by the 25 billionaires and investment managers listed here, Renaissance Technologies' 27% reduction in the number of shares held in Zoom Video Communications (ZM, $471.61) was one of the most obvious acts of profit-taking.
Jim Simons, worth $23.5 billion at last check, still has Zoom as his No. 1 holding with 5.25 million shares worth about $2.5 billion as of the end of September – and that's after the sale of more than 2 million shares during Q3.
Renaissance paid an average of $212.42 per share, first acquiring the stock in the first quarter of 2020. No wonder, then, that he was excited to reap some profits during Q3, during which Zoom's stock traded at a high of $529.74, a low of $230.00 and a midpoint average of $379.87, for a potential six-month return of 79%.
But despite the share sales, Zoom's weighting in the portfolio has actually grown from 1.59% at the end of June to 2.46% at the end of September, indicating how well the stock has performed.
It will be interesting to see how much selling the hedge fund does in the final quarter of the year. That's because Zoom's share price hit a 52-week high of $588.84 on Oct. 19, 13 trading days after the end of the third quarter.
- Market value: $11.1 billion
- Billionaire investor: John Paulson (Paulson & Co.)
- Shares sold: 161,300 (-28%)
Paulson & Co. sold 28% of its holdings in German-headquartered molecular testing solutions provider Qiagen (QGEN, $48.49) during the third quarter – a quick turn on a position that the investment management firm initiated just a quarter prior.
John Paulson's firm first invested in QGEN during Q2, paying an average price of $42.81 a share. QGEN stock hit a 52-week high in early October, suggesting that Paulson & Co. took some profits off the table late in the third quarter.
The remaining 400,000-share stake is Paulson & Co.'s 22nd-largest holding.
So, what has Qiagen been up to? During the third quarter, it reported a 26% improvement in sales to $481.3 million, after having forecasted sales growth of between 16% and 21%. Meanwhile, adjusted profits of 58 cents per share were up 61% year-over-year. Qiagen has benefited from the strong demand for its products throughout the pandemic.
Also, during the summer, Qiagen shareholders voted down a proposed $11.5 billion takeover offer from Thermo Fisher Scientific (TMO). Qiagen was forced to pay a $95 million termination fee as a result.
Qiagen wasn't Paulson's largest share sale by the number of shares sold during the third quarter. That honor went to Brazilian wireless provider TIM. The hedge fund sold 256,773 shares, representing 20% of its holdings in the South American company.
- Market value: $4.8 billion
- Billionaire investor: Bill and Melinda Gates (Bill & Melinda Gates Foundation)
- Shares sold: 2,000,000 (-28%)
The Bill & Melinda Gates Foundation didn't do much selling during the third quarter, unloading part or all of just three stakes. By far, its most significant divestiture was the 28% reduction in its holdings of Schrodinger (SDGR, $69.60), an industry-leading provider of software solutions for drug development and materials applications.
It makes sense that the foundation would be involved in this kind of company. After all, Bill Gates is passionate about both software and drug development.
The foundation entered SDGR shares during the first quarter of 2020. It paid an average price of $43.12 per share. They're up considerably from its price paid.
Although the foundation sold 2 million shares in the third quarter, it still owned slightly less than 5 million shares at the end of September, making it the 11th-largest holding out of 26 positions.
Berkshire Hathaway (BRK.B) remains the foundation's largest position by far, representing roughly 45% of the $22.1 billion in assets reported in its 13F. On July 7, 2020, Warren Buffett donated 12.2 million Class B Berkshire shares to the foundation as part of a 2006 pledge.
- Market value: $163.7 billion
- Billionaire investor: Marshall Wace LLP
- Shares sold: 463,965 (-31%)
London-based investment advisor Marshall Wace got its start in 1997. As of 2019, it managed $39 billion in assets. In 2015, it brought on KKR as a 25% partner, and that has since been bumped up to nearly 40%.
However, following Marshall Wace's paper trail takes a bit of patience. That's because it has two 13F forms. One is for Marshall Wace LLP. The other is for Marshall Wace North America LP.
The former made several high-profile stock sales during the third quarter. Although T-Mobile US (TMUS, $131.90) wasn't its most massive sale by percentage sold in a top 20 holding – that honor goes to Alibaba (BABA) at 49% – the hedge fund did reduce its stake in the wireless provider to below 1% of assets in Q3.
