We started seeing tectonic shifts in the market during the third quarter. Small-cap stocks underperformed the large-cap stocks by more than 10 percentage points between the end of June 2015 and the end of June 2016. A mean reversion in trends bumped small-cap stocks’ return to almost 9% in Q3, outperforming their large-cap peers by 5 percentage points. The momentum in small-cap space hasn’t subsided during this quarter either. Small-cap stocks beat large-cap stocks by another 4 percentage points during the first 7 weeks of this quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were boosting their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Amazon.com, Inc. (NASDAQ:AMZN).
Amazon.com, Inc. (NASDAQ:AMZN) has seen an increase in enthusiasm from smart money recently. It is actually the most popular stock among hedge funds. At the end of this article we will also compare AMZN to other stocks including Johnson & Johnson (NYSE:JNJ), Facebook Inc (NASDAQ:FB), and General Electric Company (NYSE:GE) to get a better sense of its popularity.
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To most investors, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading at present, Our researchers choose to focus on the moguls of this group, about 700 funds. These hedge fund managers administer bulk of all hedge funds’ total asset base, and by shadowing their matchless equity investments, Insider Monkey has brought to light several investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in our back tests.
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Now, let’s check out the fresh action regarding Amazon.com, Inc. (NASDAQ:AMZN).
What does the smart money think about Amazon.com, Inc. (NASDAQ:AMZN)?
At Q3’s end, a total of 150 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the most valuable position in Amazon.com, Inc. (NASDAQ:AMZN). Viking Global has a $2.45 billion position in the stock, comprising 10.6% of its 13F portfolio. The second most bullish fund manager is Fisher Asset Management, led by Ken Fisher, holding a $1.67 billion position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining peers that hold long positions comprise Lansdowne Partners, Boykin Curry’s Eagle Capital Management and Chase Coleman’s Tiger Global Management LLC.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the biggest call position in Amazon.com, Inc. (NASDAQ:AMZN). Citadel Investment Group had $1.0845 billion invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $78.8 million investment in the stock during the quarter. The other funds with brand new AMZN positions are Sharlyn C. Heslam’s Stockbridge Partners, Anand Parekh’s Alyeska Investment Group, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Let’s go over hedge fund activity in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). These stocks are Johnson & Johnson (NYSE:JNJ), Facebook Inc (NASDAQ:FB), General Electric Company (NYSE:GE), and AT&T Inc. (NYSE:T). All of these stocks’ market caps match AMZN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JNJ | 82 | 5146011 | 0 |
| FB | 149 | 16275572 | 1 |
| GE | 55 | 5080463 | -2 |
| T | 51 | 2546244 | -4 |
As you can see these stocks had an average of 84.25 hedge funds with bullish positions and the average amount invested in these stocks was $7.3 billion. That figure was $20.8 billion in AMZN’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand AT&T Inc. (NYSE:T) is the least popular one with only 51 bullish hedge fund positions. Compared to these stocks Amazon.com, Inc. (NASDAQ:AMZN) is more popular among hedge funds. Considering that hedge funds are fond of Amazon in relation to its market cap peers and historically investors achieved superior returns by investing in the top stock among hedge funds, you should seriously consider initiating a position in this stock.
