Hedge funds entered 2020 on a bit of a roll. The Preqin All-Strategies Hedge Fund benchmark delivered an 11.45% return in 2019 – only the second time the industry has registered double-digit returns since the beginning of 2014.
The pressure was on to repeat the performance in 2020. But COVID-19 hit, and all bets were off. Billionaires and hedge funds with billions in assets have spent the first part of the year trimming or completely exiting positions.
As we’ve said in looking at billionaires’ top stock picks, it’s both interesting and constructive to know what the “smart money” is doing. That’s because they boast rich resources and deep connections to insiders that can give them insights into stock picks that most other people simply don’t have. It can be equally instructive to look at what they’re unloading, and why.
Here are 25 stocks that billionaires have been selling so far in 2020. Many of those sales were stocks most likely to be affected by the virus: airlines, hotels, retailers, restaurants, casinos and other businesses that can’t make money without people physically visiting their establishments or utilizing their services. In some cases, however, the “smart money” prudently took profits on holdings that were working quite well for them. And once in a while, you’ll find that some billionaires are ditching what other institutional investors covet.
Data is as of June 14. Stocks listed in alphabetical order. Data is courtesy of S&P Global Market Intelligence, WhaleWisdom.com and regulatory filings made with the Securities and Exchange Commission.
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MARKET VALUE: N/A
BILLIONAIRE INVESTOR: David Tepper (Appaloosa Management)
SHARES SOLD: 600,000 (-46%)
David Tepper, the billionaire owner of the Carolina Panthers and the manager of hedge fund Appaloosa Management, sold 46% of Botox maker Allergan during the first quarter, reducing its weighting in the Appaloosa portfolio from 6.2% at the end of December to 3.8% at the end of March, but it remained the firm’s seventh-largest holding.
Tepper wasn’t the only smart-money manager to sell off a large chunk of AGN. John Paulson’s Paulson & Co. shed roughly 2.1 million shares, or 77% of its stake, during the first quarter.
Of course, Allergan shares don’t exist anymore. On May 8, biopharmaceutical firm AbbVie (ABBV) closed its $62 billion deal to buy AGN after clearing U.S. antitrust hurdles, creating a combined entity that should generate $50 billion in annual revenues.
“The new AbbVie will be a well-diversified leader in many important therapeutic categories, with both on-market and pipeline assets, and our financial strength will allow us to continue to invest in innovative science and continue to serve unmet medical needs of patients that rely upon us,” AbbVie CEO Richard Gonzalez said upon the deal closing. “I am proud of both organizations and look forward to the opportunities ahead.”
What’s notable about the deal is that Allergan shareholders received $120.30 in cash and 0.8660 shares of ABBV for every share held. So it appears that Tepper and Paulson alike held onto some of their Allergan stock to roll into AbbVie. We’ll see if they maintained those stakes when they report their second-quarter 13Fs, which should happen in August.
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MARKET VALUE: $1.27 trillion
BILLIONAIRE INVESTOR: Peter Woo (Wharf Holdings)
SHARES SOLD: 223,452 (-100%)
Hong Kong real estate billionaire Peter Woo is worth an estimated $13.3 billion. On May 25, Wharf Holdings – a 73%-owned subsidiary of Wheelock Properties, a holding company controlled by the billionaire – announced it had sold 223,452 shares of Amazon.com (AMZN, $2,545.02).
Wharf’s announcement stated that it had sold Amazon shares between Aug. 5, 2019, and May 22, 2020, at an average price of $1,975 per share. Based on an average price paid of $1,083, Wharf was locking in an 82% profit on its investment in the e-commerce giant.
The sales totaled more than $440 million, which is no small sum. However, Wharf Holdings wasn’t a huge owner; had it held on to its stake, it would have ranked as the company’s 175th-largest shareholder.
Woo announced in February plans to take Wheelock Properties private, offering to buy the holding company’s stock he doesn’t already own for HK$12 per share. As part of the offer, Wheelock would distribute to its shareholders the company’s ownership interest in Wharf Holdings and its sister company, Wharf REIC, which have a market value of HK$124 billion.
“It’s a win-win-win situation for all three businesses, given the current situation that the global economy finds itself,” Justin Tang, head of Asian research at broker dealer United First Partners, said about the privatization. “Once this coronavirus (outbreak) clears, the Hong Kong protests might start again, so minority investors may think this (is) a good bail out deal.”
