Consensus New Positions
* Facebook (FB): Soros Fund, Maverick Capital, Viking Global, and Coatue Management all initiated new stakes in the social media giant during the third quarter. After the company’s IPO debacle last year where shares fell from $40 down to $20, investors gradually started to scoop up shares and warm up to the valuation. More recently, investors have been pleased with the company’s monetization of its mobile platforms.
* DaVita (DVA): Passport Capital, Perry Capital, and Lone Pine Capital all established stakes in this dialysis company during Q3. Shares had recently been hit on news that a proposal by the Centers for Medicare and Medicaid Services would decrease payments to dialysis facilities by $970 million in calendar year 2014 (more details here). And in new Q4 portfolio activity, Berkshire Hathaway has just disclosed additional purchases of DVA shares. This seems to be one of Ted Weschler’s favorite investments and he must have high conviction, as they now own over $2 billion worth of DVA shares. The company also had a 2-for-1 stock split on September 6th and all portfolio tables in this issue have already accounted for this change.
* HCA (HCA): This for-profit hospital network was purchased by the likes of Passport Capital, Omega Advisors, and Viking Global during the quarter. The investment thesis here is that the company should benefit from Obamacare as more patients have access to health insurance. This has also been a longtime (and profitable) holding of Larry Robbins’ Glenview Capital as well.
* 21st Century Fox (FOXA) and News Corp (NWSA): These two securities weren’t necessarily actively purchased by hedge funds in the third quarter, but rather received in a spinoff. Many hedge funds in this issue (including Third Point, Maverick, Blue Ridge, Farallon, Coatue, Tiger Global, Lone Pine, and Viking Global) previously owned shares of the old News Corp entity. This company split up into 2 new companies: 21st Century Fox (FOXA), which houses the entertainment division and ‘new’ News Corp (NWSA) which owns the legacy publishing assets. Many of the funds above chose to hold onto the growth portion of the spin-off (FOXA) and sell the shares they received in the publishing business (NWSA). So even though these positions appear as ‘new’ holdings throughout the issue, just remember that the vast majority of these funds received these via spinoff.
Consensus increase position
* Crown Castle International (CCI): Coatue Management, Glenview Capital, and Lone Pine Capital all added to pre-existing positions in CCI during the third quarter. Shares took a brief hit on worries of rising interest rates, but have since quickly rebounded. This is a play on increased wireless data usage and there is also a potential future catalyst of a REIT conversion.
* Dollar General (DG): This dollar-store giant was purchased again by the likes of Passport Capital, Pennant Capital, and Lone Pine Capital during the third quarter. Shares climbed from $52 to $56 at the end of Q3 and have since traded even higher.
* Monsanto (MON): Hedge funds like Blue Ridge Capital, Viking Global, and Lone Pine all added to their holdings in MON again in Q3. This company provides agricultural products and is known for its seeds and biotechnology. Blue Ridge in particular has owned shares for quite some time.
* TransDigm Group (TDG): Farallon Capital, Maverick Capital, and Tiger Global all added to their pre- existing stakes in this designer and supplier of aircraft components. A large part of the investment thesis here hinges on a strong management team and solid capital allocation.
* Equinix (EQIX): Paulson & Co, JANA Partners, and Lone Pine Capital all bought more EQIX shares during the quarter. Shares have fallen from $230 in the second quarter down to $161 presently and hedge funds have started to dip their toes back into the water of this datacenter and colocation play.
Consensus Sold Positions
* Realogy (RLGY): This real estate brokerage play was once a consensus buy among hedge funds, but now some funds seem to have soured on that bet, including Blue Ridge, Coatue, and Tiger Management. Some of the worries seem to be that rising mortgage rates could deter homebuyers from buying, thus decreasing real estate transaction volume.
* Clearwire (CLWR): This is a consensus sell only because shares no longer trade (CLWR was bought out by Sprint Nextel (S)). Hedge funds that previously owned CLWR stakes include arbitrage-focused firms like Farallon and Paulson & Co, but also Glenview Capital.
* Smithfield Foods (SFD): This was another arbitrage position that was bought out in the quarter by China’s Shuanghui, so shares no longer trade. Again, arbitrage focused firms like Paulson & Co and Farallon were involved here.
* Elan (ELN): This was also an arbitrage play as the company put itself up for sale and shares rose on the possibility of a takeover. Investors such as JANA Partners, Paulson & Co, and Viking Global sold their shares in Q3. Elan agreed to a deal with Perrigo (PRGO) in July for $8.6 billion and shareholders of both companies just approved the merger a few days ago.
* ‘Old’ News Corp Entity (NWSA/NWS): This old stock mainly appears on this list for explanation purposes. The ‘old’ News Corp entity completed a split up into 21st Century Fox (FOXA) and ‘new’ News Corp (NWSA) shares. As such, hedge funds no longer show positions in the old entity because it no longer trades. Instead, they will either show stakes in FOXA, ‘new’ NWSA, or both, depending on what they decided to do after the transaction.
Consensus Decrease Position
* American International Group (AIG): While the company still trades below book value, this stock appears on this list for the second consecutive quarter. Many hedge funds are up big on their positions and are locking in some profits as the discount to book value begins to narrow. Soros, Appaloosa, Pennant, Omega, Blue Ridge, Glenview, Perry, and Fairholme all trimmed their stakes in Q3. Note that Bruce Berkowitz’s Fairholme is not on this list because he still retains a massive $4 billion stake in AIG.
* Priceline.com (PCLN): This is most likely a case of locking in profits as PCLN is up 80% over the past year. Tiger, Bridger, Farallon, Maverick, Pennant, Coatue, and Lone Pine all cut their stakes in this online travel- booking giant.
* Charter Communications (CHTR): Realistically, this stock is more of a mixed activity name. It graces this list because a good amount of funds trimmed their stakes (including Tiger Global, Bridger, Farallon, Soros, Lone Pine, and Coatue). At the same time, some other prominent funds were out buying as well.
* Google (GOOG): This highflying tech stock continues to head higher and hedge funds like Tiger, Passport, Appaloosa, Soros, Lone Pine, and Coatue have reduced their exposure to the name. This is at least partially because their position sizes have increased due to share price appreciation (GOOG is up over 58% over the past year).
* Liberty Global (LBTYA): In the past, some hedge funds were selling Liberty Global voting shares (LBTYA) and instead buying non-voting shares (LBTYK) because they traded at a discount. This quarter, it looks like they were just simply selling some of their LBTYA exposure. Funds that did so include: Soros, Third Point, Maverick, Blue Ridge, and Coatue.