Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Facebook Inc (NASDAQ:FB).
Facebook Inc (NASDAQ:FB) was in 213 hedge funds’ portfolios at the end of the first quarter of 2020. FB investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 198 hedge funds in our database with FB holdings at the end of the previous quarter. Our calculations also showed that FB ranked #3 among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Chase Coleman of Tiger Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the new hedge fund action surrounding Facebook Inc (NASDAQ:FB).
Hedge fund activity in Facebook Inc (NASDAQ:FB)
Heading into the second quarter of 2020, a total of 213 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. By comparison, 176 hedge funds held shares or bullish call options in FB a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Tiger Global Management LLC held the most valuable stake in Facebook Inc (NASDAQ:FB), which was worth $1459.6 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $1210.5 million worth of shares. Eagle Capital Management, AQR Capital Management, and D1 Capital Partners 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 Harvard Management Co allocated the biggest weight to Facebook Inc (NASDAQ:FB), around 33.71% of its 13F portfolio. Immersion Capital is also relatively very bullish on the stock, dishing out 29.16 percent of its 13F equity portfolio to FB.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Baupost Group, managed by Seth Klarman, initiated the most valuable position in Facebook Inc (NASDAQ:FB). Baupost Group had $330.9 million invested in the company at the end of the quarter. Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners also made a $232.6 million investment in the stock during the quarter. The other funds with brand new FB positions are Farhad Nanji and Michael DeMichele’s MFN Partners, Eashwar Krishnan’s Tybourne Capital Management, and Scott Bessent’s Key Square Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Facebook Inc (NASDAQ:FB) but similarly valued. These stocks are Berkshire Hathaway Inc. (NYSE:BRK-B), Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), and Walmart Inc. (NYSE:WMT). 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 |
|---|---|---|---|
| BRK-B | 115 | 18119296 | 2 |
| V | 157 | 14390735 | 14 |
| JNJ | 82 | 5454317 | -3 |
| WMT | 55 | 4887227 | 3 |
| Average | 102.25 | 10712894 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 102.25 hedge funds with bullish positions and the average amount invested in these stocks was $10713 million. That figure was $19600 million in FB’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 55 bullish hedge fund positions. Compared to these stocks Facebook Inc (NASDAQ:FB) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on FB as the stock returned 40.8% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
