25 Stocks Billionaires Are Selling
The second quarter of 2021 saw America’s billionaires adjust a number of their stock holdings, whether it was adding or reducing positions, initiating new stakes or hitting the exits. But one thing of note, in Q2 and across all of 2021 so far, is that many of America’s wealthiest billionaire insiders have been selling stock in large quantities.
Interestingly, a recent study published by several economists found that while big-money investors – portfolio managers handling at least $600 million in assets – were very good at buying stocks, they weren’t as successful at selling them.
“The average stock they chose to buy outperformed the random dart-throwing monkey by 1.2 percentage points,” NPR’s “Planet Money” reported in August. “That might not seem like a lot, but with the power of compound interest, it really adds up over time. It makes these investors rock stars in the world of finance.”
“But then the economists looked at these investors’ performance when selling stocks. It turns out they’re bad, much worse than the monkey … If their clients had instead hired the monkey with darts to randomly choose which stocks to sell, the clients’ portfolios would have earned 0.8 percentage points more per year.”
Neverthless, studying which stocks asset managers are taking their capital out of is an interesting exercise for many retail investors. That’s largely because of the “why.” In some cases, they are selling to take profits. In other situations, they could be rotating assets into more appropriate investments based on the current economic environment.
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 investments 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 Sept. 2. WhaleWisdom.com and regulatory filings made with the Securities and Exchange Commission.
Axalta Coating Systems
- Market value: $6.9 billion
- Billionaire investor: Warren Buffett (Berkshire Hathaway)
- Shares sold: 13,887,037 (-100%)
Warren Buffett’s Berkshire Hathaway didn’t do a lot of selling in the second quarter. However, Axalta Coatings Systems (AXTA, $30.06) was one of the positions the holding company completely closed out.
While there was speculation that the paint and coatings company might merge with Buffett’s Benjamin Moore subsidiary, the stock’s sale puts that rumor to bed.
The holding company was Axalta’s largest shareholder as recently as Q4 2020, but the stake only accounted for 0.2% of the Berkshire Hathaway equity portfolio, which is currently valued at more than $324 billion.
As recently as December 2020, Berkshire held 23.4 million shares, suitable for a 10% ownership stake in Axalta. However, it sold 9.5 million shares in the first quarter and closed out its position in the second, unloading the remaining 13.9 million shares.
Buffett first acquired an 8.7% stake of AXTA in 2015 from the Carlyle Group, paying $560 million, or $29 per Axalta share. Carlyle bought Axalta from DuPont (DD) in February 2013 for $4.9 billion. It took the company public in November 2014, selling 50 million common shares at $19.50 apiece.
As of March 2016, Carlyle still owned 29.3% of AXTA. But by December 2016, it had completely sold down its stake.
- Market value: $336.8 billion
- Billionaire investor: Ruane Cuniff & Goldfarb
- Shares sold: 503,701 (-100%)
Ruane Cuniff sold out of its entire position in Mastercard (MA, $341.28) during the second quarter. The MA holding accounted for 1.7% of Ruane Cuniff’s $11.3-billion portfolio, according to its 13F report.
The institutional investor first acquired the payment processor’s stock in Q2 2006. It is estimated to have paid an average price of $6.67 a share for Mastercard, according to WhaleWisdom. That would give the investment manager plenty of gains to spend on the company credit card for a celebratory lunch.
Interestingly, its only other close-out position was Mastercard rival Visa (V). Ruane Cuniff sold 363,886 shares of V during the second quarter. It first bought Visa in Q1 2008, paying an average price of $44.01 a share. The stock ended the second quarter trading at $233.82 per share.
The payment processing giants have been good to Ruane Cuniff and its clients. However, by selling completely out of these positions, it also means the investment manager believes they are fully valued and then some.
The largest number of Mastercard shares sold during the second quarter came at the hands of Capital World Investors. It sold a little over 4 million shares during the three-month period, reducing its position to 5.5 million shares.
The Mastercard Foundation remains the company’s largest shareholder, with a weighting of 11.1% at the end of June.
