Shira Gonen

About the Author Shira Gonen

Shira Gonen holds a Bachelor's degree in International Business from the Temple University in Philadelphia. Ms. Gonen joined the editorial team at TipRanks in November of 2015.

Jorge Lemann’s 4Q Biggest Trades: Sunedison Inc (SUNE), Microsoft Corporation (MSFT), Exxon Mobil Corporation (XOM)

Jorge Lemann, a Swiss-Brazilian billionaire, partly owns hedge fund 3G Capital Partners Ltd. His portfolio is mainly comprised of basic materials stocks, and since 2012 performed slightly above the S&P 500. Some of Lemann’s most notable activity in the fourth quarter includes Sunedison Inc (NYSE:SUNE), Microsoft Corporation (NASDAQ:MSFT), and Exxon Mobile Corporation (NYSE:XOM).

Jorge Lemann's portfolio overview

Sunedison Inc

Lemann sold out of SunEdison in the fourth quarter. SunEdison had a tumultuous quarter, marked by liquidity and cash flow concerns. The company announced it would stop selling projects to two of its yield cos, which are important for solar industry funding due to their higher yield and lower risk. Additionally, low oil prices of the past year sent demand for solar stocks plummeting. Despite its various asset sales, as well as revised acquisition of Vivint, the stock price continued to fall.

Although the company started various projects in the fourth quarter, analysts could not stop dwelling on liquidity issues and weak 2016 guidance. Another drawback in the fourth quarter was a request from David Tepper, another hedge fund manager, for non-public documents from the company, as it is known for its complex accounting practices. This caused the stock to fall yet again as Tepper is not usually so public with his investment decisions, indicating to investors further issues with the company. At the end of the quarter, a rumored $650 million second lien credit facility sent the stock back up. However, during the entire quarter the stock fell close to 30%.

While Lemann completely sold out of SunEdison, analysts are not so quick to shed the stock. Out of the 12 analysts who have rated the company in the past 3 months, 7 gave a Buy rating and only 1 recommended to sell the stock.

Microsoft Corporation

In the fourth quarter, Lemann reduced his stake in Microsoft by over 44%, which now accounts for 1.82% of his total holdings. For the fourth quarter, Microsoft saw growth in its cloud computing segment as well as reported that its Windows 10 operating system reached 110 million active devices. The company engaged in various partnerships and acquisitions in the fourth quarter, partnering with HPE to provide Windows 10 consulting services, extending its patent licensing with ASUS for the development of Microsoft apps on Android phones, and acquired a game development company from Intel. Microsoft also partnered with Volvo to develop self-driving cars, following the likes of Apple and Alphabet. The fourth quarter also marked product releases such as the Lumia 950 smartphone and Surface 4 tablet. Throughout the of the fourth quarter, the stock increased over 24%.

Lemann and analysts have different opinions on Microsoft, as 14 out of 20 analysts who have rated the company in the past 3 months gave a Buy rating. Only 2 out of those 20 reflected Lemann’s bearishness.

Exxon Mobil Corporation

Jorge Lemann newly added 1 million shares of XOM to his portfolio in the fourth quarter, valued at $77.95 million, now accounting for 4.64% of his total holdings. In the fourth quarter, the stock price fluctuated with falling and rising oil prices, reaching $85.85 in November, close to its 52-week high of $90.42, and then sliding down to about $78 by the end of the quarter.

Oil prices have been steadily falling for over a year due to international oversupply. Other factors that sent the stock temporarily up in the fourth quarter included Middle East tensions and a weaker dollar. The company was subpoenaed by the U.S. government in the fourth quarter, accusing it of withholding important climate change information from the public and lying to investors and customers. They also refused to comply with another request regarding specific tax information. Although the company’s stock suffered the consequences of falling oil prices, analysts were not so quick to sell the stock. Analyst Douglas Terrison of Evercore ISI believed that oil prices would eventually bounce back and gave a Buy rating on November 3, 2015.

Analysts disagree with Lemann’s bullish activity on the stock, as 2 out of the 4 who rated the company in the past 3 months recommended to sell the stock, while the other two remain on the sidelines.

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