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MARKET VALUE: $67.0 billion
BILLIONAIRE INVESTOR: Chris Hohn (TCI Fund Management)
SHARES SOLD: 3,138,793 (-78%)
TCI Fund Management, which is short for The Children’s Investment Management, is a U.K. investment advisor and hedge fund run by billionaire investor Chris Hohn. TCI managed more than $30 billion for clients heading into 2020 and destroyed the hedge fund competition in 2019, generating a 41% return. That’s almost four times the hedge fund average.
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In TCI’s March 31 13F filing, TCI revealed it had sold 78% of its holdings in health insurance plan provider Anthem (ANTM, $265.74), reducing its remaining holdings to about $170 million, or just 0.81% of the $21.1 billion listed in its 13F.
Anthem was a recent purchase, with TCI Fund Management entering its stake in the second quarter of 2019. The same quarter, it launched a pharmacy benefits manager, IngenioRx. During the first quarter of 2020, the PBM generated $5.2 billion in revenue and operating profits of $349 million. Investors can expect this segment of its business to grow dramatically.
TCI might not have made much of a profit on ANTM, however; even if it sold at the Q1 2020 peak, Hohn would’ve enjoyed a 14% gain in that case – but depending on when it sold, it might have yielded a smaller return or even losses.
TCI made several sales throughout the quarter, including complete exits of stakes in TransDigm Group (TDG) and Northrop Grumman (NOC).
In case you’re wondering about Hohn’s favorite stocks, two of his top five are Canadian railroads: Canadian Pacific (CP) and Canadian National Railway (CNI), which combined account for over $4 billion in assets.
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Bank of New York Mellon
MARKET VALUE: $34.0 billion
BILLIONAIRE INVESTOR: Nelson Peltz (Trian Fund Management)
SHARES SOLD: 2,453,278 (-20%)
Trian Fund Management, run by billionaire Nelson Peltz, wasn’t alone in reducing its position in banking and global investments giant Bank of New York Mellon (BK, $38.44) during the first quarter. A total of 369 institutions, including 55 hedge funds, cut bait on the company.
Trian reduced its ownership by 20% in the first three months of the year to 9.7 million shares. But BK remains Trian’s sixth-largest holding, at 4.7% of the $6.9 billion equity portfolio. It sits behind more Peltz-like holdings including Procter & Gamble (PG), Sysco (SYY) and Mondelez (MDLZ).
Like most financial companies, Bank of New York Mellon has had a miserable 2020. BK shares are off 23.6% year-to-date – about a percentage point behind the broader financial sector, as measured by the Financial Select Sector SPDR ETF (XLF). It’s likely Peltz was trying to lock in some of the gains earned since Trian entered the position during Q1 2014.
An interesting note: In June, the SEC awarded $50 million to a former Bank of New York Mellon trader who tipped off the commission about the bank overcharging large clients on currency trades. The award is the single-largest in the history of the whistleblower program.
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MARKET VALUE: $440.3 billion
BILLIONAIRE INVESTOR: Bill & Melinda Gates (Bill & Melinda Gates Foundation Trust)
SHARES SOLD: 5,000,000 (-10%)
The bad news (if you’re Warren Buffett): During the first quarter of 2020, Bill and Melinda Gates’ foundation sold 5 million shares of Buffett’s Berkshire Hathaway (BRK.B, $181.21).
The good news: While that sounds like a large number, the foundation still held 44.9 million shares as of the end of the first quarter. That 1.8% stake in Berkshire Hathaway still makes up 47% of the foundation’s assets, so clearly Bill and Melinda Gates haven’t soured on the Oracle of Omaha.
This is a great example of why it pays to look further into billionaire stock sales and purchases.
The Gates Foundation’s transaction was part of a planned sale set up in 2017. The foundation said that over a roughly three-year period, it would sell 60 million shares of Berkshire stock that Warren Buffett had donated as part of his 2006 commitment to give away close to 100% of his wealth to charity.
“In my entire lifetime, everything that I’ve spent will be quite a bit less than 1% of everything I make. The other 99%-plus will go to others because it has no utility to me,” Buffett said at the time. “So it’s silly for me to not transfer that utility to people who can use it.”
