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Feared Activist Investor Paul Singer’s Top 10 Stocks for 2022

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·8 min read
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In this article we present the list of Feared Activist Investor Paul Singer’s Top 10 Stocks for 2022. Click to skip ahead and see the Feared Activist Investor Paul Singer’s Top 5 Stocks for 2022.

Twitter, Inc. (NASDAQ:TWTR), Marathon Petroleum Corp (NYSE:MPC), and Howmet Aerospace Inc. (NYSE:HWM) are among the top stock picks of Paul Singer, one of the most feared activist investors on Wall Street.

Paul Singer’s Elliott Management is a West Palm Beach-based hedge fund with over $51 billion in assets under management as of the end of 2021. The billionaire money manager has become one of the most intimidating activists in the world, as evidenced by his past involvement with Twitter.

A lawsuit being brought against the firm by Twitter shareholders alleges that Twitter was so intimidated by Elliott Management’s arrival on the scene that it gave the fund a sweetheart deal to save itself the potential embarrassment of getting crushed under the activist’s heel. That deal included Twitter selling $1 billion in convertible bonds to Elliott ally Silver Lake Partners despite the company having billions in cash on hand. Even then, Elliott eventually executed its plan to oust CEO Jack Dorsey.

Elliott is not only one of the most feared activists, but was also the most active one last year, launching 17 new campaigns, its most since 2018. Among the firm’s notable campaigns last year were its battle with Duke Energy Corporation (NYSE:DUK) over the composition of the company’s board and its deal with Citrix Systems, Inc. (NASDAQ:CTXS) to take the company private.

Feared Activist Investor Paul Singer’s Top 10 Stocks for 2022
Feared Activist Investor Paul Singer’s Top 10 Stocks for 2022

Paul Singer of Elliott Management

Despite his reputation, Singer’s fund has lagged the market for much of the past several years. It returned over 13% in 2020, but that trailed the market by about five percentage points. Elliott’s annualized five-year returns through mid-2021 amounted to 9.21%, which also trailed the market substantially. Over its lengthy history however, Elliott has still delivered market beating returns, with 13.1% annualized returns since inception, 1.3 percentage points better than the S&P 500’s performance during that time.

Elliott Management’s 13F portfolio was valued at $10 billion on March 31, down from $11.3 billion as of the end of 2021. The fund sold off eight of its former holdings during the first quarter, while adding nine new positions to its portfolio. One of the most striking components of Elliott Management’s portfolio is the minimal role that tech stocks now play in it after the fund unloaded some of its biggest tech names during the prior two quarters. The fund had just 2% exposure to tech stocks on March 31, the least it’s had in the last two decades.

In this article, we’ll look at the ten stocks that Elliott Management has the most conviction as we head towards summer 2022.

Our Methodology

The following data is gathered from Elliott Management’s latest 13F filing with the SEC. We follow hedge funds like Elliott Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.

All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.

Feared Activist Investor Paul Singer’s Top 10 Stocks for 2022

10. E2open Parent Holdings, Inc. (NYSE:ETWO)

 

Value of Elliott Management‘s 13F Position: $142 million

 

Number of Hedge Fund Shareholders (as of March 31): 29

In contrast to Twitter, Inc. (NASDAQ:TWTR), Marathon Petroleum Corp (NYSE:MPC), and Howmet Aerospace Inc. (NYSE:HWM), which are several of the well-known stocks owned by Paul Singer, E2open Parent Holdings, Inc. (NYSE:ETWO) is one of the least heralded names in his 13F portfolio. While Singer raised his stake in the company by 3% during Q1, several other money managers were selling, as hedge fund ownership of the stock fell by 28%.

A software and analytics provider for the global supply chain market, E2open Parent Holdings, Inc. (NYSE:ETWO) earned $0.08 per share in adjusted EPS during its Q4 of FY2022, beating estimates of just $0.02. The company fell short of sales estimates however, delivering $144.2 million in revenue. On the other hand, E2open Parent Holdings, Inc. (NYSE:ETWO)’s FY2023 revenue guidance of between $681 million and $689 million was nearly $50 million ahead of estimates on the top end.

9. Evergy, Inc. (NYSE:EVRG)

 

Value of Elliott Management‘s 13F Position: $153 million

 

Number of Hedge Fund Shareholders (as of March 31): 23

Evergy, Inc. (NYSE:EVRG) still ranks among Paul Singer’s ten favorites, though the activist unloaded 77% of his former stake in the company during Q1, ending the quarter with 2.24 million shares. Shares of the utility company were owned by 23 hedge funds on March 31, down from 40 in the middle of 2020.

