>>> Consensus New Buys
* Walt Disney (DIS): Managers that initiated new stakes in DIS include Duquesne Family Office, Appaloosa, and Sequoia Fund, among others. And while not a new position, Third Point added sizably to the stake it started in Q1 and it’s now one of their top holdings. The company’s theme parks have been hurt by the global pandemic, but its Disney+ streaming platform has been a huge early success, achieving 60 million subscribers in less than nine months (for comparison, it took Netflix seven years to achieve the same number). This is the main attraction for these funds, as they see the company’s total addressable market expanding.
* TransDigm Group (TDG): Maverick Capital, Coatue Management, and Hound Partners all initiated new positions in the company. TDG is an aerospace aftermarket parts supplier. The company is run like a private equity-style roll-up, acquiring complementary businesses. TDG is highly focused on parts where they are the sole supplier, giving them pricing power. Given the pandemic has dulled demand for travel, planes are flying less frequently and as such need less replacement parts (and airlines are also retiring older planes early). The company also has a lot of leverage, so these two reasons explain the volatility shares saw over the first half of the year. These funds used that volatility to look past near-term headwinds and enter what they view as a good business.
* Qiagen (QGEN): This is a merger arbitrage play, so it should come as no surprise that Farallon Capital and Paulson & Co are the main funds showing new positions in the name, but Maverick Capital also bought shares. QGEN is set to be acquired by Thermo Fisher Scientific. After agreeing a deal in March, the terms were amended in July to increase the offer price from €39 to €43 per QGEN share in cash.
* T-Mobile Subscription Rights (TMUSR): This entry is included mainly for explanation as it is both
backwards-looking (the rights have already expired) and many holders show a position in them not necessarily
because they bought them outright, but likely received them directly as a result of being a TMUS common
stock holder to begin with. The company announced a rights offering in order to buy a block of its own stock
back from Softbank. These rights expired 7/27/20 and the offering was over-subscribed.
>>> Consensus Increased Positions
* Facebook (FB): This is the third consecutive quarter this stock has landed on this list and it remains one of the
higher consensus picks. This time around, Tiger Management, Brave Warrior, Farallon, Maverick, Sequoia,
and Lone Pine Capital all added to their pre-existing positions. While FB has been impacted by the pandemic
given its focus on advertising, it has also shown resilience. For instance, when one pool of advertisers pulled
back spend or cut it entirely, another bidder was ready to fill the void because lower demand led to lower
prices, which attracted bidders. CEO Mark Zuckerberg also recently testified before the House Judiciary
subcommittee on antitrust along with the CEOs of Amazon, Apple, and Google. While all faced tough
questions and ‘gotcha’ statements, some analysts believe that of the four, FB’s business practices are
potentially the least anti-competitive.
* Microsoft (MSFT): Shares of the tech giant were acquired by Appaloosa, Maverick, Duquesne, Lone Pine,
and Tiger Global. The company continues to ride the cloud computing trend behind its successful Azure
platform. And in recent news, the company is reported to be in talks to acquire TikTok, after the Chinese
company faced an ultimatum from President Trump to sell or be banned from the US. This is a fluid situation,
but perhaps could be quite a fortuitous one for a company that missed two of the biggest recent trends: mobile
and social media (Windows Phone and LinkedIn notwithstanding). Detractors to a possible combination point
to MSFT’s failure to execute after acquiring companies like Skype in the past. It would also be a bit ironic if
the US government, which is concerned about the power of ‘Big Tech,’ basically forces the fastest growing
social media upstart into the arms of… Microsoft (who was notably not invited to the antitrust hearing
mentioned above).
* JPMorgan Chase (JPM): Maverick, Omega Advisors, Brave Warrior, and Viking Global all boosted their financial sector exposure via this moneycenter bank. Interest rates are at historic lows and economic uncertainty provides potential potholes for their lending division. Not to mention, they also have a large credit card portfolio. But funds utilized the market volatility to bet on Jamie Dimon, widely considered the best operator in the space.
* Micron Technology (MU): Rounding out this list, shares of the chipmaker were accumulated by the likes of Tiger Management, Coatue, Maverick, and Appaloosa.
