Analyzing the data provided by hedge funds in their latest 13F filings, we observed that investors remain as bullish as ever when it comes to investing in technology stocks. During the last year, the technology sector posted a total return of 26.92%, ranking it second among all sectors, while the P/E ratio of the sector is about 24.67 compared to the lowest sector’s P/E 13.93, for the consumer goods sector. We’ll take a look at what billionaires feel about some of the top technology stocks in this article.
We pay attention to hedge funds and prominent investors because historically, a select group of these funds’ top stock picks (their small-cap picks) delivered superior risk-adjusted returns between the years 1999 and 2012. Our research has shown that imitating a portfolio of the 15 most popular small-cap picks among these funds delivered an alpha of around 80 basis points per month and beat the market by nearly a percentage point per month on average, while the 50 most popular stocks among hedge funds overall delivered a monthly alpha of just six basis points per month and underperformed the market. This small-cap strategy has managed to post gains of over 144% in the last 32 months since we started following it in real-time, outperforming the S&P 500 ETF (SPY) by over 80 percentage points (read more details here).
Apple Inc. (NASDAQ:AAPL) loses its spot as the most popular tech stock among billionaires, sliding down to fourth. During the first quarter of 2015, the total number of billionaires holding shares in the most-valuable company in the world fell to 16 from 19. The largest shareholder of those billionaires among the funds we track is Carl Icahn, whose Icahn Capital LP holds 52.76 million shares, unchanged over the first quarter of the year. In recent days, Icahn issued an open letter to Apple Inc. (NASDAQ:AAPL)’s CEO Tim Cook, in which he expressed his beliefs that the company’s shares are undervalued and stated a price target of $240 per share. Icahn forecast that by the end of 2016, Apple would post a $12.00 diluted EPS, and a 30% diluted EPS growth in 2017. While Icahn appreciated that Apple increased its share repurchase program by $50 billion, he recommended that Apple should continue to grow the buyback program. Other billionaire shareholders in Apple Inc. (NASDAQ:AAPL), which owns one of the most profitable businesses ever, are Ken Fisher’s Fisher Asset Management and David Einhorn’s Greenlight Capital, while Leon Cooperman was one of the billionaires to sell off their stake in Apple during the first quarter.
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Google Inc (NASDAQ:GOOGL)‘s Class A shares moves into the top spot among tech stocks, with 17 billionaires holding them as of March 31 (12 hold the company’s Class C shares, GOOG). That moved Google all the way into third overall, after failing to rank in the top ten during the previous reporting period. Andreas Halvorsen’s Viking Global is just one bullish billionaire on Google Inc (NASDAQ:GOOGL) as his fund more than doubled its position in the search engine giant’s Class A stock to 1.64 million shares valued at $908.85 million, while also owning a large position in its Class C shares. Steve Cohen was one of the billionaires to open a new position in Google Inc (NASDAQ:GOOGL) during the first quarter.
Facebook Inc (NASDAQ:FB) also makes a strong move, taking up residence in the portfolios of 15 of the billionaires we track as of March 31, an increase from 12 at the end of 2014. During the quarter, the social media giant enjoyed strong revenue growth to $3.54 billion, compared to $2.50 billion year-over-year. From an operational standpoint, the highlights of Facebook Inc (NASDAQ:FB) include its increase in monthly active users to 1.44 billion as well as its 24% rise in the mobile domain to 1.25 billion users. Stephen Mandel’s Lone Pine Capital is among the top billionaire shareholders of Facebook Inc (NASDAQ:FB), holding 8.11 million shares as of March 31.
Another popular candidate in the technology sector at the end of the first quarter was Yahoo! Inc. (NASDAQ:YHOO). The total number of billionaires invested in the company stood at 15, which like Facebook, was also an increase from 12 one quarter prior. Billionaire Daniel S. Och’s OZ Management made a particularly bullish move in Yahoo! Inc. (NASDAQ:YHOO) during the quarter, with the fund increasing its position in Yahoo by 62.90% to 14.65 million shares, valued at $650.88 million, moving it up to the fund’s top pick overall. D E Shaw, the fund founded by billionaire David E. Shaw owns 12.43 million shares of Yahoo! Inc. (NASDAQ:YHOO) worth $552.52 million.
Microsoft Corporation (NASDAQ:MSFT) lost some of its billionaire investor confidence as the number of billionaires with a stake in the tech company decreased to 13 from 14. The $379.4 billion company’s stock gained more than 16% during the year. Billionaires Ken Fisher and Stephen Mandel hold large stakes in Microsoft Corporation (NASDAQ:MSFT), while billionaire Och closed his position in Microsoft Corporation (NASDAQ:MSFT) as he went all-in on Yahoo.
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