Billionaire Louis Bacon’s Moves Reveal Less Trust for Top Tech Names

Billionaire Louis Bacon steered his fund Moore Capital Management through treacherous waters in the first half of 2015 and delivered reasonable gains, with his firm’s Global Investment Fund up by 4.8% and the Macro Management Fund posting 3.61% gains (both net of fees). The investment manager has a knack for disengaging from possibly problematic investments before they embark on a steep downhill trajectory. For instance, the fund slashed its holding in Alibaba Group Holding Ltd (NYSE:BABA) by 90% during the fourth quarter of last year. The stock has plunged by about 22% so far this year. This warrants an inspection of Bacon’s top stock picks heading into the fourth quarter, some of which he has also begun to make cuts to.

At Insider Monkey we don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 102%, more than two-times greater returns than the S&P 500 during the same period (see the details here).

#5 Taubman Centers, Inc. (NYSE:TCO)

Shares held (as of September 30): 375,000

Total Value (as of September 30): $25.91 million

Moore boosted its stake in the $4.40 billion REIT by 25% during the September trimester. The mall operator’s stock price has fallen by about 4.5% since the start of the year and Evercore downgraded the stock to ‘Hold’ from ‘Buy’ last month, citing retail weakness across a variety of subsectors. Regardless, John Khoury’s Long Pond Capital is also bullish on Taubman Centers, Inc. (NYSE:TCO), having upped its stake by 42% to 3.76 million shares during the last quarter.

#4 Facebook Inc (NASDAQ:FB)

Shares held (as of September 30): 375,000

Total Value (as of September 30): $33.71 million

During the July-to-September period, Moore slashed its holding in the owner of the world’s largest social media platform by 56%. The move might have been ill-conceived in this case, considering that Facebook Inc (NASDAQ:FB)’s stock price has surged by almost 16% since the end of September, and is up by more than 35% this year. The company managed to beat both the top and bottom line estimates in its financial results for the third quarter. However, the investment manager could be thinking about a possible rate hike by the Fed in the near future, which could take a toll on growth stocks like Facebook. Among the more than 700 hedge funds that we track, Lone Pine Capital, led by Stephen Mandel, is the largest stockholder of Facebook Inc (NASDAQ:FB), holding more than 10.7 million shares.

#3 Amazon.com, Inc. (NASDAQ:AMZN)

Shares held (as of September 30): 76,000

Total Value (as of September 30): $38.90 million

Moore also reduced its stake in Amazon.com, Inc. (NASDAQ:AMZN) by a sizable 57% during the third quarter. The e-commerce giant is another company that has continued on its upward trajectory in the fourth quarter, with the stock posting gains of nearly 30%. Generally, hedge funds were bullish on the company during the third quarter, as 113 in our database had investments worth $14.98 billion in Amazon.com, Inc. (NASDAQ:AMZN) at the end of September compared to 103 firms with $10.46 billion in shares a quarter earlier. The company posted strong financial results for the third trimester, including quarterly revenue from Amazon Web Services coming in at $2.09 billion, a 78% rise on a year-over-year basis. Tiger Global Management, which is led by Chase Coleman, owns nearly 3.20 million shares of Amazon.com, Inc. (NASDAQ:AMZN).

#2 AerCap Holdings N.V. (NYSE:AER)

Shares held (as of September 30): 1.64 million

Total Value (as of September 30): $44.51 million

Moore cut its AerCap Holdings N.V. (NYSE:AER) stake by 16% during the third quarter. So far this year, AerCap’s stock price has appreciated by almost 14%, even though fears of high widebody aircraft valuations as promulgated by Delta CEO Richard Anderson in October, led to a sharp decline in the stock price. Despite the second-largest aircraft lessor in the world beating both the top and bottom line estimates for its third quarter financial results, the net interest margin shrank by 2 percentage points compared to the same quarter a year ago. Activist investor David Einhorn‘s Greenlight Capital owns about 7.34 million shares of AerCap Holdings N.V. (NYSE:AER).

#1 JPMorgan Chase & Co. (NYSE:JPM)

Shares held (as of September 30): 1.53 million

Total Value (as of September 30): $93.25 million

The firm’s newly-initiated stake in JPMorgan Chase & Co. (NYSE:JPM) is also one of the ten banks recently accused of rigging the $320 trillion market for interest rate swaps. With gains of more than 7% so far this year, the stock hasn’t quite taken a hit from this development. In fact the world’s largest investment bank in terms of revenue is also leaving its bonus pool unchanged for the year, while competitors are cutting payouts. Alex Snow‘s Lansdowne Partners is the largest stockholder of JPMorgan Chase & Co. (NYSE:JPM) within our database, holding about 18.86 million shares.

Disclosure: None