- Market value: $27.9 billion
- Billionaire investor: Ruane Cuniff & Goldfarb
- Shares sold: 815,927 (-56%)
Ruane Cuniff was a lot busier trimming positions in the second quarter than closing them out. It reduced its holdings in 26 stocks during the three-month stretch. For example, its stake in Arista Networks (ANET, $363.91) was cut by 56%, from 4.1% of its $11.3-billion portfolio down to 2.0%.
ANET was the investment manager’s second-largest reduction by the number of shares. The largest was technical professional services firm Jacobs Engineering Group (J).
Ruane Cuniff sold more shares of Arista during the quarter than any other investment manager filing a 13F with the Securities and Exchange Commission (SEC). The hedge fund first acquired ANET shares in the second quarter of 2019 at an estimated average price of $203.39 a share.
The cloud networking solutions provider has generated a one-year total return of 59%, more than double the entire U.S. market. Year-to-date (YTD), it has a total return of 25%, also considerably better than the S&P 500.
Arista Networks reported healthy growth in the second quarter ended June 30. Sales rose 6.0% on a sequential basis and 30.8% year-over-year (YoY). Its non-GAAP (generally accepted accounting principles) net income in Q2 2021 was $216.8 million, 29.8% higher than a year earlier.
The investment manager may have felt that with paper profits at hand, there were likely better options available elsewhere, and opted to redeploy capital, turning the unrealized gains into actual ones.
- Market value: $197.4 billion
- Billionaire investor: Jim Simons (Renaissance Technologies)
- Shares sold: 12,841,586 (-100%)
Of all the stocks closed out by Renaissance Technologies in the second quarter, AT&T (T, $27.64) was by far the most significant. Yet, the wireless carrier only accounted for 0.5% of the hedge fund’s $80.1 billion in assets reported on its 13F.
Not only was AT&T the largest holding to be closed out by Renaissance Technologies in the second quarter, but of all the hedge funds closing out their position in the telecom, it sold the most T shares.
Of course, the big news surrounding AT&T during the second quarter was its announcement that it was spinning off its WarnerMedia subsidiary and merging it with Discovery (DISCA), home to networks such as HGTV and Food Network.
AT&T will get $43 billion in a combination of cash and debt securities. The new entity, Warner Bros. Discovery, will also assume some of WarnerMedia’s debt. AT&T shareholders will own 71% of the company, with Discovery shareholders owning the rest.
Renaissance likely sold T stock because the stand-alone company will cut its dividend payment in half upon the transaction closing.
The hedge fund’s portfolio held 3,406 stocks at the end of June. Renaissance’s number one position is biotech Novo Nordisk (NVO), with a weighting of 2.5%.
SPDR Gold Shares
- Assets under management: $58.2 billion
- Billionaire investor: John Paulson (Paulson & Co.)
- Shares sold: 1,894,252 (-100%)
Entering the second quarter, the SPDR Gold Shares (GLD, $169.25) accounted for almost 7% of Paulson & Co.’s portfolio. But, by the end of June, the hedge fund knocked down its position in the gold bullion exchange-traded fund (ETF) to 0%.
That could be a sign that the billionaire thinks gold is expensive, or he was interested in redeploying some capital. Paulson first acquired shares of the gold trust in Q1 2009. He is estimated to have paid an average of $103.73 per share. GLD ended the second quarter trading at $165.63.
Paulson also closed out stakes in a pair of pharmaceutical stocks during the three-month period. Together, Alexion Pharmaceuticals and Takeda Pharmaceutical (TAK) accounted for roughly 6.9% of the hedge fund’s $4.4-billion 13F portfolio at the end of June. Alexion was acquired by AstraZeneca ((AZN)) in July.
The Paulson & Co. 13F showed that it held 40 stocks at the end of the second quarter. Its largest position is drug manufacturer Bausch Health Companies (BHC), accounting for 18.2% of its overall portfolio. In addition, Paulson owns large positions in several gold producers, the biggest being NovaGold Resources (NG).
In July 2020, John Paulson announced that he would convert his hedge fund business into a family office, handing back all external capital to its investors.
- Market value: $18.3 billion
- Billionaire investor: John Paulson (Paulson & Co.)