Marshall Wace first acquired shares in T-Mobile in the first quarter of 2014, and it has paid an average of $103.46 per share over the years. During the third quarter of 2020, TMUS shares hit a high of $119.20 and a low of $103.43, so Paul Marshall and Ian Wace likely made some money on the share sale, but nothing close to a home run. That said, TMUS shares have had a great 2020, up 68% year-to-date.
In July, Financial Times reported that Marshall Wace was raising $1 billion to invest in companies that have high ESG (environmental, social and corporate governance) ratings, and it will short those companies it feels are doing a poor job in this growing area of investing.
- Market value: $748.1 billion
- Billionaire investor: David Tepper (Appaloosa Management)
- Shares sold: 1,155,000 (-34%)
The largest Q3 share sale by Appaloosa Management – the hedge fund co-founded by billionaire David Tepper, who owns the NFL's Carolina Panthers – was AT&T (T), at 4.45 million shares, or 49% of the hedge fund's holdings.
But Tepper also carved into holdings much bigger than AT&T, just the seventh largest stake by assets under management. That includes Alibaba (BABA, $276.48), previously tops at 12.6% of the portfolio – and still second-highest behind California utility PG&E (PCE) at 11.5%, even after selling 34% of the e-commerce company's shares.
Again, this seems like nothing more than prudent profit taking. At their peak in Q3, shares of the Chinese e-commerce giant had gained a little more than 40% year-to-date as online shopping becomes even more entrenched in everyday life.
The PCG position is noteworthy as well. The hedge fund first bet on PCG stock during Q4 2017. In July, after the utility emerged from bankruptcy, Appaloosa along with other investors participated in a private placement worth $3.25 billion in PG&E stock at $10.50 a share. This was part of a three-tranche, $8.72 billion equity offering. As a result, Tepper's stake jumped by 803% to nearly 81 million shares worth about $758 million as of the end of September.
As part of the utility's plan to exit bankruptcy, the company put $5.4 billion of cash and 22.2% of its stock into a trust for the California wildfires' victims caused by the utility's faulty equipment.
- Market value: $1.6 trillion
- Billionaire investor: David Tepper (Appaloosa Management)
- Shares sold: 83,500 (-37%)
Appaloosa didn't just sell out of Chinese e-commerce – he took profits on America's largest online seller, too. And while Tepper's hedge fund sold just 83,500 shares of Amazon.com (AMZN, $3,195.34) during Q3, the proceeds – based on a high of $3,522.25, a low of 2,754.00, and a midpoint of $3,138.13 – still would've been a nifty $262.0 million.
That's a large amount for any investor.
The 37% reduction in Amazon stock leaves Tepper with 141,500 shares worth $438.4 million at current prices and representing 7.9% of Appaloosa's $5.7 billion in 13F holdings. Amazon remains the hedge fund's sixth-largest holding.
Appaloosa first acquired AMZN shares during the first quarter of 2019. It's thought to have paid an average of $1,782.29 per share along the way, netting the fund a handsome profit.
As we transition into a Biden government that will undoubtedly listen to organized labor concerns, AMZN's rich stock price could take a hit. Amazon's treatment of frontline workers is frequently called into question.
"Amazon is a notoriously bad employer," Ron Knox, a senior researcher at the U.S. advocacy group Institute for Local Self-Reliance, told Equal Times. "It has a record of mistreating employees … and (there's) disturbing evidence of Amazon ignoring and flouting safety protocols during the pandemic."
It will be interesting to see if Appaloosa's stock sales accelerate in the fourth quarter and beyond.
- Market value: $21.6 billion
- Billionaire investor: Larry Robbins (Glenview Capital Management)
- Shares sold: 2,316,959 (-40%)
Glenview Capital finished the third quarter with $3.1 billion invested in a concentrated portfolio of 45 stocks. ViacomCBS (VIAC, $35.06), despite the hedge fund selling 40% of its shares, is still the 10th-largest holding with a weighting of about 3%. And Glenview Capital keeps things concentrated – its top 10 holdings account for 67% of the portfolio, including top holding Tenet Healthcare (THC) at a 15.2% weight.
The hedge fund first began acquiring Viacom shares in the second quarter of 2013. Glenview paid an average price of $45.62 per share. Shares eclipsed that point for several long stretches over the next few years, but Glenview has held on, to its detriment.
