Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Amazon.com, Inc. (NASDAQ:AMZN), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Amazon.com, Inc. (NASDAQ:AMZN) the right pick for your portfolio? Prominent investors were selling. The number of bullish hedge fund bets shrunk by 30 in recent months. Amazon.com, Inc. (NASDAQ:AMZN) was in 243 hedge funds’ portfolios at the end of March. The all time high for this statistic is 273. Our calculations also showed that AMZN ranked #3 among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 273 hedge funds in our database with AMZN holdings at the end of December.
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bill Miller of Miller Value Partners
At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding Amazon.com, Inc. (NASDAQ:AMZN).
Do Hedge Funds Think AMZN Is A Good Stock To Buy Now?
At Q1’s end, a total of 243 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AMZN over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Amazon.com, Inc. (NASDAQ:AMZN) was held by Citadel Investment Group, which reported holding $10508.4 million worth of stock at the end of December. It was followed by SB Management with a $6211 million position. Other investors bullish on the company included Fisher Asset Management, Arrowstreet Capital, and Tiger Global Management LLC. In terms of the portfolio weights assigned to each position SB Management allocated the biggest weight to Amazon.com, Inc. (NASDAQ:AMZN), around 40% of its 13F portfolio. VGI Partners is also relatively very bullish on the stock, setting aside 21.48 percent of its 13F equity portfolio to AMZN.
Because Amazon.com, Inc. (NASDAQ:AMZN) has faced falling interest from hedge fund managers, it’s easy to see that there exists a select few money managers that decided to sell off their entire stakes heading into Q2. Interestingly, Jeffrey Talpins’s Element Capital Management said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, worth about $116.2 million in stock. Andrew Immerman and Jeremy Schiffman’s fund, Palestra Capital Management, also dropped its stock, about $107.3 million worth. These moves are interesting, as total hedge fund interest dropped by 30 funds heading into Q2.
Let’s go over hedge fund activity in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). These stocks are Alphabet Inc (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Alibaba Group Holding Limited (NYSE:BABA), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), Berkshire Hathaway Inc. (NYSE:BRK-B), and JPMorgan Chase & Co. (NYSE:JPM). 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 |
|---|---|---|---|
| GOOGL | 185 | 24573668 | 6 |
| FB | 257 | 40967433 | 15 |
| TSLA | 62 | 10013166 | -6 |
| BABA | 135 | 15497689 | -21 |
| TSM | 76 | 10870661 | 4 |
| BRK-B | 111 | 19880791 | 1 |
| JPM | 111 | 5253689 | -1 |
| Average | 133.9 | 18151014 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 133.9 hedge funds with bullish positions and the average amount invested in these stocks was $18151 million. That figure was $50422 million in AMZN’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 62 bullish hedge fund positions. Amazon.com, Inc. (NASDAQ:AMZN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMZN is 95.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and beat the market again by 6.7 percentage points. Unfortunately AMZN wasn’t nearly as successful as these 5 stocks and hedge funds that were betting on AMZN were disappointed as the stock returned 8.1% since the end of March (through 8/6) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
