In this article, we will be looking at 12 stocks to sell according to Motley Fool. To skip our detailed analysis of current market dynamics heading into 2023, you can go directly to see the 5 Stocks To Sell According to Motley Fool.
Motley Fool Asset Management focuses on high-quality growth companies, and it is constantly reviewing its current holdings in light of current stock market trends to ensure it maximizes its gains while minimizing its losses.
In 2022, the stock market indisputably entered the bearish territory. However, considering most investors are opting for safer investment strategies today and the economy is slowly beginning to mend itself, major financial institutions have hope for the economy and market in 2023. According to a JPMorgan report on 2023 long-term capital market assumptions published in 2022, the long-term global inflation forecast for 2023 stands at 2.6%. JPMorgan analysts expect the inflation rates of today to subside significantly over the next two years. They also raised their forecast annual return for a US dollar 60/40 stock-bond portfolio over the next 10-15 years from 4.3% to 7.2%.
We have used Motley Fool Asset Management's 13F holdings data for the third quarter of 2022 to pick the stocks for our list below. The investment management company either completely sold off its stake or reduced it in these companies during the third quarter of 2022. We have also used Insider Monkey's hedge fund data for the third quarter to show hedge fund sentiment on these stocks. They are ranked on the basis of the number of hedge funds holding stakes in them, from the lowest to the highest.
Stocks To Sell According to Motley Fool
12. Cardlytics, Inc. (NASDAQ:CDLX)
Number of Hedge Fund Holders: 24
Cardlytics, Inc. (NASDAQ:CDLX) is an advertising company based in Atlanta, Georgia. The company offers the Cardlytics platform, a proprietary native bank advertising channel. The platform enables marketers to reach customers through their network of financial institution partners with digital channels like mobile applications and email.
Motley Fool Asset Management has decreased its stake in Cardlytics, Inc. (NASDAQ:CDLX) by 51% as of the third quarter. Analysts forecast a bleak earnings outlook for the company is 2023, expecting it to lose $2.35 per share this year and $2.09 per share in 2024. As of December 2022, Cardlytics, Inc. (NASDAQ:CDLX) had $255 million in liabilities compared to $249 million in assets. This indicates a weak near-term financial position as well.
Cardlytics, Inc. (NASDAQ:CDLX) was found among the 13F holdings of 24 hedge funds in the third quarter, with a total stake value of $126.7 million.
Headwaters Capital, an investment management firm, mentioned Cardlytics, Inc. (NASDAQ:CDLX) in its fourth-quarter 2021 investor letter. Here's what the firm said:
“Sells: Cardlytics (“CDLX”). The CDLX position was sold during the quarter as it had become an opportunity cost in the portfolio. CDLX was a small position at the beginning of the year and has subsequently underperformed throughout the year due to a couple of poor strategic acquisitions along with a depressed spending environment from its customer base. The acquisitions were particularly concerning given that the company has not articulated a clear strategic rationale for the deals and have delayed the company’s path to profitability given that both of the acquired companies are generating losses. Given the small size of the position and the need for capital for more attractive investment opportunities, the entire CDLX position was sold during the quarter.”
11. Landstar System, Inc. (NASDAQ:LSTR)
Number of Hedge Fund Holders: 25
Landstar System, Inc. (NASDAQ:LSTR) is a trucking company based in Jacksonville, Florida. The company provides integrated transportation management solutions in the US, Canada, Mexico, and internationally. It operates through its Transportation Logistics and Insurance segments.
Baird analyst Garrett Holland holds a Neutral rating on Landstar System, Inc. (NASDAQ:LSTR) shares as of February 3.
Motley Fool Asset Management reduced its stake in Landstar System, Inc. (NASDAQ:LSTR) by 5% during the third quarter.
There were 25 hedge funds long Landstar System, Inc. (NASDAQ:LSTR) in the third quarter, with a total stake value of $250.9 million.
“Landstar System, Inc. (NASDAQ:LSTR) reported +53% revenue growth during the quarter which drove over +60% growth in earnings per share. Despite the strong results over the past few quarters, the stock peaked back in November of 2021 as investors have begun trying to time the end of the economic cycle, using Landstar as a proxy for economic activity. We are less concerned about where we are in this particular macroeconomic cycle, not only because the market has already discounted a slowdown but also because the underinvestment in long-haul drivers has been a multi-decade phenomenon that will not likely be solved even if consumer demand normalizes over the next few quarters. We think Landstar should generate excess returns over time because it has been one of the few companies that has been steadily investing in drivers while there has not been a concomitant increase in competitive capacity.”
10. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 26
UiPath Inc. (NYSE:PATH) is a systems software company based in New York. It provides an end-to-end automation platform that offers robotic process automation (RPA) solutions. The company primarily operates in the US, Romania, and Japan.
Raimo Lenschow at Barclays holds an Equal Weight rating on UiPath Inc. (NYSE:PATH) shares as of January 10.