Viacom and CBS merged in December 2019. The merger brought the two companies back together after separating in 2006. For every Viacom share held, investors received 0.5965 shares of the new company. The two businesses previously tried to work a deal in 2016 and 2018.
Things have gone downhill from there. VIAC shares started dropping well before the rest of the market did this year, and they're still off by 16% year-to-date.
In March, the company put several non-core assets up for sale, including book publisher Simon & Schuster, which Penguin House recently announced it would buy for $2.175 billion.
- Market value: $6.0 billion
- Billionaire investor: Carl Icahn
- Shares sold: 14,722,025 (-41%)
Carl Icahn famously went long Herbalife (HLF, $49.21) in 2013 amid a spat with fellow billionaire Bill Ackman, who made a billion-dollar bet against the company. In February 2018, Ackman finally quit the position – and in March 2018, Icahn said he had made a billion dollars from Herbalife.
However, Icahn's love affair with Herbalife appears to be slowly coming to an end. During Q3, Icahn sold 41% of his stake, reducing it to 20.5 million shares, or a still-significant 5.5% of the overall portfolio. But that's down considerably from 8% at the end of Q2.
It has been a roller-coaster year for Icahn's HLF stake. He began 2020 with 28.2 million shares. At the end of Q1, he held 35.2 million. He stayed put in Q2, but ended the third quarter with 14.7 million fewer HLF shares.
Despite the sales, Icahn still owns 15.5% of the multi-level-marketing nutrition company. Also, Herbalife remains Icahn's second-largest holding behind Icahn Enterprises (IEP), which accounts for 60.2% of his $17.4 billion in publicly traded stocks.
Icahn first acquired Herbalife stock in Q1 2013. He's bought the shares at an average price of $10.55 a share, well below its current share price near $50.
In October, Icahn announced his son would return to Icahn Enterprises. As part of the arrangement, Brett Icahn could become CEO and chairman within seven years, replacing his father as Chairman and Keith Cozza as CEO.
In his previous role at Icahn Enterprises, the investment portfolio Brett Icahn was responsible for generated a six-year, annualized total return of 26.8%.
A talent for investing appears to run in the family.
- Market value: $555.2 billion
- Billionaire investor: Baillie Gifford
- Shares sold: 24,149,530 (-41%)
Baillie Gifford is a large U.K. investment management firm with $145 billion in assets under management. And while it cut its Tesla (TSLA, $585.76) holdings by 41% in the third quarter, the investment manager seems to remain plenty bullish on Elon Musk and his company.
Baillie Gifford first acquired shares in the electric vehicle maker in Q1 2013. It's estimated to have paid an average price of $8.38 a share, providing the company's clients with an excellent return on investment.
In early September, Tesla's shares fell after Baillie Gifford reported that its ownership stake had decreased from 7.67% in February to 4.25%. The daily loss on the news was Tesla's most significant drop in share price since the March correction. Of course, TSLA shares remain up 600% year-to-date, so the firm isn't exactly hurting.
Moreover, the investment firm said it intends to hold Tesla for the long term and buy more should its share price face a severe correction. Baillie Gifford trimmed its position due to restrictions on its weight on a single stock in a client's portfolio. It had nothing to do with concerns about increased competition, etc.
Indeed, Tesla remains Baillie Gifford's largest holding with 34.7 million shares worth nearly $15 billion as of the end of Q3.
- Market value: $117.7 billion
- Billionaire investor: Warren Buffett (Berkshire Hathaway)
- Shares sold: 110,202,265 (-46%)
Warren Buffett's purge of Wells Fargo (WFC, $28.46) continued in the third quarter, with Berkshire Hathaway selling 46% of its holdings in the beleaguered bank, leaving it with just 127.4 million shares.
Heading into 2020, Buffett's holding company owned 345.7 million shares.
Uncle Warren had been supportive for a long time as the management and board moved to change the company's culture and how the bank does business in the wake of numerous scandals. However, the longtime Wells Fargo shareholder – Berkshire has held WFC shares for more than 30 years – is thought to lost his patience after the bank hired a Wall Streeter as its new CEO, in opposition to his advice.
