>>> Consensus New Buys
Vantiv (VNTV): During the third quarter, funds such as Glenview Capital, Lone Pine Capital, and Third Point established stakes in Vantiv. The company is a payment processor that enables merchants to accept credit/ debit cards and other payments.
Anheuser Busch Inbev (BUD): Lone Pine Capital, Farallon Capital, and Viking Global all established new positions in this alcoholic beverage giant. While ‘big beer’ has been declining in popularity in certain markets, the company is the dominant player in the industry and uses its scale to acquire smaller competitors, especially in the craft beer segment that has gained so much popularity over the years. It’s known for a solid management team via 3G Capital.
Equifax (EFX): During the third quarter, this credit reporting agency was hit by a data breach. The massive hack led to huge public backlash as names, social security numbers, and other personal information was stolen. Shares plunged lower and funds such as Viking Global, Hound Partners, and Farallon Capital all dipped their toes in the water. While there’s still some uncertainty surrounding the exact liability the company will face, EFX is part of an oligopoly (along with TransUnion and Experian) and has an entrenched position in the financial lending space as issuing banks rely heavily on its independent services. It remains to be seen if these funds were using the volatility to make a quick trade in a potentially overblown situation, or if they’re looking to hold on longer term. Time will tell.
DowDuPont (DWDP): This is listed as a’new’ buy in the quarter but in reality, the vast majority of the funds in this issue received DWDP shares due to their previous ownership stake in either Dow Chemical (former ticker DOW) or DuPont (former ticker DD), as the two companies merged to form DWDP. Now, while these funds may not have been buying DWDP in the open market, it’s definitely a consensus trade. Hedge funds like Omega Advisors, Maverick Capital, Third Point, and Glenview Capital all hold notable positions. If you weren’t counting DWDP on this list, the next consensus buy would be a tie between Bank of America (BAC) and Twitter (TWTR).
>>> Consensus Increased Positions
Alphabet (GOOG): Hedge funds such as Tiger Management, Hound Partners, SPO Advisory, Farallon Capital, and Maverick Capital all added to their existing stakes in Google’s parent company. Many managers have viewed shares as ‘cheap’ in recent months and their activity certainly backs that up. While its search engine generates the bulk of cashflow, they’re also working on many other promising fields such as machine learning, A.I., self-driving cars (Waymo), video content (YouTube), and more.
Apple (AAPL): Jumping into shares ahead of the latest iPhone X product cycle were funds like Maverick Capital, Appaloosa Management, Coatue Management, and Berkshire Hathaway. The company’s latest smartphone should be a nice upgrade cycle and they’re pushing the envelope on pricing power, as these are the most expensive iPhones produced yet.
Visa (V): This giant payment processor was bought by hedge funds including Maverick Capital, Blue Ridge Capital, and Viking Global. Many of these managers sizably increased their pre-existing stakes, which is notable. For Blue Ridge Capital in particular, Visa is now their largest holding. The company continues to benefit from a secular shift from paying with cash to paying with plastic (credit/debit cards). It benefits from huge network effects and continues its expansion overseas.
Shire (SHPG): This is the second consecutive quarter this stock has graced this list. This time around, funds that accumulated more SHPG shares include Omega Advisors, Maverick Capital, and Glenview Capital. Shares have trended lower ever since late May of this year. They peaked around $191 and currently trade around $147.
>>> Consensus Increased Positions
Humana (HUM): This is the second quarter in a row that hedge funds have exited HUM shares. This time around, Farallon Capital, Flenview Capital, Third Point, and Viking Global all liquidated their stakes.
ServiceMaster (SERV): Previously somewhat of a ‘hedge fund favorite,’ SERV seems to have fallen out of favor with this crowd. Hound Partners and Paulson & Co were some of the funds that exited their stakes entirely during the third quarter.
Altice (ATUS): Patrick Drahi’s entrance into the US cable market via acquisition of Suddenlink and Cablevision attracted numerous shareholders who were familiar with his costcutting playbook in Europe. That said, ATUS shares have done nothing but go down since their IPO this year. Funds that threw in the towel include the likes of Lone Pine Capital and Maverick Capital.
Wells Fargo (WFC): Funds like Appaloosa Management and Blue Ridge Capital liquidated their stakes during Q3. The company has been dealing with negative publicity surrounding a scandal in which accounts were opened without customers’ permission. And while banks are benefiting from an environment where interest rates are slowly increasing, funds seem to prefer to play that trend via Bank of America (BAC) and JPMorgan Chase (JPM).
Dow Chemical (DOW): This stock no longer trades as Dow merged with DuPont to form the new DowDuPont (DWDP). And as highlighted earlier, the vast majority of funds that previously owned DOW continue to own the new DWDP entity, as it’s been an event-driven play with catalysts.
Mobileye (MBLY): This stock is also listed for informational purposes. The company was acquired by Intel (INTC) in a $15 billion deal during the quarter so shares no longer trade. The arbitrage focused funds in the newsletter (Farallon and Paulson) were the main owners of these shares.
>>> Consensus Decreased Positions
Facebook (FB): This is the second consecutive quarter this stock graces this list. Shares of the social media giant have performed extremely well, so it’s likely just been a case of profit-taking and reducing position sizes back down as they’ve increased. This time around, Bridger Management, Farallon, Blue Ridge, Maverick, Third Point, Viking, and Lone Pine all trimmed their stakes.
Charter Communications (CHTR): This is now the seventh straight quarter that hedge funds have been trimming their CHTR positions. As the company integrates its merger with Time Warner Cable and Bright House, managers have taken profits and reduced their swelling position sizes. Hedge funds that were trimming their CHTR stakes this time around include Bridger, Farallon, Hound, Lone Pine, and Berkshire Hathaway. There have been concerns surrounding the company’s loss of video subscribers as of late, but the company has also received a lot of interest from potential merger partners, though none of the overtures have approached what CHTR feels is fair value.
Huntsman (HUN): This chemical company’s shares were sold by Paulson & Co, Maverick, Pennant Capital, Farallon, and Appaloosa during the third quarter.
Liberty Global (LBTYA & LBTYK): Both the voting shares (LBTYA) and non-voting shares (LBTYK) were consensus reductions this quarter. LBTYA was sold by Brave Warrior, Coatue, Farallon, and Glenview, while LBTYK was sold by Farallon, Coatue, Glenview, and SPO Advisory. The European cable giant has had some operational issues on the continent and shares have languished over the past few quarters. Previously a ‘hedge fund favorite’ just a few years ago, managers are definitely allocating less capital to this play these days.