JNJ, AMZN, FB: Hedge Funds Made the Right Call On These Stocks

After a rocky start to the year, the three major U.S. stock indexes have rebounded to post gains of between 4% and 5.3% in 2016. Along with the broader market’s rebound, several major stocks have managed to post strong returns this year, and it seems like the hedge funds in our database were anticipating these moves.

In the following article we’ll take a look at five stocks that the hedge funds in our database were collectively bullish on, and which have managed to outperform the market this year.

At Insider Monkey, we track more than 750 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

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#5. Johnson & Johnson (NYSE:JNJ)

– Number of Hedge Fund Shareholders (as of June 30): 82

– Total Value of Hedge Funds’ Holdings (as of June 30): $5.58 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 1.7%

We’ll start with Johnson & Johnson (NYSE:JNJ), which was held by 82 hedge funds in our system on June 30, up by 6.5% quarter-over-quarter. Among the most bullish were Ken Fisher’s Fisher Asset Management, which disclosed ownership of 10.84 million shares worth $1.33 billion as of June 30, and Ken Griffin’s Citadel Advisors, which boosted the size of its holding by 64% during the second quarter, to 1.98 million shares.

Shares of Johnson & Johnson (NYSE:JNJ) have risen by 16.08% year-to-date, all while paying out an annualized dividend that yields more than 2.7%. However, the stock has lost almost 5% since the beginning of August. In late-September, shares tumbled even though the FDA approved the use of STELARA (ustekinumab) for the treatment of adults with certain cases of moderately-to-severely-active Crohn’s disease. STELARA is produced by Janssen Pharmaceuticals, a Johnson & Johnson subsidiary.

#4. Comcast Corporation (NASDAQ:CMCSA)

– Number of Hedge Fund Shareholders (as of June 30): 88

– Total Value of Hedge Funds’ Holdings (as of June 30): $9.68 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 6.1%

Next up is Comcast Corporation (NASDAQ:CMCSA), which counted the backing of several major hedge funds at the end of June, including Mehdi Mahmud’s First Eagle Investment Management, which held 26.21 million shares valued at $1.7 billion, and the Alex Snow-led Lansdowne Partners, which owned 24.48 million shares at the end of the second quarter.

Comcast Corporation (NASDAQ:CMCSA) shares have jumped by almost 15.82% year-to-date, helped by acquisitions, strong second-quarter results, and an expanding internet business, among other things. In late-September, the company announced that it was acquiring the remaining 24% stake in its Spectacor business, giving it full ownership of it. Former Chairman Ed Snider held the portion that was bought by Comcast.

On the second page of this article, we’ll check out three more stocks that hedge funds were buying in the second quarter that have proven to be great purchases.

#3. Charter Communications, Inc. (NASDAQ:CHTR)

– Number of Hedge Fund Shareholders (as of June 30): 134

– Total Value of Hedge Funds’ Holdings (as of June 30): $18.43 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 25.4%

Charter Communications, Inc. (NASDAQ:CHTR) saw its popularity among the funds that we track surge by more than 36% during the second quarter, as the company completed its merger with Time Warner Cable and Bright House Networks. Among the 36 newcomers was Dan Loeb’s Third Point, which started a position comprising 1.45 million shares between April and June. Among the pre-existing shareholders was Warren Buffett’s Berkshire Hathaway, which held more than 8% of the company’s outstanding shares at the end of June, 9.34 million in total, despite a 9% reduction to its stake during the quarter.

Charter Communications, Inc. (NASDAQ:CHTR) has managed to return more than 45% this year, which was recently helped by CEO Tom Rutledge’s appearance at the Communacopia Conference. During the event, the company’s top executive shared some updates on the integration of its aforementioned acquisitions, its competition with streaming platforms, the possibility of it going into wireless services, and its capital allocation plans.

#2. Amazon.com, Inc. (NASDAQ:AMZN)

– Number of Hedge Fund Shareholders (as of June 30): 145

– Total Value of Hedge Funds’ Holdings (as of June 30): $19.82 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 5.9%

Amazon.com, Inc. (NASDAQ:AMZN), the third-most popular stock among the funds that we track as of June 30, has also performed well this year, surging by 24% year-to-date, including 17% gains in the third quarter. In fact, shares continue to push record highs, helped among other things by the recent release of a new portal featuring photo-printing services, and another one for handmade products, dubbed ‘Handmade at Amazon’.

Among the 145 funds in our database long Amazon.com, Inc. (NASDAQ:AMZN) on June 30 was Andreas Halvorsen’s Viking Global, which held 3.27 million shares worth more than $2.3 billion. Also noteworthy was the position of John Griffin’s Blue Ridge Capital, which boosted its stake in Amazon by 48% during the second quarter, to 343,000 shares.

#1. Facebook Inc (NASDAQ:FB)

– Number of Hedge Fund Shareholders (as of June 30): 148

– Total Value of Hedge Funds’ Holdings (as of June 30): $15.24 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 4.7%

Finally, there’s Facebook Inc (NASDAQ:FB), the most popular single stock among the hedge funds that we track (Alphabet, which has two different classes of shares, is the most popular stock across both classes). Large shareholders as of June 30 included Viking Global with 20.14 million shares, Stephen Mandel’s Lone Pine Capital with 10.94 million shares, and John Armitage’s Egerton Capital Limited, with 5.58 million shares valued at $638 million.

Facebook Inc (NASDAQ:FB) has climbed by 23.25% year-to-date, and gained more than 12% in the third quarter. However, they have been largely flat since a tumble on September 23 after the company disclosed that for more than two years, it had unintentionally overestimated the average time users watched videos on its platforms. Although the inflated data did not impact billing, advertisers are not happy with the 60%-to-80% overestimation.

Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned in this article.