>>> Consensus Sold Positions
* IQVIA (IQV): Hedge funds that exited IQV shares include Coatue, Hound Partners, and Tiger Management,
among others. This company houses the combination of the former Quintiles and IMS Health entities.
* Berkshire Hathaway (BRK.B): Greenlight Capital and Maverick Capital both exited shares of Warren
Buffett’s holding company during the second quarter. And most notably, Bill Ackman’s Pershing Square
liquidated its position too. This had previously been his second largest holding worth almost $1 billion.
During Q2, Berkshire actually bought back $5.1 billion worth of its own stock, so there’s a very real chance
they were actually buying from these very funds
* Centene (CNC): Funds that liquidated exposure to CNC include Glenview, Greenlight, and Third Point. Centene closed its $17 billion merger with WellCare Health Plans in the first quarter.
* Allergan (AGN): Allergan no longer trades due to its merger with AbbVie (ABBV) closing. Hedge funds that were previously playing the deal include Appaloosa, Farallon, Maverick, Paulson & Co, and Third Point.
* Luckin Coffee (LKNCY): Shares of the Chinese coffee company were suspended and will be delisted following an accounting scandal was uncovered where they inflated sales fraudulently. Luckin’s CEO and COO were fired in May. The company was only founded in 2017 and went public last year as investors bet on a pureplay way to get exposure to the Chinese coffee market as the company took on the colossus in the space, Starbucks (SBUX). Coatue and Duquesne no longer show positions in the name. Neither does Lone Pine, perhaps Luckin’s most notable investor casualty here. At the end of Q1 it was their 20th largest US-listed holding worth over $360 million. A 13G filed with the SEC shows they blew out of the position on April 2nd, just after the fraud became public. This goes to show that even some of the most respected investors make mistakes too, but also showcases just how quickly they take action when a mistake is made, even if it means taking a big loss.
>>> Consensus Decreased Positions
* Amazon (AMZN): This quarter this list is basically a ‘FAANG stock’ compilation (save for Facebook and Apple). Positions in AMZN were reduced by the likes of Tiger, Pennant Investors, Duquesne, Sequoia, Coatue, Third Point, Appaloosa, Lone Pine, and Viking. Needless to say, this was the most consensus decision from funds in the newsletter during Q2. There’s probably not a consensus as to ‘why’ they were selling, though. Shares have outperformed significantly as the company has widely benefited from trends exacerbated by COVID-19. Customers are ordering things online more than ever and its cloud computing division (AWS) is being fueled by the work from home trend. Some funds may have trimmed for position size management reasons, while others might simply be looking for sources of capital to put to work in more compelling ideas given AMZN’s surge
* Alphabet (GOOG): This is the second consecutive quarter this name lands on the decrease list. Funds that
reduced exposure in Q2 include Hound, Maverick, Baupost Group, Farallon, Appaloosa, and Sequoia Fund.
CEO Sundar Pichai recently appeared in front of the House Judiciary subcommittee on antitrust along with the
CEOs of Amazon, Apple, and Facebook. While all took tough questions, Google saw the most heat. Some
analysts feel that of the four, Google is the most likely to be in trouble. After the hearing, the conclusion was
basically that it’s not ‘if’ an antitrust case will be brought against them, but ‘when.’ The bull counter to this
potential development is that any regulation could actually have the opposite intended effect: it could just
entrench incumbents further and make it more expensive and harder for upstarts to compete.
* UnitedHealth Group (UNH): Hedge funds that reduced holdings of the US’s largest healthcare insurer
include Maverick, Glenview, Appaloosa, Bridger Capital, Brave Warrior, and Lone Pine.
* Netflix (NFLX): Positions in the streaming giant were trimmed by the likes of Appaloosa, Duquesne, Viking Global, Coatue, and Lone Pine. Like Amazon above, Netflix has also benefited from the pandemic in the sense that more people are spending more time in their homes and are looking for sources of entertainment since a lot of out-of-home options have been eliminated or curtailed in the mean time. Shares held up quite well during the volatility in the first half of the year.