Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Alphabet Inc (NASDAQ:GOOGL) in this article.
Is Alphabet Inc (NASDAQ:GOOGL) a bargain? The smart money was buying. The number of long hedge fund positions advanced by 17 in recent months. Alphabet Inc (NASDAQ:GOOGL) was in 179 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 167. This means the bullish number of hedge fund positions in this stock reached a brand new all time high. Our calculations also showed that GOOGL ranks #4 among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Dan Loeb of Third Point
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let’s take a gander at the fresh hedge fund action encompassing Alphabet Inc (NASDAQ:GOOGL).
Do Hedge Funds Think GOOGL Is A Good Stock To Buy Now?
At Q4’s end, a total of 179 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GOOGL over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Alphabet Inc (NASDAQ:GOOGL), with a stake worth $2927.7 million reported as of the end of December. Trailing Fisher Asset Management was Viking Global, which amassed a stake valued at $1086.3 million. D1 Capital Partners, AQR Capital Management, and Melvin Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position AltaRock Partners allocated the biggest weight to Alphabet Inc (NASDAQ:GOOGL), around 23.5% of its 13F portfolio. Fosse Capital Partners is also relatively very bullish on the stock, earmarking 20.73 percent of its 13F equity portfolio to GOOGL.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Third Point, managed by Dan Loeb, created the most outsized position in Alphabet Inc (NASDAQ:GOOGL). Third Point had $455.7 million invested in the company at the end of the quarter. Catherine D. Wood’s ARK Investment Management also initiated a $164.9 million position during the quarter. The other funds with brand new GOOGL positions are Ryan Frick and Oliver Evans’s Dorsal Capital Management, Michael Rockefeller and Karl Kroeker’s Woodline Partners, and Keith Meister’s Corvex Capital.
Let’s now review hedge fund activity in other stocks similar to Alphabet Inc (NASDAQ:GOOGL). These stocks are 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), Visa Inc (NYSE:V), and Johnson & Johnson (NYSE:JNJ). All of these stocks’ market caps are closest to GOOGL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FB | 242 | 38233910 | 12 |
| TSLA | 68 | 12308025 | 1 |
| BABA | 156 | 17892090 | -10 |
| TSM | 72 | 11843403 | 5 |
| BRK-B | 110 | 20795968 | 1 |
| V | 166 | 23599162 | 6 |
| JNJ | 81 | 5820696 | -1 |
| Average | 127.9 | 18641893 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 127.9 hedge funds with bullish positions and the average amount invested in these stocks was $18642 million. That figure was $21903 million in GOOGL’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 68 bullish hedge fund positions. Alphabet Inc (NASDAQ:GOOGL) is not the most popular stock in this group but hedge fund interest is still way above average. Our overall hedge fund sentiment score for GOOGL is 88.9. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on GOOGL as the stock returned 30.6% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