- Shares sold: 8,133,790 (-70%)
While Paulson & Co. closed out seven holdings in the second quarter, it only trimmed four others – the largest being its 70% reduction in Viatris (VTRS, $15.13). The generic and specialty pharmaceutical company was formed in November 2020 when Pfizer (PFE) spun off its Upjohn business and merged that unit with Mylan to form Viatris.
VTRS accounted for 3.7% of Paulson’s portfolio at the end of the first quarter. When June wrapped up, that figure had dropped to 1.2%. It is still the billionaire’s 23rd largest holding.
Paulson got the Viatris shares due to holding Mylan stock before the merger. At the end of September 2020, he had 11.5 million shares of Mylan stock. Mylan shareholders owned 43% of Viatris after the merger, while Pfizer stakeholders owned 57%.
Viatris is in the middle of a restructuring that saw it lose $279.2 million in the second quarter. However, it’s right on track to meet cost-cutting targets from its merger. It expects to find $500 million in cost savings in 2021 and at least $1 billion by the end of 2023. In addition, it expects to pay down $6.5 billion of its debt by the end of 2023.
Paulson first acquired Mylan shares in Q1 2010.
- Market value: $7.8 billion
- Billionaire investor: Paul Marshall and Ian Wace (Marshall Wace)
- Shares sold: 3,053,107 (-51%)
UK.-based global investment manager Marshall Wace trimmed 608 of its 2,589 holdings during the second quarter. At the end of June, its 13F said it had $22.1 billion invested on behalf of clients.
In terms of shares sold during the second quarter, Marshall Wace unloaded 51% of its stake in iQiyi (IQ, $9.92), the Chinese video streaming company. It first acquired the shares in Q1 2021. It is estimated to have paid $16.62 a share, much higher than its current share price.
Unfortunately for iQiyi shareholders, while the company has been improving its financial picture in recent quarters, it has failed to attract investors because of the Chinese government’s crackdown on tech stocks.
In the second quarter ended June 30, IQ delivered a 3% YoY increase in revenues, with a fifth consecutive quarter of smaller operating losses than in the previous year.
KeyBanc analyst Hans Chung recently lowered his price target on iQiyi by 27%, from $26 down to $19. However, that is still double the stock’s current price and the analyst did maintain his Overweight rating, which is the equivalent of a Buy. He feels the content continues to get better and that should reduce subscriber churn rate, making it easier for IQ to become profitable.
- Market value: $258.6 billion
- Billionaire investor: David Tepper (Appaloosa Management)
- Shares sold: 385,000 (-100)
The billionaire owner of the Carolina Panthers closed out 12 stocks in the second quarter and reduced holdings in another 41. That was virtually the entire portfolio. According to its 13F for the three-month period, the hedge fund had $4.8 billion invested in 54 holdings.
Out of the 12 stocks Tepper exited, the 1.6 million shares of IQ was the biggest as far as number of total shares sold. But Salesforce.com (CRM, $264.15) was the largest position as a percentage of the portfolio, with a weighting of 1.2% at the end of Q1 2021.
The hedge fund first acquired shares in the cloud-based software company in Q1 2019 at an average estimated price of $170.13 per share. Again, this is a classic case of taking profits.
Salesforce currently trades at 10.8x sales. That’s considerably higher than its five-year average of 8.7x.
Appaloosa also reduced its exposure to PG&E (PCG), selling 43% of its position. This California electric utility went bankrupt in 2020, and affilliates of Appalloosa, along with other investors, made a $3.25 billion investment in the company as it emerged from Chapter 11. Still, PCG remains a top 10 position for Tepper.
Laboratory Corp. of America
- Market value: $29.8 billion
- Billionaire investor: Larry Robbins (Glenview Capital Management)
- Shares sold: 220,595 (-100%)
Glenview Capital Management closed out 10 positions during the second quarter. Laboratory Corp. of America (LH, $308.34) was one of them. It accounted for just under 1% of Glenview’s roughly $6 billion in assets invested before being completely sold in Q2.