The less privileged have benefited from Buffett’s grand gesture ever since.
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MARKET VALUE: $106.9 billion
BILLIONAIRE INVESTOR: Marshall Wace North America LP
SHARES SOLD: 1,304,102 (-99%)
London-based investment advisor Marshall Wace got its start in 1997. As of 2019, it managed $39 billion in assets. It brought on KKR & Co. (KKR) as a 25% partner in 2015 and has since pumped that percentage up to 40%.
Following the paper trail for Marshall Wace 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. Together, they had assets of $23.2 billion at the end of March that were invested across a few thousand stocks.
Marshall Wace North America was one of numerous institutional investors to shed Boeing (BA, $189.51) stock during the first quarter of 2020. It sold off roughly 1.3 million Boeing shares during the first quarter, reducing its stake – which it initiated in Q1 2017 – to a mere 6,718 shares. It has paid an average price of $360.59 per share. But it likely did most of the selling in March, when BA fell from $275 at the end of February to a low of $95 by the third week of March. Boeing stock finished the quarter around $149 per share, well down from where it started 2020.
Also, Marshall Wace LLP sold 15,849 shares, or 66% of its holdings, to finish March with a little more than 8,000 shares.
While BA shares have recovered somewhat in Q2, the company still has a long road ahead of it. In April, Boeing reported a $641 million loss and plans to permanently cut 10% of its workforce.
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MARKET VALUE: $50.5 billion
BILLIONAIRE INVESTOR: Dan Loeb (Third Point LLC)
SHARES SOLD: 5,000,000 (-100%)
Activist investor Dan Loeb’s firm exited several positions during the first quarter – a three-month period that saw Third Point’s investments lose 16% of their value.
One of those was Boston Scientific (BSX, $35.35). The medical device company previously accounted for 2.6% of Third Point’s portfolio, the 14th-largest position at the time. It first acquired BSX shares during the first quarter of 2019 at an average price of $38.80 per share, making it likely that Third Point made a small profit or broke even over the past year.
May was a busy month for Boston Scientific. It raised $2 billion by doing preferred and common stock offerings concurrently. The common offering sold 29.4 million shares, with an option to buy 3.8 million more, at $34.25 a share. The preferred offering sold 10.1 million shares, including an over-allotment option of 1.3 million shares, of 5.5% convertible mandatory preferreds at $100 each. BSX intends to use some of the proceeds to repay the $750 million that was outstanding on its credit facility due in April 2021. The rest goes toward general corporate purposes.
Third Point’s largest position is Baxter International (BAX), another medical equipment company that made up 15% of the portfolio as of the end of Q1 2020. But it didn’t escape the scythe, either – Third Point sold 5.9 million shares, or 33% of its stake in BAX, during the first quarter.
25 Stocks That Billionaires Are Selling | Slide 9 of 26
Chipotle Mexican Grill
MARKET VALUE: $27.7 billion
BILLIONAIRE INVESTOR: Bill Ackman (Pershing Square Capital)
SHARES SOLD: 563,078 (-32%)
Billionaire hedge fund manager Bill Ackman sold more than half a million shares of Chipotle Mexican Grill (CMG, $991.83) in the month of February at prices between $859.62 and $893.42. That was roughly a third of Ackman’s position, but he remains a top-10 investor in CMG with about 1.2 million shares, or a roughly 4.2% stake.
But don’t think this is a sign of bearishness on Ackman’s part. It’s still likely one of his favorite stocks.
For one, Ackman was just prudently taking some profits on a stock he first started accumulating in Q3 2016, at an estimated average price of $386.20 per share. In fact, Ackman wanted to buy Chipotle stock in March when it fell to $465 but was unable to do so because Pershing Square has a person sitting on the restaurant chain’s board. He called his hamstringing “the only big frustration” of the first quarter.
One other big sale by the hedge fund came in May, when Pershing Square unloaded its $1 billion investment in Berkshire Hathaway to raise cash to put to work in case the markets corrected again. That came after Pershing actually upped its investment in BRK.B during Q1, adding 1.4 million shares to the 4.02 million it held at the end of 2019.