"They just have to come from someplace (outside Wells) and they shouldn't come from Wall Street," Buffett told Financial Times in 2019. "There are plenty of good people to run it (from the Wall Street banks), but they are automatically going to draw the ire of a significant percentage of the Senate and the U.S. House of Representatives, and that's just not smart."
To make matters worse, not only did the board hire Charles Scharf, a former JPMorgan Chase (JPM) executive, as its CEO, but it let him work out of New York despite being headquartered in California.
"That's outrageous" Charlie Munger, Berkshire's vice-chairman, told Bloomberg when asked about the arrangement.
Investors will surely be watching in February to find out if Berkshire will cut its ties completely.
VanEck Vectors Gold Miners ETF
- Assets under management: $15.3 billion
- Billionaire investor: David Einhorn (Greenlight Capital)
- Shares sold: 864,000 (-47%)
If you own gold, shares of gold miners, or an exchange-traded fund (ETF) such as the VanEck Vectors Gold Miners ETF (GDX, $34.23), the fact that David Einhorn sold 47% of Greenlight Capital's stake in the ETF is a good news-bad news situation.
The bad news is that the billionaire lightened his position by almost half, suggesting he believes gold is starting to lose its luster. However, the good news is that GDX is still Greenlight's ninth-largest position, accounting for 3.1% of its $1.2 billion in assets.
In his Q3 2020 letter to shareholders, Einhorn had a lot to say about the state of the markets – he suggested technology stocks are in a bubble – and about the state of America's political system and how the country has lost its centrist position.
As for gold, here's what he had to say:
"The only common ground between the two parties seems to be money-printing. Over $3.3 trillion has been printed year-to-date, which represents nearly 22% of all U.S. dollars in existence at the end of 2019," Einhorn stated. "Unsurprisingly, gold is outperforming. Investors who have argued against gold for decades are now buying some."
Greenlight continues to underperform for investors, however. Einhorn had a 5.9% return in the third quarter – 300 basis points less than the S&P 500.
iShares Core S&P 500 ETF
- Assets under management: $235.7 billion
- Billionaire investor: Ray Dalio (Bridgewater & Associates)
- Shares sold: 1,051,128 (-63%)
Ray Dalio continues to turn ETFs.
Of Bridgewater's top five sales during the third quarter, all were ETFs. The largest sale in terms of the number of shares sold was the iShares China Large-Cap ETF (FXI) at 1,089,587. However, it only accounted for 3.2% of Bridgewater's total portfolio before the sale.
While Bridgewater sold slightly more shares of the SPDR S&P 500 ETF Trust (SPY) during the fourth quarter, the hedge fund sold 61% of its position in the iShares Core S&P 500 ETF (IVV, $364.98), reducing its weighting from 8.7% before the quarter to 2.5% after.
Bridgewater first acquired the S&P 500-tracking ETF in Q3 2010. It paid an average price of $256.24 for its shares over the past decade. Based on a high of $360.26, a low of $310.25, and a midpoint of $335.26, it made approximately $83.1 million on its sale.
IVV still remains a solid core holding for investors looking for basic stock exposure. Earlier this year, iShares cut the management expense ratio of IVV to 0.03% from 0.04% as part of a broader swath of fee reductions.
"Nearly $200 billion in assets went from 4 basis points to 3 basis points," Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, told CNBC in early July.
- Market value: $162.7 billion
- Billionaire investor: Man Group PLC
- Shares sold: 1,392,124 (-74%)
If you're looking for an investment firm with experience, Man Group is it. The company, founded in the U.K. in 1783, has been managing money for a long time, and it currently boasts $113 billion in assets under management. Eighty-four percent of that comes from institutional investors, and the remainder is from high-net-worth individuals and other wealthy organizations and endowments.
It's a busy firm, too. Man Group's latest 13F filing with the SEC indicates that $25.4 billion was invested among more than 3,400 holdings.
Entering Q3, communications chipmaker Qualcomm (QCOM, $143.83) was its 17th-largest holding with a weighting of just less than 0.9%. However, during the quarter, Man Group sold nearly three-quarters of its holdings to reduce its ownership to just more than 0.2%.
Man Group first acquired QCOM shares in Q1 2018 and has paid an average price of $75.54 per share. QCOM currently trades for almost double that amount, so it's likely Man Group cashed out with an excellent return on its investment.
Qualcomm reported its fourth-quarter results on Nov. 4, and they were much better than analyst expectations. Sales of $6.5 billion were almost 10% better than the consensus, while adjusted earnings of $1.45 per share were 24% better than expectations.