The investment firm first acquired shares of the company in the second quarter of 2020, and paid an average price of $166.11 per share. This is well below where it’s currently trading, given how much Labcorp has benefited from COVID-19 testing. Investors can likely chalk up Glenview’s sale of LH to taking profits.
The largest-weighted position Glenview sold out of in the second quarter was artificial intelligence (AI) stock Nuance Communications (NUAN). It accounted for 2.3% of Glenview’s portfolio at the end of March.
In terms of investment managers closing out Labcorp in the second quarter, Allen Investment Management gets the nod for most shares sold at 1.2 million – roughly five times the number unloaded by Glenview.
- Market value: N/A
- Billionaire investor: Carl Icahn
- Shares sold: 16,729,960 (-100%)
Carl Icahn’s 13F at the end of the second quarter had $24.3 billion in assets across just 21 stocks. Over 55% of the billionaire’s portfolio is invested in Icahn Enterprises (IEP) – his own holding company and investment firm.
In the second quarter, Icahn closed out three stocks, the largest being Navistar International, which had a weighting of 3.1% at the end of March.
Navistar was acquired on July 1 for $3.7 billion by Traton (TRATF), the commercial truck unit of Volkswagen (VWAGY). Traton originally agreed to buy Navistar in November 2020 for $44.50 a share. However, it first had to secure regulatory approval for the purchase.
Traton initially tried to acquire Navistar for $35 a share before the pandemic. It came back with a better offer in October 2020, finally settling on a per-share price of $44.50 in November 2020. Although Icahn was looking for $50, the billionaire supported the final price for America’s largest independent maker of trucks and parts.
Icahn first took a stake in Navistar in the third quarter of 2011. He acquired almost 10% of its stock at the time because he felt its shares were undervalued. By the time Traton completed the Navistar deal in July, Icahn was the company’s largest shareholder.
- Market value: $7.2 billion
- Billionaire investor: David Einhorn (Greenlight Capital)
- Shares sold: 2,789,700 (-100%)
Greenlight Capital exited ADT (ADT, $8.69) in the second quarter, selling 100% of its shares. At the end of Q1 2021, the asset manager’s stake in the home security company represented 1.6% of its $1.6 billion in total assets.
David Einhorn’s hedge fund finished the second quarter with 71 holdings, the biggest being the 17.4 million shares of Green Brick Partners (GBRK) it owns. This position represents 24.9% of the Greenlight portfolio and a 34.3% ownership stake in Green Brick.
Why sell ADT?
Greenlight first started buying ADT in the fourth quarter of 2020, paying an average per-share price of $8.06. During the second quarter, ADT stock traded close to $12. Most investment managers would be thrilled with a 50% return. And it’s likely David Einhorn took his profits and went home.
Private-equity firm Apollo Global Management (APO) and its affiliated investment funds own more than 73% of ADT’s stock. While David Einhorn is jumping ship, APO is waiting to make a big payday. Patience is of the essence.
ADT has traded below its January 2018 initial public offering (IPO) price of $14 for most of its life as a public company. Over the past four years, it’s lost roughly 40% of its value. It’s impressive that Einhorn made so much money from this underachiever.
- Market value: $4.2 billion
- Billionaire investor: Apollo Global Management
- Shares sold: 12,946,324 (-100%)
Apollo Global sold its entire position in Fisker (FSR, $14.15) in the second quarter. That amounts to 1.4% of its $17.7-billion portfolio. Apollo first started buying FSR shares in Q4 2020 after the electric vehicle (EV) startup merged with a special purpose acquisition company (SPAC) in October.
Apollo paid an average price of $14.65 per share for its stake in Fisker. The stock ended Q2 at $19.28, and currently trades for approximately half its February peak near $29.
The plan for Fisker is to show off its first production vehicle, the all-electric Ocean SUV, at the Los Angeles Auto Show in November. Its manufacturing partner, Magna International (MGA), will begin production a year later. In 2023, FSR hopes to hit a monthly production rate of 5,000 vehicles or more per month. Its production agreement with Magna runs through 2029.
Among Apollo’s largest holdings is VICI Properties (VICI). It recently bought MGM Growth Properties (MGP) for $17.2 billion. The deal makes the real estate investment trust (REIT) one of the largest land owners on the Las Vegas Strip.