An additional reason for unloading Berkshire stock: Ackman was disappointed that Buffett didn’t put its big cash hoard to use over the year he owned BRK.B.
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MARKET VALUE: $180.1 billion
BILLIONAIRE INVESTOR: 3G Capital
SHARES SOLD: 4,094,556 (-100%)
3G Capital, for those unaware, is the Brazilian private equity firm that has made huge, leveraged acquisitions in consumer favorites such as Anheuser-Busch InBev (BUD), Restaurant Brands International’s (QSR) Burger King and Kraft Heinz (KHC). It manages more than $26 billion in assets for clients.
The first quarter of 2020 saw 3G exit several communications investments, including Comcast (CMCSA, $39.46). It first acquired shares in CMCSA during the first quarter of 2018 at an average price paid of $38.63. Thus, 3G likely made money on its investment, but not as much as you’d like to have earned over a four-year investment.
Comcast stock was downgraded to Neutral (equivalent of Hold) in mid-May by Guggenheim analyst Mike McCormack. The analyst feels NBCUniversal will face major headwinds for the remainder of the year due to COVID-19 affecting revenues at its theme parks, filmed entertainment and advertising.
3G also sold out the hedge fund’s position in Fox A Class (FOXA) and Fox B Class (FOX) shares, as well as Charter Communications (CHTR) during Q1. Its largest position is now Carvana, an online used car retailer that makes up 17.6% of the equity portfolio.
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MARKET VALUE: $3.0 billion
BILLIONAIRE INVESTOR: Greenlight Capital
SHARES SOLD: 677,000 (-100%)
David Einhorn’s Greenlight Capital was the third-biggest seller of EchoStar (SATS, $30.28) stock in the first quarter behind Putnam Investments and Thornburg Investment Management.
Greenlight completely exited its position in EchoStar and six other stakes in Q1. The biggest splash of those sales was Einhorn’s exit from a 6.1-million-share position in General Motors (GM).
As for EchoStar, Greenlight entered the satellite communications and internet services provider during the fourth quarter of 2018. The hedge fund paid an average share price of $37.55 for the provider of satellite broadband services. If Einhorn was able to exit the position early in the first quarter when it was trading near $43, Greenlight would have made a tidy profit. If he sold closer to mid-March, when SATS was trading below $27, he might have suffered a considerable loss.
EchoStar recorded a 2% increase in first-quarter sales to $465.7 million, but operating income plunged 62% to $10.6 million.
As for Einhorn? He has had a rough year, with his Greenlight Capital funds down 16.6% through the end of May.
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MARKET VALUE: $651.2 billion
BILLIONAIRE INVESTOR: Peter Woo (Wharf Holdings)
SHARES SOLD: 2,576,491 (-100%)
Facebook (FB, $228.58) was the second of Wharf Holdings’ FAANG sales.
The company announced May 25 that it sold almost 2.6 million shares of Facebook stock at an average selling price of $195. As with Amazon, it sold the shares on several occasions between Aug. 5, 2019, and May 21, 2020, for net proceeds of $503 million.
Given that Wharf Holdings paid an average of $175.82 a share, that translates into a less-than-impressive 11% return.
Still, the gains reaped from both Amazon and Facebook might make his Wheelock Properties empire more attractive as he privatizes the firm.
Facebook itself is having one heckuva year, up 11.4% year-to-date versus a nearly 6% loss for the broader markets.
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MARKET VALUE: $69.4 billion
BILLIONAIRE INVESTOR: Warren Buffett (Berkshire Hathaway)
SHARES SOLD: 10,084,571 (-84%)
Warren Buffett has exited several positions in 2020, but he also hacked away at his Goldman Sachs (GS, $201.78) stake. After selling off 84% of its investment, which he initiated in 2013, Berkshire is left with 1.92 million shares worth $387 million – the remaining reminder of Buffett’s bailout of the investment bank in 2008.
For its $5 billion lifeline, Berkshire received preferred stock that paid a 10% dividend, along with warrants to buy 43.5 million shares of its stock at $115 each. The preferred paid $1.2 billion in dividends in the three years they were outstanding. On top of that, Berkshire received a $500 million premium when Goldman redeemed the preferreds in 2011.
The warrants were renegotiated in 2013. Berkshire has bought and sold the stock in the seven years since, but Q1 was a particularly deep cut likely meant to reduce Buffett’s exposure to the banking industry.
