Big Bets On Amazon (AMZN), Symantec (SYMC) And Other Tech Stocks Lift Whale Rock to Big Q3

At Insider Monkey, we monitor the activity of some of the top-performing hedge funds and other investment firms like Tiger Global Management and Point72 Asset Management because we uncovered that a certain group of stocks that they are collectively bullish on can help investors generate returns above the broader indices. In this article, we’ll take a look at the performance of one such fund, Alex Sacerdote’s Whale Rock Capital Management, and analyze the performance of some of its top stock picks.

Let’s start with a look at the returns generated by some of Whale Rock’s stock picks in the third quarter. As of June 30, the fund had 29 long positions in its portfolio in companies valued at no less than $1 billion. Those positions had weighted average returns of 21.7% during the third quarter, pushing the fund’s year-to-date gains to over 22%. It should be noted that our methodology for calculating a fund’s returns should not be considered an accurate representation of its actual returns, as they do not factor in changes to positions during the quarter, or positions that don’t get reported in 13F filings, like short positions. Nonetheless, for funds with low turnover who invest primarily in non-micro-cap stocks, it’s a fairly accurate way to judge the performance of the long side of their portfolios.

In this article we’ll take a look at four of the tech positions in Whale Rock Capital’s portfolio on June 30, as the fund almost exclusively invests in tech stocks. We’ll begin with its top pick Amazon.com, Inc. (NASDAQ:AMZN), in which it held 176,116 shares on June 30, valued at $126 million. The fund had 10.47% exposure to the stock in its public equity portfolio, which contained holdings valued at $1.20 billion at the end of June. Amazon.com, Inc. (NASDAQ:AMZN) had a rear hiccup following its latest earnings release, but prior to that, gained 17% in the third quarter and is still up by 12% year-to-date.

As you can see, Amazon has pushed to new heights of popularity among the funds that we track, as 145 of them were long the stock on June 30, a 9% increase from one quarter earlier. Viking Global, managed by Andreas Halvorsen, holds the largest position in Amazon.com, Inc. (NASDAQ:AMZN) ($2.35 billion), while the second-largest stake is held by Ken Fisher of Fisher Asset Management ($1.50 billion). Other professional money managers that hold long positions comprise Alex Snow’s Lansdowne Partners, Boykin Curry’s Eagle Capital Management, and Stephen Mandel’s Lone Pine Capital.

Next up was a much less popular stock among the entirety of the hedge funds that we track, but one which Whale Rock was extremely bullish on. In fact, it held the largest position in Ellie Mae Inc (NYSE:ELLI) among all of the funds that we track, consisting of 1.12 million shares valued at $102.72 million. The enterprise software company has been an exceptional performer this year, gaining 15% in the third quarter and 71% year-to-date. Oppenheimer’s price target on Ellie Mae Inc (NYSE:ELLI) was recently raised to $120 from $110, with the firm expecting the company to carry its strong momentum through 2017. It has an ‘Outperform’ rating on the stock.

24 of the hedge funds tracked by Insider Monkey were long Ellie Mae on June 30, down 14% quarter-over-quarter and some funds chose to take profit from the stock’s run. Some of the other hedge funds in our database with positions in the stock included Peter S. Park of Park West Asset Management, Brett Barakett’s Tremblant Capital, Edmond M. Safra’s EMS Capital, and Eduardo Costa’s Calixto Global Investors.

On the next page we’ll run through two more tech stock picks of Whale Rock Capital.

Zendesk Inc (NYSE:ZEN) was Whale Rock’s third-most valuable holding at the end of the second quarter, valued at $95.87 million. After a big run-up in the second quarter, which may have prompted Whale Rock to trim 8% of its stake, shares didn’t stop in the third quarter, gaining another 14%. However, they’ve been hit hard this quarter, slumping to six-month lows. Craig-Hallum believes the recent weakness has made Zendesk Inc (NYSE:ZEN) an attractive buying opportunity, calling its current headwinds a temporary setback.

At the end of the second quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Whale Rock Capital Management again had the most valuable position in the stock, and was followed by Jericho Capital Asset Management, led by Josh Resnick ($77.9 million position). Other hedge funds and institutional investors with similar optimism in Zendesk Inc (NYSE:ZEN) encompass Principal Global Investors’ Columbus Circle Investors, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital.

Lastly we come to Symantec Corporation (NASDAQ:SYMC), a new addition to Whale Rock’s portfolio in the second-quarter. The fund bought 3.75 million shares during the quarter, which were valued at $76.94 million at the end of June. Symantec is another stock that posted a strong Q3 (22% gains), but has been battered this month, losing nearly 8% on Friday after its latest quarterly results were issued, despite adjusted EPS coming in 50% higher than estimates.

According to Insider Monkey’s hedge fund database, Elliott Management, managed by Paul Singer, was one of 38 funds with a position in Symantec Corporation (NASDAQ:SYMC) at the end of June. Elliott Management had a $236.8 million position in the stock, while Slate Path Capital, led by David Greenspan, held a $113.1 million position in it; 8.8% of the value of its 13F portfolio was allocated to the company. D E Shaw and Orbis Investment Management were some of the other funds with Symantec Corporation (NASDAQ:SYMC) long positions.

Disclosure: None