Apollo owned more than 6 million shares of VICI at the end of March. After selling 58% of its position in the second quarter, it now owns 2.5 million shares that account for 0.4% of its investment portfolio.
- Market value: $86.6 billion
- Billionaire investor: Ray Dalio (Bridgewater Associates)
- Shares sold: 1,831,169 (-100%)
In the second quarter, Bridgewater closed out 80 positions. Mondelez International (MDLZ, $61.92) was the largest holding it unloaded, with the position representing almost 1% of the asset manager’s $15.6-billion portfolio before the sale.
Interestingly, the top six stocks the billionaire’s hedge fund sold in the second quarter, when looking at total shares, were all consumer staples stocks. So Ray Dalio might be signaling that you don’t need to get too defensive just yet.
According to WhaleWisdom, 97 investment managers closed out their positions in Mondelez in the second quarter, including Bridgewater, which sold the most shares in the food company.
Bridgewater first owned MDLZ in Q1 2020. It paid an average price of $58.10 per share for the stock. If the hedge fund bought the shares during the March 2020 correction, it could have picked up MDLZ in the low $40s. It has consistently traded between $58 and $65 since the beginning of March 2021.
The MDLZ stock has turned in a poor performance over the past year. It has a total return of about 5%, well below that of the broader U.S. market.
SPDR S&P 500 ETF Trust
- Assets under management: $403.1 billion
- Billionaire investor: Ray Dalio (Bridgewater Associates)
- Shares sold: 1,163,138 (-37%)
The S&P 500 must be getting expensive. In the second quarter, Bridgewater sold 37% of its position in the SPDR S&P 500 ETF Trust (SPY, $453.19). Despite the sale, it remains the hedge fund’s largest position, accounting for 5.4% of its $15.6-billion portfolio.
Bridgewater’s second-largest holding at the end of June was Walmart (WMT), with a 4.7% weighting. The Vanguard FTSE Emerging Markets ETF (VWO) rounded out the top three positions, accounting for 4.1% of the portfolio.
Ray Dalio’s firm first bought SPY in the fourth quarter of 2007. Bridgewater is estimated to have paid an average price per share of $201.37, less than half its current share price.
SPY has been on an unbelievable run the past decade. For example, a $10,000 investment in the ETF a decade ago would today be worth about $42,500. By comparison, the same $10,000 investment in AT&T would be worth $16,400.
So far, in 2021, SPY has a total return of 21.2%. The S&P 500 hasn’t had a single pullback of 5% or more through the first nine months of the year, and August was the index’s seventh consecutive month of gains.
It looks like professional investors such as Dalio are taking some profits off the table.
- Market value: $46.2 billion
- Billionaire investor: David Siegel (Two Sigma Investments)
- Shares sold: 205,768 (-25%)
Two Sigma Investments had $44.1 billion invested in 3,960 positions at the end of June. Roku (ROKU, $346.49) remains the investment manager’s second-largest holding with a 0.6% weighting, even after selling almost 206,000 shares in the second quarter.
Still, Two Sigma holds 608,434 shares of the video streaming platform. It first bought ROKU shares in the first quarter of this year, paying an estimated average price of $325.77 per share.
While it’s probably only made $25 million or so on its bet thus far, the gains add up quickly if you multiply that over almost 4,000 stocks.
Two Sigma wasn’t the only one selling during the second quarter. Roku founder and CEO Anthony Wood sold 2.4 million shares of the stock in the three-month period. Wood still owns more than 20 million ROKU shares worth $7.1 billion.
After several years of beating the markets, Roku stock is trailing badly, up a modest 4.4% for the year to date. However, over the past 52 weeks, it’s a different story, with the shares boasting a more than 106% return.
- Market value: $116.6 billion
- Billionaire investor: Eagle Capital Management
- Shares sold: 14,130,056 (-100%)
Eagle Capital Management closed out six positions in the second quarter. General Electric (GE, $106.26) was its largest sale. The investment manager first bought GE stock in the fourth quarter of 2018 at an average price of $8.82 per share.