Buffett’s most earth-shattering stock sale this year, however, came in early May when Berkshire exited its positions in America’s four largest airlines at a loss. Buffett, once opposed to owning airline stocks, bought large stakes in the airlines in 2016 and had held ever since.
“The airline business changed in a very major way. The future is much less clear to me about how the business will turn out,” Buffett said at Berkshire’s annual meeting in May.
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Goodyear Tire & Rubber
MARKET VALUE: $2.2 billion
BILLIONAIRE INVESTOR: Lyrical Asset Management
SHARES SOLD: 9,203,229 (-98%)
Lyrical Asset Management, a fundamental value investor that has been managing money since 2009, manages $7.4 billion for clients, according to WhaleWisdom. And precious little of that is dedicated to Goodyear Tire & Rubber (GT, $9.42) after Lyrical shed 98% of its stake during the first quarter.
At the end of December, Lyrical owned 9.3 million shares that made up roughly 2% of the portfolio. Now it holds just 136,601 shares, which makes up just 0.02%.
So, why did it sell?
The tire producer’s sales and earnings are falling dramatically. Goodyear’s sales during the first quarter were $3.06 billion, 15% lower than a year ago. And its 60-cent-per-share adjusted loss was more than double analyst expectations for a 26-cent deficit. It’s possible that Lyrical felt Goodyear’s business was going to get worse in the second quarter and decided to redeploy the capital elsewhere.
Not every billionaire sees Goodyear’s glass as half-empty, however. During Q1, David Tepper’s Appaloosa established a new position in the tiremaker by purchasing almost 3.4 million shares of GT stock.
That’s the beauty of the markets: There are two sides to every story.
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MARKET VALUE: $617.6 million
BILLIONAIRE INVESTOR: P2 Capital Partners
SHARES SOLD: 18,570,778 (-100%)
P2 Capital Partners is a New York-based hedge fund that manages approximately $2.3 billion. It exited three positions during the quarter. Groupon (GRPN, $21.75) was the second-largest by stake size, at 3.3% of the portfolio; Canada’s Cott (COT), at 4.5% of the portfolio, was its biggest retreat.
P2 first bought GRPN shares during the first quarter of 2018 at an estimated price of $4.14 a share. Considering the stock traded between $3.13 and 49 cents per share during Q1, P2 Capital Partners almost certainly lost money in bailing from the discount marketplace.
Groupon is currently facing a class-action lawsuit that alleges the company violated federal securities laws by failing to disclose that its Goods category was experiencing fewer customer engagements and given the Goods segment drives sales, the company would have known that its sales were going to be materially weaker than in the same period a year ago.
GRPN currently is trading where it is because it announced poor fourth-quarter earnings in February. Worse than that, Groupon announced it was exiting the Goods category in North America during this year’s third quarter and internationally during the fourth quarter.
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Hertz Global Holdings
MARKET VALUE: $402.7 million
BILLIONAIRE INVESTOR: Carl Icahn (Icahn Enterprises)
SHARES SOLD: 55,342,109 (-100%)
You can’t hit home runs if you don’t swing for the fences.
That ought to be Carl Icahn’s motto in life. Of course, in the case of Hertz Global Holdings (HTZ, $2.83), the billionaire swung and he missed – badly.
On May 26, Icahn reported to the SEC that two of his affiliated companies (Icahn Partners LP and Icahn Partners Master Fund LP) sold 100% of their holdings in the car rental business at the bargain-basement price of 72 cents a share. As recently as March, Icahn was buying Hertz stock at prices between $7 and $8.
Icahn owned 39% of the company’s stock at the time of the sale. When it became apparent the company would file for bankruptcy, Icahn had little choice but to recoup whatever he could from the failed investment.
“Yesterday I sold my equity position at a significant loss, but this does not mean that I don’t continue to have faith in the future of Hertz,” Icahn said. “I believe that based on a plan of reorganization that includes new capital, Hertz will again become a great company.”
Icahn lost an estimated $2 billion from Hertz, or approximately 14% of his current net worth. Worse? Two weeks after Icahn exited his stake, shares briefly spiked above $6 amid rampant speculation in the stock.
