Apple, McDonald’s, Yahoo: 5 Stocks Hedge Funds Were Getting Rid of During Q2

Pfizer Inc. (NYSE:PFE)

– Number of Hedge Funds With Long Positions (as of June 30): 94
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $5.67 billion

Pfizer fell from being the seventh-most popular stock among the hedge funds that we track on March 31, to the 14th-most popular one on June 30. A net total of 25 hedge funds vacated the stock during the second quarter, including Barry Rosenstein’s JANA Partners, which sold off a position that contained 13.46 million shares on March 31. Jason Karp’s Tourbillon Capital sold off its 7.00 million-share position during the quarter, while Arthur B. Cohen and Joseph Healey’s Healthcor Management sold off its 1.60 million-share holding.

Pfizer Inc. (NYSE:PFE)’s inclusion on this list (and that of Allergan’s below) aren’t total shocks, as merger arbitrage funds gobbled them up in preparation of what would have been a monolithic merger between the two. As fate would have it, that merger was scuttled early in the second quarter and many of those hedge funds groaned and sold off their stakes. Pfizer recently rewarded itself with a small consolation prize in the form of Medivation Inc (NASDAQ:MDVN), purchasing the cancer drug developer for $14 billion. However, the market groaned again, this time at the price tag, and sold off their Pfizer shares, which have drifted down by 5% in August.

Apple Inc. (NASDAQ:AAPL)

– Number of Hedge Funds With Long Positions (as of June 30): 116
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $10.68 billion

Apple witnessed a gigantic fall in hedge fund popularity during the second quarter, as there was a net total of 36 fewer hedge funds long the tech giant on June 30 than there were on March 31, when Apple was the fourth-most popular stock overall (it’s now fallen to eighth). Michael Burry‘s Scion Asset Management, Leon Cooperman’s Omega Advisors, and John Griffin’s Blue Ridge Capital were among the prominent investors in our database who sold off Apple holdings during the second quarter.

Hedge funds were likely spooked by Apple Inc. (NASDAQ:AAPL)’s first quarter earnings report, which showed its first sales decline in over a decade. Carl Icahn, who also sold off Apple during the quarter, cited concerns about China’s growth as a reason for abandoning the stock. Indeed, Apple has had a rough go of it in China recently, as sales and market share have crumbled in the face of cheaper local options.

Allergan PLC (NYSE:AGN)

– Number of Hedge Funds With Long Positions (as of June 30): 131
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $13.91 billion

Hedge fund darling Allergan, which ranked as the second-most popular stock among hedge funds a quarter ago, experienced a large dip in sentiment during the second quarter. From being held in the portfolios of 170 of the investors in our system on March 31, Allergan’s total dipped to 131 as of June 30, which dropped it to fifth in terms of popularity. James Flynn’s Deerfield Management, Ken Griffin’s Citadel Investment Group, and David Einhorn’s Greenlight Capital were just a few of the hedge funds that closed Allergan positions during the quarter.

As mentioned, the failed Allergan PLC (NYSE:AGN)/Pfizer lockup likely explains the huge dip in the ownership of both companies among hedge funds. Allergan recently made a much lower-key acquisition than Pfizer’s, snatching up private biotech company ForSight Vision5 for an upfront payment of $95 million as well as a milestone payment should the biotech’s glaucoma treatment receive FDA approval. The small acquisition is in keeping with Allergan CEO Brent Saunders’ comments during the company’s second quarter earnings call, in which he stated that Allergan would look for deals that would act as “stepping stones”, rather than making a big splash. It had been rumored that Allergan would make a play for $69 billion Biogen Inc (NASDAQ:BIIB), which Mr. Saunders shot down during the call.

Disclosure: None