Given the continuing growth of 5G technology, investors can expect Qualcomm to continue to benefit.
- Market value: $9.6 billion
- Billionaire investor: Leon Black (Apollo Global Management)
- Shares sold: 6,668,352 (-76%)
Leon Black's Apollo Global Management sold off a big chunk of its Vistra (VST, $19.59) holdings during the third quarter. Apollo held 8.7 million shares of the Texas energy provider at the end of the second quarter, or a 1.8% weight. After a reduction of 76% during the latest quarter, that stake now sits at about 0.3%.
Vistra is in the middle of transitioning to clean energy. In September, it announced Vistra Zero, a collection of zero-carbon power generation sources including solar, battery energy storage and nuclear. It also has seven new developments underway. Meanwhile, it will retire its coal plants in Illinois and Ohio.
Apollo's 77-stock portfolio at the end of September was valued at $12.1 billion. ADT (ADT) remained its largest holding as of the end of September, accounting for slightly less than 40% of the multibillion-dollar portfolio. That stake was reduced, too, by nearly 4.2 million shares, or a roughly 6% decline.
- Market value: 194.5 billion
- Billionaire investor: John Overdeck and David Siegel (Two Sigma Investments)
- Shares sold: 2,722,955 (-79%)
Two Sigma Investments has suffered losses in some of its quantitative investment funds this year because of increased volatility. For example, its risk-premia strategy had lost 11.5% in 2020 through Oct. 31, while its absolute-return fund lost 2.7% through the first 10 months of the year.
"Quants rely on data from time periods that have no reflection of today's environment," Adam Taback, chief investment officer of Wells Fargo Private Wealth Management, told Bloomberg. "When you have volatility in markets, it makes it extremely difficult for them to catch anything because they get whipsawed back and forth."
During the third quarter, Two Sigma, which manages more than $58 billion, sold 79% of its Intel (INTC, $47.45) shares, which it first started acquiring in Q2 2015. It paid an average of $59.46 for its shares of one of the world's largest chipmakers.
Intel's stock is losing ground to competitors such as Nvidia (NVDA) and Advanced Micro Devices (AMD), and the firm's stock was crushed this summer after it announced its next-gen chip was behind schedule. It doesn't help that the current business environment is smooshing margins, too; in the third quarter, Intel's operating margins were 36%, 8 percentage points lower than a year earlier.
INTC shares are down more than 20% this year.
Liberty Global Class C
- Market value: $12.7 billion
- Billionaire investor: Eagle Capital Management
- Shares sold: 9,587,368 (-81%)
Eagle Capital's sale of almost 10 million Liberty Global Class C (LBTYK, $21.82) shares was its largest in terms of sheer share volume during the third quarter. However, it was only the company's 23rd-largest holding going into Q3, so its relegation to 34th isn't that precipitous a drop.
The remaining stake is worth $44 million, which is child's play compared to top holding Microsoft (MSFT), which Eagle also sold off but still remains king at $2.6 billion, or 9.3% of assets.
But any large sales are noteworthy because Eagle Capital, which has been in business for more than three decades, has always managed its clients' money with a long-term approach. It invests in a concentrated portfolio of large-cap stocks, and it rarely turns the mover.
Liberty Global, by the by, is one of many companies tied to billionaire John Malone. The European cable company boasts systems in the U.K., Switzerland, Belgium (60% ownership), the Netherlands (50%-owned), Ireland, Poland and Slovakia.
Eagle first acquired shares in the company in the third quarter of 2005. It has paid an average of $28.47 per share over the years. Over the past 15 years, however, LBTYK shares have generated an annualized total return of 6.2% – less than half the performance of its peers in the entertainment sector.
- Market value: $64.5 billion
- Billionaire investor: Ken Griffin (Citadel Advisors)
- Shares sold: 7,435,643 (-84%)
Citadel Advisors' 84% reduction in its General Motors (GM, $45.06) stake isn't a big deal as far as Citadel is concerned. The automaker was a meager position amid a scattered portfolio of more than 12,000 holdings.
But the sale was likely meaningful to GM. Only two other institutions – Brock Capital Group and UAW Retiree Medical Benefits Trust – sold more shares during the quarter, unloading 40 million shares, which is about five times Citadel's divestiture. Citadel's remaining stake is a little more than 1.3 million shares.