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MARKET VALUE: $50.1 billion
BILLIONAIRE INVESTOR: Larry Robbins (Glenview Capital Management)
SHARES SOLD: 723,842 (-68%)
Billionaire Larry Robbins’ Glenview Capital Management trimmed or exited several significant stakes in Q1 2020, and that included a 68% cut in health insurer Humana (HUM, $378.72) shares.
Glenview is thought to have gotten into the stock in the fourth quarter of 2018 at an average price of $267.98 a share. During the first three months of the year, Humana’s stock traded between a high of $385.00 in February and a low of $208.25 in March. Considering that, and that his remaining stake is now priced at nearly $380 per share, Robbins is likely doing OK on his investment, which remains the fund’s 12th-largest position.
On May 29, Humana filed a disclosure report with the SEC that in its meetings with investors in June, the company will reaffirm its guidance for full-year adjusted earnings of $18.50 at the midpoint. That hasn’t changed from its guidance at the end of April despite the ongoing uncertainty caused by COVID-19.
On June 5, Goldman Sachs analyst Robert Jones initiated coverage of Humana with a Buy rating and a 12-month price target of $510. The analyst believes the company’s Medicare Advantage business will continue to gain market share, resulting in multiple expansion in the future for Humana’s stock.
While Humana remains widely held among the hedge fund crowd, 315 investment firms filing a 13F reduced their HUM holdings during the first quarter, versus just 73 that added to them.
The jury’s still out.
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Jacobs Engineering Group
MARKET VALUE: $10.5 billion
BILLIONAIRE INVESTOR: Ruane, Cunniff & Goldfarb
SHARES SOLD: 1,378,084 (-24%)
If you own shares of Jacobs Engineering (J, $80.49), don’t be too dismayed by Ruane, Cunniff & Goldfarb’s considerable stock sale in Q1 2020.
Yes, the disposal of almost 1.4 million shares was one of the hedge fund’s largest sales during the first quarter. But on a positive note, the global provider of engineering and construction services remains Ruane, Cunniff’s seventh-largest holding at 5.4% of the portfolio.
Besides, Ruane, Cuniff has paid an estimated $49.74 per share for Jacobs’ stock since initiating the position in Q4 2012. Given that J shares traded above $100 as recently as late February, it’s easy to understand why the smart money took some profits during Q1.
And in fact, given that the stock is trading close to $80 at the moment, any additional weakness might result in further profit-taking.
Also take heart in the company’s operational results. Q1 revenues grew 10.9% year-over-year to $3.4 billion, and adjusted earnings rose 12% to $186 million. And on May 6, the company said it expects fiscal 2020’s adjusted earnings to reach $4.80 per share – a modest 5% decline that seems fortunate considering the pandemic’s fiercer hits to other parts of the economy.
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MARKET VALUE: $187.5 billion
BILLIONAIRE INVESTOR: Marshall Wace LLP
SHARES SOLD: 2,746,985 (-85%)
During the first quarter of 2020, Marshall Wace LLP sold 2,746,985 shares of Pfizer (PFE, $33.75), which represented 85% of its holdings in the drug company. But its North American counterpart also ditched a large slug of its Pfizer holdings, selling more than 3.4 million shares representing 42% of its holdings.
Thus, together, the two entities sold nearly 6.2 million PFE shares during Q1, reducing its overall stake in the company by 55%.
Marshall Wace LLP first added Pfizer to the portfolio in the fourth quarter of 2016, paying an average price of $37.90 a share. Marshall Wace North America LP first added Pfizer to the portfolio in Q1 2017, paying $37.38 on average.
Pfizer’s stock traded as high as $40.97 in January and as low as $27.88 in March, so it’s unlikely that Marshall Wace made much money from its latest sales.
Longtime shareholders can likely relate to that lack of reward. Over the past five years, Pfizer has a total return of 3.4%, less than half the total return of the U.S. markets as a whole.
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SPDR Gold Shares
ASSETS UNDER MANAGEMENT: $63.3 billion
BILLIONAIRE INVESTOR: John Paulson (Paulson & Co.)
SHARES SOLD: 2,425,770 (-56%)
John Paulson, worth $4.2 billion at last check, cut his hedge fund’s ownership position in SPDR Gold Shares (GLD, $162.62) by 56% in the first quarter, lowering its ownership in the gold exchange-traded fund to about 1.9 million shares.
