The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Facebook Inc (NASDAQ:FB).
Is Facebook Inc (NASDAQ:FB) ready to rally soon? The smart money was taking a bullish view. The number of long hedge fund bets inched up by 9 in recent months. Facebook Inc (NASDAQ:FB) was in 266 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 257. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FB ranked #2 among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 257 hedge funds in our database with FB holdings at the end of March.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Eric Mandelblatt of Soroban Capital Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s go over the new hedge fund action encompassing Facebook Inc (NASDAQ:FB).
Do Hedge Funds Think FB Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 266 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in FB over the last 24 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Facebook Inc (NASDAQ:FB), which was worth $4804 million at the end of the second quarter. On the second spot was Eagle Capital Management which amassed $2581.4 million worth of shares. Fundsmith LLP, Tiger Global Management LLC, and Lone Pine Capital 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 Immersion Capital allocated the biggest weight to Facebook Inc (NASDAQ:FB), around 32.85% of its 13F portfolio. Arrow Capital Management is also relatively very bullish on the stock, designating 31.97 percent of its 13F equity portfolio to FB.
As aggregate interest increased, some big names were breaking ground themselves. Soroban Capital Partners, managed by Eric W. Mandelblatt and Gaurav Kapadia, assembled the largest position in Facebook Inc (NASDAQ:FB). Soroban Capital Partners had $692.6 million invested in the company at the end of the quarter. George Yang’s Anatole Investment Management also initiated a $175.3 million position during the quarter. The other funds with new positions in the stock are Anand Desai’s Darsana Capital Partners, Aaron Cowen’s Suvretta Capital Management, and Patrick Degorce’s Theleme Partners.
Let’s also examine hedge fund activity in other stocks similar to Facebook Inc (NASDAQ:FB). We will take a look at Tesla Inc. (NASDAQ:TSLA), Alibaba Group Holding Limited (NYSE:BABA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Berkshire Hathaway Inc. (NYSE:BRK-B), JPMorgan Chase & Co. (NYSE:JPM), Visa Inc (NYSE:V), and Johnson & Johnson (NYSE:JNJ). This group of stocks’ market valuations match FB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSLA | 60 | 9296858 | -2 |
| BABA | 146 | 16793500 | 11 |
| TSM | 64 | 10694405 | -12 |
| BRK-B | 116 | 22380662 | 5 |
| JPM | 108 | 4928203 | -3 |
| V | 162 | 27609638 | -2 |
| JNJ | 88 | 7057087 | 7 |
| Average | 106.3 | 14108622 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 106.3 hedge funds with bullish positions and the average amount invested in these stocks was $14109 million. That figure was $42350 million in FB’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 60 bullish hedge fund positions. Compared to these stocks Facebook Inc (NASDAQ:FB) is more popular among hedge funds. Our overall hedge fund sentiment score for FB is 99.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.1% in 2021 through September 20th and still managed to beat the market by 6.9 percentage points. Hedge funds were also right about betting on FB, though not to the same extent, as the stock returned 2.3% since the end of June (through September 20th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
