The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Amazon.com, Inc. (NASDAQ:AMZN) and determine whether the smart money was really smart about this stock.
Amazon.com, Inc. (NASDAQ:AMZN) has experienced a decrease in hedge fund interest recently. Amazon.com, Inc. (NASDAQ:AMZN) was in 248 hedge funds’ portfolios at the end of June. The all time high for this statistics is 251 which was achieved at the end of March. Our calculations also showed that AMZN still ranked #1 among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 hedge fund stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out ideas like this under-the-radar stock to identify the next tenbagger. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to check out the key hedge fund action surrounding Amazon.com, Inc. (NASDAQ:AMZN).
How are hedge funds trading Amazon.com, Inc. (NASDAQ:AMZN)?
At the end of June, a total of 248 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from the first quarter of 2020. On the other hand, there were a total of 163 hedge funds with a bullish position in AMZN a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Amazon.com, Inc. (NASDAQ:AMZN), which was worth $8.8 billion at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $4.55 billion worth of shares. Eagle Capital Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position VGI Partners allocated the biggest weight to Amazon.com, Inc. (NASDAQ:AMZN), around 29.92% of its 13F portfolio. NWI Management is also relatively very bullish on the stock, designating 22.14 percent of its 13F equity portfolio to AMZN.
Because Amazon.com, Inc. (NASDAQ:AMZN) has faced a decline in interest from the smart money, it’s safe to say that there exists a select few funds that slashed their full holdings last quarter. Intriguingly, Renaissance Technologies cut the biggest position of the 750 funds tracked by Insider Monkey, worth about $376 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also said goodbye to its stock, about $125.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). These stocks are Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), Alibaba Group Holding Limited (NYSE:BABA), Facebook Inc (NASDAQ:FB), Berkshire Hathaway Inc. (NYSE:BRK-B), Visa Inc (NYSE:V), and Johnson & Johnson (NYSE:JNJ). This group of stocks’ market valuations resemble AMZN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOOGL | 157 | 13533499 | -10 |
| GOOG | 144 | 14761874 | -3 |
| BABA | 154 | 24386257 | -13 |
| FB | 210 | 25222524 | -3 |
| BRK-B | 107 | 15633556 | -8 |
| V | 154 | 17010420 | -3 |
| JNJ | 94 | 4731250 | 12 |
| Average | 145.7 | 19476039 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 145.7 hedge funds with bullish positions and the average amount invested in these stocks was $16.5 billion. That figure was $43.2 billion in AMZN’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand JNJ is the least popular one with only 94 bullish hedge fund positions. Compared to these stocks Amazon.com, Inc. (NASDAQ:AMZN) is more popular among hedge funds. Our overall hedge fund sentiment score for AMZN is 99.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 28.2% in 2020 through August 24th but still managed to beat the market by 20.6 percentage points. Hedge funds were also right about betting on AMZN as the stock returned 19.9% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