If you’re thinking it hit the jackpot on GE, you’d be partly right. The industrial conglomerate did a 1-for-8 reverse stock split on July 31. As a result, the new average price paid for GE stock was $70.56. So Eagle Capital still managed to generate a healthy return on the General Electric, considering the stock ended Q2 trading at $107.68.
According to WhaleWisdom, approximately 275 investment managers closed out their GE positions during the second quarter. However, Eagle Capital’s GE weighting of 4.6% prior to the sale was higher than any other firm reporting to the SEC.
Parkwood had the second-highest GE portfolio weighting (3.8%) before closing out of its full position in the second quarter. This privately owned company provides investment, tax and legal services to Cleveland’s Mandel family and charitable entities.
GE’s stock has rebounded nicely in the past year. Its total return over the past 52 weeks is 106.3%, and year-to-date, it is up 23% – both exceeding the performance of the market as a whole.
- Market value: $645.7 billion
- Billionaire investor: Eagle Capital Management
- Shares sold: 1,674,300 (-35%)
Warren Buffett’s holding company remains Eagle Capital’s 18th largest position despite the asset manager selling 35% of its Berkshire Hathaway (BRK.B, $285.05) stake in the second quarter. It now accounts for 2.4% of the hedge fund’s $35.0 billion in 13F assets.
Eagle Capital runs a focused portfolio of 61 stocks, with its top 10 holdings accounting for 58% of its assets. Its biggest is Google parent Alphabet (GOOGL), with a weighting of 9.2%.
The investment manager first bought Berkshire Hathaway stock in the second quarter of 2006, paying an average price of $115.80 a share. It has delivered solid, if not spectacular, results for Eagle Capital over the years.
Berkshire is beating the U.S. market as a whole in 2021. It has a total return of 22.9%, which is 210 basis points (one basis point is one-one hundredth of a percentage point) higher than YTD gain for the S&P 500. However, Berkshire’s returns lag the markets over more extended periods, such as five or 10 years.
On Aug. 30, Warren Buffett turned 91.
In recent years, he has been preparing the company and investors for the eventuality of his successor. He’s also been repurchasing a lot more of Berkshire stock. The company bought back $24.7 billion of its stock in 2020. YTD, it has repurchased $12.6 billion.
Greg Abel, who runs Berkshire’s non-insurance operations, will take the top job once Buffett steps down as CEO.
- Market value: $48.7 billion
- Billionaire investor: Chase Coleman III (Tiger Global Management)
- Shares sold: 13,036,566 (-32%)
Although Tiger Global cut its stake in Roblox (RBLX, $84.60) by roughly a third in the second quarter, the gaming stock remains its fourth-largest holding with a weighting of 4.5%. Overall, Chase Coleman’s hedge fund reduced positions in 16 out of 144 stocks in its $53.8-billion portfolio.
The firm’s top 10 holdings, which include Roblox, account for nearly 45% of its portfolio. The investment manager’s largest holding is Chinese e-commerce company JD.com (JD), which accounts for 7.5% of Tiger Global’s assets.
Coleman first bought Roblox shares in Q1 2021, paying an average price of $64.83 a share. So selling down its holdings by a third appears to be nothing more than a bit of profit-taking.
Roblox has been a public company since March. The online video game platform sold no shares to the public, opting for a direct listing. Its shares gained 54.4% on their first day of trading, based on its reference price of $45 per share. Since then, its returns have been choppy, though it did top the $100 per-share mark in June.
Roblox reported Q2 2021 results in mid-August. Revenue jumped 127% year-over-year, while free cash flow – the cash remaining after a company has paid its expenses, interest on debt, taxes and long-term investments to grow its business – increased more than 70% to $168 million. In addition, all of its user metrics are heading in the right direction.
That’s good news for Tiger Global’s remaining stake in Roblox.
- Market value: $78.0 billion
- Billionaire investor: Winslow Capital Management
- Shares sold: 6,427,413 (-100%)
Of the 10 stocks Winslow Capital closed out in the second quarter, Uber Technologies (UBER, $41.40) was its biggest sale. The hedge fund reduced its position to 0% from a 1.5% weighting at the end of the first quarter. Do-it-yourself (DIY) social media site Pinterest (PINS) and e-signature solutions specialist DocuSign (DOCU) were two other stocks Winslow closed out during the second quarter.