Why did it sell?
Citadel first acquired shares in the company in the fourth quarter of 2010. It paid an average of $36.54 a share. Based on the fact GM's shares now trade in the mid-$40s, it's likely that the hedge fund decided a small profit was better than none over such a long time.
It's more than likely that Citadel bought its shares shortly after GM went public on Nov. 23, 2010, after emerging from bankruptcy. It has not had a good decade compared to the S&P 500.
- Market value: $91.6 billion
- Billionaire investor: Tom Russo (Gardner Russo & Gardner)
- Shares sold: 4,779,988 (-99%)
Tom Russo's hedge fund might have sold almost all of its position in the over-the-counter shares of U.K. liquor giant Diageo (DGEAF, $39.61), but it's not as dramatic an exit as it might seem – but it's still a big exit.
Gardner Russo evacuated roughly 4.8 million DGEAF shares during Q3, first acquiring them in Q1 2011 at an average price of $21.90 per share. As of the end of September, it had just 33,086 left worth $1.1 million.
You see, Gardner Russo retains a much larger position in the company's New York Stock Exchange-listed shares (DEO, $156.68). It also dipped out of some DEO shares, but only about 32,073 – a much smaller 14% reduction in its holdings. Gardner Russo first acquired these shares in the first quarter of 2001 at an average price of $157.66 per share.
That said, Russo Gardner still reduced its overall exposure to Diageo from $192.1 million in Q2 to just $31.1 million in Q3 – an 84% haircut.
In this case, Russo might have just run out of patience. For instance, DEO shares are down 4.6% year-to-date versus a nearly 15% gain for the broader market on a total-return basis. Over the past 10 years, DEO trails the S&P 500 by 276.4% to 183.2%.
One of Diageo's most famous brands is Guinness beer. Recently, the company launched Guinness 0.0 in Britain and Ireland. The non-alcoholic version of the beer is expected to be rolled out to the rest of the world in 2021. Diageo says it took the company four years to figure out how to change the 261-year-old recipe to an alcohol-free version.
- Market value: $3.1 billion
- Billionaire investor: Chris Hohn (TCI Fund Management)
- Shares sold: 12,632,780 (-100%)
In its most recent 13F, TCI Fund Management reported that it sold its remaining 12.6 million shares in Univar Solutions (UNVR, $18.29), a global distributor of chemicals and ingredients. It started this year with 16.7 million shares (TCI sold off 20% of its stake in Q2.)
It was a short holding for TCI, which began accumulating the company's shares in Q1 2019 and is estimated to have paid an average of $22 per share. The stock has been trading at less than $19 for most of the time since March, and it appears that Chris Hohn decided to cut his losses rather than wait around for it to recover to January 2020 levels.
But it's difficult to see why the billionaire invested in the company in the first place. Univar's revenues have been relatively stagnant in recent years, only growing due to its $2 billion cash-and-stock acquisition of Nexeo Solutions in September 2018. Nexeo had just $29.4 million in net income in fiscal 2018 from $4.0 billion in sales.
Nexeo shareholders received $3.29 per share in cash and 0.305 shares of Univar stock that were valued at $8.36 for an implied value of $11.65 per Nexeo share. Univar shares were valued at $27 a share at the time of the sale, 48% higher than today.
- Market value: $30.6 billion
- Billionaire investor: Chase Coleman III (Tiger Global Management)
- Shares sold: 800,000 (-100%)
Chase Coleman III, who runs Tiger Global Management, is one of the so-called "Tiger Cubs" because he worked for Tiger Management, run by famed investor Julian Robertson, before going out on his own. Tiger Global has invested in public equities since 2001 and private equity since 2003. It focuses on the internet, software, consumer and financial technology industries.
During the third quarter, Tiger Global exited Chewy (CHWY, $74.25), the retailer of all things related to pets that was spun off from PetSmart in June 2019.
It wasn't a large position for the hedge fund – the 93rd largest, according to its 13F – but it was profitable. According to WhaleWisdom, Tiger Global first acquired shares in the pet retailer in Q3 2019, paying an average price of $35 for its position. CHWY stock peaked just above $70 per share during the third quarter of this year, so it's possible Coleman doubled his money.