Motley Fool Asset Management completely eliminated its stake in UiPath Inc. (NYSE:PATH) in the third quarter, selling the stock entirely.
ARK Investment Management was the largest stakeholder in UiPath Inc. (NYSE:PATH) in the third quarter, holding 44.1 million shares. In total, 26 hedge funds were long the stock, with a total stake value of $993.5 million.
9. Penumbra, Inc. (NYSE:PEN)
Number of Hedge Fund Holders: 27
Penumbra, Inc. (NYSE:PEN) is a healthcare company based in Alameda, California. The company develops and markets medical devices in the US and internationally. It offers aspiration-based thrombectomy systems and accessory devices.
Motley Fool Asset Management reduced its stake in Penumbra, Inc. (NYSE:PEN) shares during the third quarter by about 5%. The stock now only makes up about 0.4% of the investment management company's portfolio. This February, UBS analysts also named Penumbra, Inc. (NYSE:PEN) as one of the earnings-at-risk stocks this year.
A total of 27 hedge funds held stakes in Penumbra, Inc. (NYSE:PEN) in the third quarter. Their total stake value was $549 million.
“Our aversion toward early-stage biotech proved productive as did our approach of emphasizing the enablers and selected, profitable medical technology companies. Strong contributors during the fourth quarter included Penumbra, a developer of stents and related products to treat aneurysms that saw it shares recover from a product recall earlier in the year.”
8. Trex Company, Inc. (NYSE:TREX)
Number of Hedge Fund Holders: 28
Trex Company, Inc. (NYSE:TREX) is a building products company based in Winchester, Virginia. It manufactures and distributes decking, railing, and outdoor living products and accessors for residential and commercial markets. The company operates through its Trex Residential and Trex Commercial segments.
On January 30, Loop Capital analyst Jeffrey Stevenson reiterated a Hold rating on Trex Company, Inc. (NYSE:TREX) shares.
Motley Fool Asset Management reduced its stake in Trex Company, Inc. (NYSE:TREX) by 36% in the third quarter.
There were 28 hedge funds long Trex Company, Inc. (NYSE:TREX) in the third quarter. Their total stake value was $256.9 million.
Baron Funds, an investment management company, mentioned Trex Company, Inc. (NYSE:TREX) in its fourth-quarter 2022 investor letter. Here's what the firm said:
“The shares of two leading residential-related building products companies declined in the most recent quarter in part due to concerns about the housing-related slowdown and corresponding expected slowdown in their growth:
Trex Company, Inc. (NYSE:TREX): the #1 manufacturer of wood-alternative outdoor decking and railing in the U.S by market share. Pool Corporation: the world’s largest distributor of swimming pool supplies, equipment, and related leisure products and is also one of the top three distributors of irrigation and landscape suppliers in the U.S.
We have been buying shares of both Trex and Pool at prices that we believe are attractive relative to their long-term growth opportunities.”
7. Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)
Number of Hedge Fund Holders: 31
Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is a biotechnology company based in Novato, California. It works on the identification, acquisition, development, and commercialization of novel products to treat rare and ultra-rare genetic diseases. The company operates in North America, Europe, and internationally.
In the third quarter, Motley Fool Asset Management reduced its stake in Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) by about 52%. Avisol Capital Partners views the stock as stagnating because of a lack of major near-term catalysts. They view Ultragenyx Pharmaceutical Inc.'s (NASDAQ:RARE) operating expenses in the third quarter, which stood at $315.8 million, as too high. This is because these expenses, coupled with the third-quarter revenue of $90.7 million, ensure that the company's cash on hand will only give it a runway of about three to four quarters at best.
Our hedge fund data shows 31 funds long Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) in the third quarter, with a total stake value of $409 million.
6. MarketAxess Holdings Inc. (NASDAQ:MKTX)
Number of Hedge Fund Holders: 32
MarketAxess Holdings Inc. (NASDAQ:MKTX) is a financial exchanges and data company based in New York. The company operates an electronic trading platform for institutional investors and broker-dealer companies across the globe.
Credit Suisse analyst Gautam Sawant holds a Neutral rating on MarketAxess Holdings Inc. (NASDAQ:MKTX) shares as of January 26.
MarketAxess Holdings Inc. (NASDAQ:MKTX) was among the stocks completely sold off by Motley Fool Asset Management in the third quarter.
In total, 32 funds were long MarketAxess Holdings Inc. (NASDAQ:MKTX) in the third quarter. Their total stake value was $847.6 million.
Baron Funds, an asset management company, mentioned MarketAxess Holdings Inc. (NASDAQ:MKTX) in its second-quarter 2022 investor letter. Here's what the firm said:
“We reduced our position in MarketAxess Holdings Inc. (MKTX), an electronic trading platform for fixed income instruments, on concerns about modest declines in the company’s relative market share.”
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Disclosure: None. 12 Stocks To Sell According to Motley Fool is originally published on Insider Monkey.