The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Facebook Inc (NASDAQ:FB).
Is Facebook (FB) stock a buy or sell? FB investors should pay attention to an increase in activity from the world’s largest hedge funds lately. Facebook Inc (NASDAQ:FB) was in 242 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 213. 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 ranks 3rd among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Gabriel Plotkin of Melvin Capital Management
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 (or at the end of this article). Keeping this in mind let’s check out the key hedge fund action regarding Facebook Inc (NASDAQ:FB).
Do Hedge Funds Think FB Is A Good Stock To Buy Now?
At Q4’s end, a total of 242 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in FB over the last 22 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Facebook Inc (NASDAQ:FB) was held by SB Management, which reported holding $3278.7 million worth of stock at the end of December. It was followed by Fundsmith LLP with a $1753.4 million position. Other investors bullish on the company included Tiger Global Management LLC, Eagle Capital Management, and Melvin Capital Management. In terms of the portfolio weights assigned to each position Immersion Capital allocated the biggest weight to Facebook Inc (NASDAQ:FB), around 26.14% of its 13F portfolio. Gobi Capital is also relatively very bullish on the stock, designating 21.76 percent of its 13F equity portfolio to FB.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, created the biggest position in Facebook Inc (NASDAQ:FB). Melvin Capital Management had $1.2729 billion invested in the company at the end of the quarter. Mark Massey’s AltaRock Partners also initiated a $467.6 million position during the quarter. The other funds with new positions in the stock are Andreas Halvorsen’s Viking Global, Anand Desai’s Darsana Capital Partners, and Zach Schreiber’s Point State Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Facebook Inc (NASDAQ:FB). We will take a look at Visa Inc (NYSE:V), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), Berkshire Hathaway Inc. (NYSE:BRK-B), Tesla Inc. (NASDAQ:TSLA), Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG). All of these stocks’ market caps are similar to FB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| V | 166 | 23599162 | 6 |
| TSM | 72 | 11843403 | 5 |
| BRK-B | 110 | 20795968 | 1 |
| TSLA | 68 | 12308025 | 1 |
| WMT | 70 | 6197019 | 1 |
| JNJ | 81 | 5820696 | -1 |
| PG | 83 | 10421985 | 8 |
| Average | 92.9 | 12998037 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 92.9 hedge funds with bullish positions and the average amount invested in these stocks was $12998 million. That figure was $38234 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 68 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Unfortunately FB wasn’t nearly as successful as these 30 stocks and hedge funds that were betting on FB were disappointed as the stock returned -1.7% since the end of the fourth quarter (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