Chewy has significantly benefited from COVID-19. The company added more customers between February and July 2020 than it did for all of 2019. And while PetSmart paid $3.4 billion for Chewy in 2017, the pet e-tailer is now worth $30.6 billion, roughly nine times the price paid back then.
It will be interesting to see if Chewy can keep rolling once COVID-19 isn't a big issue. Coleman doesn't seem to think doesn't think so.
- Market value: $297.1 billion
- Billionaire investor: Winslow Capital Management
- Shares sold: 1,514,684 (-100%)
Winslow Capital Management manages more than $23 billion for its clients. And not a cent of that will be tied up in Home Depot (HD, $275.99) during the fourth quarter.
In fact, the Minneapolis-based investment manager sold 100% of its holdings in four different stocks: Home Depot, Fiserv (FISV), GoDaddy (GDDY) and BioMarin Pharmaceutical (BMRN). Of the four, Home Depot had the largest weighting in the portfolio before being sold at 1.9%. If still held, Home Depot would be the investment manager's 16th largest position.
But don't weep for HD. It did just fine for Winslow. The stock's 26.4% year-to-date gain is more than double the S&P 500. Winslow first acquired its shares in HD in the first quarter of 2020 at an estimated average price of $216.21. During the third quarter, Home Depot traded at a high of $292.95 and a low of $246.22. It's easy to see why Winslow chose to take some quick profits.
That said, investors might not necessarily benefit from following Winslow completely out the door. The retailer's latest earnings suggest that Home Depot has even more growth ahead of it. In the quarter ended Nov. 1, HD enjoyed same-store sales growth of 24% in the quarter, well clear of the analyst estimate of 17.4%.
On Nov. 16, Home Depot announced that it would acquire HD Supply Holdings, a former subsidiary, for $56 a share and an enterprise value of $8 billion. That's about the same amount it sold the unit for in 2007.
- Market value: $210.7 billion
- Billionaire investor: Dan Loeb (Third Point)
- Shares sold: 1,250,000 (-100%)
Nike (NKE, $134.25) wasn't the largest holding of nine holdings that Third Point closed out during the third quarter. (The footwear and apparel giant accounted for approximately 1.7% of the hedge fund's total portfolio.) But it was nonetheless a notable exit.
Third Point started accumulating Nike shares in the second quarter of 2020, paying an average price of approximately $98.05, suggesting the hedge fund sold its shares to take quick profits in the quarter.
He won't benefit from the bigger dividend. Nike announced Nov. 20 that it would raise its quarterly payout by 12% to 27.5 cents per share. That represents a meager 0.8% at current prices, but remember: Dividend growth adds up over time.
Third Point delivered its shareholder letter on Oct. 15. The billionaire generated a Q3 2020 return of 11.7% on its flagship Offshore Fund, 280 basis points more than the S&P 500. Through Sept. 30, it had an annualized return of 14.2%, 570 points higher than the index.
In his shareholder letter, Loeb pointed out that the Federal Reserve may be eager to nurse the economic recovery post-COVID, which means interest rates could remain low for longer than typically expected after a recession.
- Market value: $369.5 billion
- Billionaire investor: Leon Cooperman (Omega Advisors)
- Shares sold: 310,000 (-100%)
Leon Cooperman got out of managing money for clients in 2018, converting Omega Advisors into a family office. But at the end of the third quarter, Cooperman still had assets of more than $1 billion spread across 41 different stocks.
And that's a much tighter portfolio than it was a quarter earlier.
Cooperman closed out six stakes and reduced his assets in nine others during the third quarter. Of the complete exits, JPMorgan Chase (JPM, $121.22) accounted for the largest part of his billion-dollar portfolio, with a weighting of 3.3% at the end of the second quarter.
Cooperman first acquired the bank stock in Q1 2020 at an average price of $91.72 per share. JPM crossed the $100 threshold multiple times in Q3, so the billionaire likely generated decent profits on his approximately six-month hold.
In November, the long-time investor discussed his thoughts on the future direction of the stock markets.
"I think the near-term outlook is favorable because of Fed policy, because of the apparent election outcome, and I think that we will get, if necessary, we will get a stimulus bill and I think we'll get good news on the vaccine for the virus," Cooperman told CNBC. "Longer term, I probably have a dissenting view than Wall Street because I'm of the concern as to who pays (for) the party when the party is over."