As of June 30, Winslow had 63 stocks invested in $25.8 billion in assets. Its largest holding is Microsoft, with an 8.9% weighting. E-commerce giant Amazon.com (AMZN) is the second-largest at 8.1%. The hedge fund’s top 10 holdings account for 46.2% of its portfolio.
Uber stock has suffered in 2021.
YTD, it has a total return of -18.8%, well below the U.S. market as a whole. Moreover, most of the losses have come in the past three months.
While the ride-hailing business has done well boosting revenue, it has come at the expense of profits. Uber reported an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $509 million in its June quarter, though this is still a 39% improvement from the year prior.
- Market value: $7.4 billion
- Billionaire investor: Dan Loeb (Third Point)
- Shares sold: 8,698,694 (-100%)
According to Third Point’s 13F, it closed out 33 positions during the second quarter, including its 3.2% weighting in IAA (IAA, $54.86). This company specializes in auctioning off vehicles destroyed in car accidents, etc. Insurance companies are some of its biggest clients.
Dan Loeb’s hedge fund had $17.1 billion invested in 127 stocks in the second quarter. This means it closed out 26% of its portfolio from the first quarter and added 33 stocks to replace the ones it disposed of, such as IAA. The top weighting for a new stock was fintech SoFi Technologies (SOFI), with the 28.9 million shares bought translating into a 3.2% weighting.
IAA was spun off from KAR Auction Services (KAR) in June 2019. As a result, KAR shareholders received one new IAA share for every share held in the parent. Overall, KAR shareholders have made out quite well.
Specifically, on June 27, 2019, the day before the split, one KAR share was worth $23.53. Today, KAR stock is trading at $17.69, while IAA is at $54.86. That’s a 133% return over 26 months.
Third Point first started buying IAA shares in Q4 2019 at an average price of $43.78, so it did reasonably well on its six-quarter hold.
- Market value: $32.8 billion
- Billionaire investor: Theleme Partners
- Shares sold: 134,959 (-100%)
Heading into the second quarter, AutoZone (AZO, $1,520.65) accounted for 6.3% the $3.4 billion in assets in the Theleme Partners portfolio. It was the investment manager’s largest position closed out during the quarter.
You could not find a more concentrated fund if you tried. It held nine stocks at the end of June, with COVID-19 vaccine maker Moderna (MRNA) accounting for 41.7%, or $1.43 billion. It’s a “best ideas” portfolio for the ages.
Theleme Partners first acquired AutoZone stock in the fourth quarter of 2020, paying an average price of $1,223.53 per share. AZO stock finished the second quarter at $1,492.22. It has continued to move higher in the third quarter.
AutoZone has a YTD total return of 28.3% and a one-year total return of 21.6%. Long term, its 15-year annualized return is 20.6%, almost double that of the entire U.S. market.
Analysts are mostly bullish on the auto parts stock. Of the 25 covering AZO that are tracked by S&P Global Market Intelligence, 10 have it at Strong Buy and four say Buy. Another nine give it a Hold rating and two rate it Sell. Overall, AZO stock is rated Buy. The average target price is $1,640.00, representing expected upside of nearly 8% over the next 12 months or so.
- Market value: $76.7 billion
- Billionaire investor: Steadfast Capital Management
- Shares sold: 1,245,629 (-100%)
Excluding the call and fund positions Steadfast held and closed out in the second quarter, Fiserv (FISV, $115.83) was the investment manager’s largest position it exited. At the end of the first quarter, the hedge fund’s stake in FISV accounted for 1.5% of its $10.8 billion in assets reported on its 13F.
While not quite as focused a portfolio as Theleme Partners, Steadfast finished the second quarter with 60 holdings. Social media giant Facebook (FB) is its top equity position at a 5.2% weighting. The asset manager’s largest 10 holdings account for 43.6% of its overall portfolio.
Steadfast first started buying shares of the financial services technology firm in the third quarter of 2019. It paid an estimated average price of $103.64 per share.