Gold lovers, fear not: GLD remains Paulson’s third-largest position.
When you consider that gold prices are up about 26% over the past 52 weeks, it’s understandable that Paulson took some of his hedge fund’s gold exposure off the table. It’s especially understandable when you consider that Paulson made a big bet on gold back in the Great Recession with middling results. Gold got as high as $1,921 in 2011 before falling back to earth when the expected surge in inflation failed to materialize, putting a dent in his hedge fund’s performance.
Perhaps he fears the same thing will happen in 2020.
Another billionaire that isn’t afraid of gold is Bridgewater Associates’ Ray Dalio. His hedge fund owns more than $600 million of GLD, making the ETF his second-largest position.
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SPDR S&P 500 ETF Trust
MARKET VALUE: $273.9 billion
BILLIONAIRE INVESTOR: Ray Dalio (Bridgewater Associates)
SHARES SOLD: 3,425,622 (-49%)
Speaking of Dalio, he took a massive chunk out of his largest holding during Q1. His Bridgewater Associates sold nearly half of its holdings in the SPDR S&P 500 ETF Trust (SPY, $304.21) – an ETF that tracks the S&P 500 Index.
Even after those sales, the S&P 500 tracker remained Bridgewater’s largest holding at 18.2% of the fund.
Bridgewater sold out of several other ETFs in Q1. It dropped 43% of its holdings in the Vanguard FTSE Emerging Markets ETF (VWO, $39.38), which remains its second-largest holding at 9.2% of assets. Dalio also cast off 41% of his stake in the iShares Core S&P 500 ETF (IVV), another S&P 500 tracker that still is his fourth-largest holding at 6.6% of assets.
These three low-cost funds account for more than a third of Bridgewater’s portfolio. The rest is spread among 647 stocks and funds.
WhaleWisdom data shows that 919 financial institutions reduced their holdings in SPY during the first quarter, including 133 hedge funds. Moreover, 186 financial institutions closed out their positions entirely; 57 of those were hedge funds.
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MARKET VALUE: $11.5 billion
BILLIONAIRE INVESTOR: Leon Cooperman (Omega Advisors)
SHARES SOLD: 1,160,802 (-100%)
Leon Cooperman exited United Airlines (UAL, $39.66) during the first quarter, months before Warren Buffett decided to do the same.
Cooperman had held United since the fourth quarter of 2013 and is estimated to have paid an average of $53.10 per share. in the first quarter, long before Warren Buffett decided to exit his airline stocks. If so, Omega Advisors lost a significant amount from its investment.
Cooperman’s hedge fund is said to manage $4.3 billion for clients. According to its 13F from December, UAL was the fourth-largest holding out of 60 stocks; only the hedge fund’s investments in Fiserv (FISV), Alphabet (GOOGL) and Cigna (CI) were larger.
Cooperman is said to be worth $3.2 billion, according to Forbes. That number likely would be higher if it weren’t for United.
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MARKET VALUE: $23.8 billion
BILLIONAIRE INVESTOR: Winslow Capital Management
SHARES SOLD: 3,587,053
Minneapolis-based investment manager Winslow Capital Management manages almost $19 billion for its clients. And during the first quarter, it exited a number of stakes, including in VF Corp. (VFC, $61.25), the apparel conglomerate best known for its Vans, The North Face and Timberland brands.
Winslow hadn’t owned VFC for very long. It picked up VF Corp.’s stock during the second quarter of 2019, paying an average of $90.61 per share. VFC has traded below that ever since its fiscal Q3 earnings report in late January. The company cut its full-year forecast thanks to declining demand for its Timberland brand and slowing growth at Vans.
Of note to long-time shareholders: In December 2018, John E. Barbey Jr. – the son of the company’s founder – died at the age of 102. In February 2019, trustees for Barbey’s will reported that Barbey’s various trusts owned 68.4 million shares of VFC stock at the end of 2018, representing 17.24% of its stock. On Feb. 7, 2020, the trusts reported that the shares shares owned had dropped to 39.7 million, representing 9.96% of VF Corp.’s stock.
Before too long, that stake might disappear from history.