Elliott Management has had an active role in guiding Evergy, Inc. (NYSE:EVRG)’s fortunes over the last few years, pushing the company for leadership changes and to explore merger possibilities. In March 2020, the two parties reached an agreement that added two independent directors to Evergy’s board and established a committee that would seek ways to increase shareholder value.

After Evergy, Inc. (NYSE:EVRG) failed to find a suitable buyer, the company formed a new agreement with Elliott in August 2020 that committed it to pursue greater shareholder returns and to invest heavily in its transmission and distribution infrastructure over the coming five years. The two sides reached another agreement in February 2021 that added two more directors to Evergy’s board.

8. Switch, Inc. (NYSE:SWCH)

 

Value of Elliott Management‘s 13F Position: $178 million

 

Number of Hedge Fund Shareholders (as of March 31): 14

Elliott Management’s stake of 5.79 million shares in Switch, Inc. (NYSE:SWCH) was kept intact during the first quarter. That represented the largest holding of any of the funds tracked by Insider Monkey. Steve Cohen’s Point72 Asset Management raised its stake in SWCH to 1.6 million shares by March 31, a 653% increase from a quarter earlier.

Elliott Management became the largest class A shareholder of Switch, Inc. (NYSE:SWCH) back in August 2021, with an 11% economic interest in the company. The two companies reached an agreement later that month which saw the company add Elliott portfolio manager Jason Genrich to its board. Elliott said at the time that it believed greatly in the company’s leadership and believed the stock remained undervalued despite best-in-class performance in several key areas.

Switch, Inc. (NYSE:SWCH) eventually looked into the possibility of a sale, which culminated in the data center company agreeing to be bought by DigitalBridge and IFM Investors in a deal worth $34.25 per share. Should the deal go through, Elliott will have gained 66% on its early-August position.

7. Uniti Group Inc. (NASDAQ:UNIT)

 

Value of Elliott Management‘s 13F Position: $282 million

 

Number of Hedge Fund Shareholders (as of March 31): 18

Paul Singer’s Elliott Management own 20.5 million shares of Uniti Group Inc. (NASDAQ:UNIT) as of March 31, the same amount the fund held on December 31. Singer has the largest position in the company among the select group of hedge funds that are tracked by Insider Monkey’s database.

Uniti Group Inc. (NASDAQ:UNIT) in another infrastructure REIT that has caught the attention of Paul Singer in recent years. The company has built a sizable network of 7.5 million strand miles of fiber, the majority of which has yet to be leased. The company believes it is well positioned to capitalize on a growing market that has minimal competition.

Uniti Group Inc. (NASDAQ:UNIT)’s consolidated revenue hit $278 million in Q1, $205 million of which came from its Uniti Leasing segment. Consolidated adjusted EBITDA was an impressive $225 million, with the company achieving a 97% adjusted EBITDA margin during the quarter. Uniti anticipates its adjusted funds from operations to be between $1.70 and $1.77 per share in 2022, a 4% year-over-year increase at the midpoint.

6. Suncor Energy Inc. (NYSE:SU)

 

Value of Elliott Management‘s 13F Position: $326 million

 

Number of Hedge Fund Shareholders (as of March 31): 41

Closing out the first part of the list of Paul Singer’s top 10 stocks is Suncor Energy Inc. (NYSE:SU), which he bought 10 million shares of during Q1 to build a sizable new long position in the stock. Hedge fund ownership of SU rose by 21% during the first quarter and has nearly doubled since the third quarter of 2020.

Suncor Energy Inc. (NYSE:SU) announced the sale of its solar and wind assets in April in an effort to refocus on what it does best: squeeze oil out of sand. The Canadian company does have some other renewables plans, where the focus will be on renewable fuels and hydrogen. Suncor had a blowout Q1, setting its quarterly record for adjusted funds from operations at $4.1 billion. The company used the windfall to hike its dividend and spend over $1.5 billion buying back shares and paying down its debt.

The ClearBridge Investments International Growth ADR Strategy liked the price it bought SU shares at, having this to say about Suncor Energy Inc. (NYSE:SU) in its Q1 2022 investor letter:

“Also within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy (NYSE:SU). Suncor, a past holding, is a Canadian integrated oil company where we capitalized on attractive valuation due to a COVID-19-induced slowdown. We expect recovery in oil demand and strong pricing will result in faster than expected free cash flow growth and financial deleveraging.

The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”

 

On the next page we’ll take a look at Paul Singer’s stakes in Marathon Petroleum Corp (NYSE:MPC), Twitter, Inc. (NASDAQ:TWTR), and Howmet Aerospace Inc. (NYSE:HWM).

 

Click to continue reading and see the Feared Activist Investor Paul Singer’s Top 5 Stocks for 2022.

 

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Disclosure: None. Feared Activist Investor Paul Singer’s Top 10 Stocks for 2022 is originally published at Insider Monkey.