In February 2020, Fiserv sold 60% of its investment services business to private-equity firm Motive Partners for $510 million in net after-tax cash and a 40% equity interest in the business. The division was rebranded as Tegra118. In February 2021, Tegra118 merged with data provider Finantix and fintech InvestCloud. In June, Fiserv sold its remaining 40% interest in the business for $460 million.
Activist investor ValueAct Capital recently took a 1.6% stake in Fiserv. ValueAct plans to educate the markets about Fiserv’s recent changes to become a new world technology company.
- Market value: $50.0 billion
- Billionaire investor: Southeastern Asset Management
- Shares sold: 603,890 (-100%)
Southeastern Asset Management closed out Biogen (BIIB, $335.57) in the second quarter. The drug company accounted for 3.6% of the investment manager’s $4.7 billion in assets at the end of March. In addition, Biogen was the only stock the hedge fund closed out in the three-month period.
Southeastern first acquired Biogen shares in Q1 2021, paying an average price of $279.75 per share. Thus, it made an excellent return from its short-term investment in the Boston-based marketer of multiple sclerosis drug Fumarate, spinal muscular atrophy treatment Spinraza and anti-inflammatory medicine Benepali.
In June, the Food and Drug Administration (FDA) approved Aduhelm for the treatment of Alzheimer’s disease. The drug is being co-developed with Japanese pharmaceutical company Eisai (ESALY). Biogen gets 55% of the drug’s profits in the U.S. and 68.5% in Europe. Eisai receives 80% of the profits in Japan. They split the rest of the world fifty-fifty. Some analysts project peak sales of $10 billion annually.
Southeastern wasn’t the only one selling out of its Biogen position in Q2. Berkshire Hathaway and Renaissance Technologies each sold more than 600,000 BIIB shares in the three-month period.
- Market value: $2.3 trillion
- Billionaire investor: Marshall Wace North America
- Shares sold: 1,229,730 (-36%)
Marshall Wace North America finished the second quarter with $21.7 billion in 13F assets invested in about 1,400 stocks. Microsoft ((MSFT), $301.15) is the hedge fund’s fourth-largest holding. It accounts for 2.4% of its holdings, even after the asset manager sold 36% of its stake.
The trio ahead of it is Alphabet, Facebook and Amazon.com in ascending order.
Microsoft was one of 446 stocks that were trimmed in the second quarter. Marshall Wace also closed out 587 positions during the quarter. The top 10 holdings, including Microsoft, account for 23.7% of its overall portfolio.
It’s been a good year for (MSFT) stock. Its YTD total return is 36.2%, better than both its industry peers and the U.S. market as a whole. Over the past decade, Microsoft has generated an annualized return of 28.5%. As a result, a $10,000 investment a decade ago would be worth $145,000 today.
Magnolia Oil & Gas
- Market value: $3.9 billion
- Billionaire investor: Leon Cooperman (Omega Advisors)
- Shares sold: 1,994,548 (-100%)
Leon Cooperman’s portfolio had 67 holdings worth $1.8 billion at the end of the second quarter. Magnolia Oil & Gas (MGY, $16.36) wasn’t one of them. Omega Advisers closed out its entire position during the quarter. It was one of six stocks sold by the billionaire.
Entering the second quarter, MGY accounted for 1.4% of Cooperman’s portfolio. Of the stocks remaining, the top 10 account for 56.7% of the investment manager’s overall assets. Its largest holding at an 8.2% weighting is Alphabet, followed by home loan servicer Mr. Cooper Group (COOP) at 7.9% and blank-check company Athene Holding (ATHN) at 6.6%.
If you’re unfamiliar with Magnolia Oil & Gas, it is an independent oil producer operating in South Texas. It owns around 476,000 net acres producing 64.9 million barrels of oil equivalent per day. It generated 74% adjusted cash operating margins in Q2 2021, up 200 basis points from the first quarter.
The energy stock is up 132% YTD and 163% over the past year, as the rebound in oil prices has led to market-beating returns in 2021. Cooperman likely felt that having paid an average of $11.13 per share since Q2 2018 for his investment, it was time to redeploy the capital.