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MARKET VALUE: $3.2 billion
BILLIONAIRE INVESTOR: Richard Branson (Vieco 10)
SHARES SOLD: 34,925,000 (-31%)
On May 14, Vieco 10, a subsidiary of Richard Branson’s Virgin Group, reported that it owned more than 112 million shares of Virgin Galactic (SPCE, $14.99), the Branson-founded commercial space travel company.
The billionaire has pursued this dream for years. It officially got underway in September 2004, when Virgin Galactic Airways was launched to much fanfare, and it went public in October 2019. Originally, Virgin Galactic’s management expected commercial spaceflight operations to begin in June 2020, but that timeline has been pushed back by COVID-19.
In the meantime, many of Branson’s hospitality businesses, which include Virgin Atlantic Airlines, have been severely hurt by the pandemic, forcing Branson to sell SPCE stock to help his other businesses survive during these troubling times.
On May 22, Vieco 10 reported that it had sold 22.4 million shares of Virgin Galactic stock, lowering its ownership stake from 53.3% to 42.7%. Then in June, it was reported that Branson was to sell up to 12.5 million shares through Credit Suisse at $15.30 per share. A June 5 regulatory filing showed that Vieco 10 was down to 77,290,438 shares, implying a stake of 36.7%.
Branson had said that he would sell $500 million in stock. The recent sales have hit that target, so we’ll see if any more take place in the future.
Despite these recent moves, Branson still is by far the largest owner of Virgin Galactic’s stock.
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MARKET VALUE: $208.6 billion
BILLIONAIRE INVESTOR: Larry Robbins (Glenview Capital Management)
SHARES SOLD: 2,088,178 (-100%)
The house that Walt built wasn’t one of Glenview Capital’s top 10 holdings starting out the year, but Walt Disney (DIS, $115.49) nonetheless represented a healthy 2.6% chunk of the fund’s assets. That was before Glenview opted to exit the stake, likely after seeing how devastating COVID-19 would be on Disney’s operations.
Of all the investment firms that sold 100% of their Disney holdings in the first quarter, Glenview sold the second-largest number of shares. It trailed only Oslo-based Norges Bank, which unloaded 17.7 million shares.
Robbins, who is worth almost $2 billion, tends to swing wildly between sprinting past the stock market and eating its dust. Through the first three months of 2020, Glenview is down 30.5%, which includes a 19.5% decline in March alone. It likely recovered some of those losses in April and May.
In 2019, however, Glenview delivered a 26.3% return that dwarfed the hedge fund community.
On June 4, Miller Tabak chief market strategist Mark Maley suggested that if Disney’s share price falls to $100, investors should back up the truck. If it gets to $100, you would think Robbins would consider renewing a position in the entertainment giant.
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MARKET VALUE: $114.7 billion
BILLIONAIRE INVESTOR: Gardner Russo & Gardner
SHARES SOLD: 11,143,204 (-88%)
Tom Russo’s firm manages almost $10 billion in assets for clients. And during the first quarter, Russo decided that those assets would be better spent elsewhere than Wells Fargo (WFC, $27.97), chopping 88% of Gardner Russo’s stake.
Gardner Russo’s exit represented only the fourth-largest sale of WFC shares during the quarter. Interestingly, the No. 1 spot again goes to Norges Bank, which sold more than 40 million shares.
Wells Fargo easily was its biggest offloading of the first quarter. WFC went from being 5.2% of the portfolio to just 0.4%. Gardner Russo also exited 83% of its stake in Altria (MO), but that position represented less than 1% of assets at the end of 2019.
On June 2, news surfaced that Wells Fargo, one of the largest lenders for auto loans in the U.S., will stop making loans to independent auto dealerships. That’s an about-face from its earlier growth in the space; the bank grew its auto loans by 19% in the first quarter, to $6.5 billion.
Wells Fargo had “an obligation to review our business practices in light of the economic uncertainty presented by COVID-19 and have let the majority of our independent dealer customers know that we will suspend accepting applications from them,” Natalie Brown, a spokeswoman, said in an email to CNBC.
WFC shares are having a miserable year, off 48% year-to-date – more than double the financial sector’s losses in 2020.
Author: Will Ashworth
Source: Kiplinger: 25 Stocks That Billionaires Are Selling