Is Amazon.com, Inc. (NASDAQ:AMZN) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Is Amazon.com, Inc. (NASDAQ:AMZN) an attractive stock to buy now? Hedge fund managers are buying. The number of long hedge fund bets advanced by 7 lately. AMZN was in 137 hedge funds’ portfolios at the end of June. There were 130 hedge funds in our database with AMZN positions at the end of the previous quarter. Amazon was actually the third most popular stock among hedge funds at the end of the second quarter (see the list of 25 most popular stocks among hedge funds).
However, this doesn’t necessarily mean that all hedge funds were bullish on Amazon. This week at the Sohn San Francisco Conference Longtail Alpha’s Vineer Bhansali recommended shorting Amazon shares. He thinks tech stocks will underperform in a rising interest rate environment. You can see what else hedge funds were recommending at this conference on our site.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to review the key hedge fund action encompassing Amazon.com, Inc. (NASDAQ:AMZN).
What have hedge funds been doing with Amazon.com, Inc. (NASDAQ:AMZN)?
Heading into the third quarter of 2018, a total of 137 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. You can check out the hedge fund ownership data for the last 6 quarters below.
Among these funds, Citadel Investment Group held the most valuable stake in Amazon.com, Inc. (NASDAQ:AMZN), which was worth $5109.1 millions at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $2656.9 millions worth of shares. Moreover, Taconic Capital, Antipodean Advisors, and Light Street Capital were also bullish on Amazon.com, Inc. (NASDAQ:AMZN), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Maplelane Capital, managed by Leon Shaulov, established the biggest call position in Amazon.com, Inc. (NASDAQ:AMZN). Maplelane Capital had $318.7 million invested in the company at the end of the quarter. Anna Nikolayevsky’s Axel Capital Management also initiated a $6.6 million position during the quarter. The following funds were also among the new AMZN investors: Alan Fournier’s Pennant Capital Management and Pasco Alfaro / Richard Tumure’s Miura Global Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Amazon.com, Inc. (NASDAQ:AMZN) but similarly valued. We will take a look at Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Facebook Inc (NASDAQ:FB). This group of stocks’ market values are closest to AMZN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOOGL | 125 | 14815899 | 1 |
| GOOG | 122 | 13498140 | 4 |
| MSFT | 161 | 28073330 | 9 |
| FB | 193 | 25308776 | 13 |
As you can see these stocks had an average of 150.25 hedge funds with bullish positions and the average amount invested in these stocks was $20.4 billion. That figure was $21 billion in AMZN’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Alphabet Inc (NASDAQ:GOOG) is the least popular one with only 122 bullish hedge fund positions. Overall, hedge funds are extremely bullish on mega-cap technology companies including Amazon. However, it is also true that Federal Reserve isn’t done with its interest rate hikes and any potential slowdown in the economy will negatively affect the stock prices of high flying tech stocks. We believe investors need to be cautious about initiating brand new positions in Amazon.
Disclosure: None. This article was originally published at Insider Monkey.
