Consensus New Buys
- Apple (AAPL): A few years ago, this stock was a hedge-fund-favorite but eventually firms moved on to other ideas. Enter Q3 2016: they have returned. Funds such as Viking Global, Glenview Capital, Appaloosa Management, Third Point, and Coatue Management all started new stakes in the smartphone giant. The company recently released its new iPhone 7 suite of smartphones. Going into the event, sentiment was low in AAPL shares, as they had previously reported slowing iPhone growth, especially in China. Perhaps these funds thought AAPL would outperform low expectations, or perhaps they’re buying on the rumors that the next iPhone won’t be an “S” upgrade model but instead will be an all new, fully re-designed device with an edge-toedge OLED display.
- Alibaba Group (BABA): Hedge funds including Tiger Global, Lone Pine Capital, Coatue Management, and Third Point all piled into BABA shares during Q3. This is the largest e-commerce player in China via its Taobao and Tmall platforms. After trading down after its initial public offering last year, BABA shares have stabilized and built a base. During the quarter when funds were buying, BABA reported solid numbers and shares gapped higher. They have, however, since retraced that move a bit.
- Bank of America (BAC): This is one of the few financial stocks that hedge funds have been accumulating recently. And they’ve had impeccable timing with this one, whether through luck or skill. Post Donald Trump’s victory in the US presidential election, financial stocks have rocketed higher now that the thought is interest rates will rise and these companies will capture the spread. Funds such as Pennant Capital, Appaloosa, and Viking Global all acquired shares in Q3.
- Williams (WMB): Shares of WMB were in a tailspin last year as oil prices sank lower and their potential merger with Energy Transfer (ETE) came into question. Since early 2016, however, WMB shares have slowly but steadily climbed higher. Funds took advantage of the decreased uncertainty as Energy Transfer called off the merger in June. Buyers included Third Point, Lone Pine Capital, and Omega Advisors, among others.
Consensus Increased Positions
- Facebook (FB): This is probably one of the most widely owned stocks among hedge funds out there. Any dip in shares seems to be bought and that was the case with FB in Q3. Funds such as Tiger Management, Paulson & Co, Blue Ridge Capital, Third Point, and Coatue were all out accumulating shares. The company continues to take advertising spend as companies shift marketing from offline to online mediums. Alphabet (GOOG) and FB are the two biggest recipients by far and have basically cornered the market. While it has popular platforms like Facebook, Instagram, WhatsApp, and Oculus Virtual Reality, its core social media network is seeing pressure from SnapChat, which recently reportedly filed to go public.
- Liberty Global (LBTYA & LBTYK): This is the third consecutive quarter that shares of John Malone’s European cable giant have been accumulated by hedge funds in the newsletter. Managers such as Third Point, Glenview, Coatue, Berkshire Hathaway, Brave Warrior, and Coatue all bought more. Different funds bought different share classes as well: LBTYA are the voting shares and LBTYK are non-voting and typically trade at a slight discount to the ‘A’ shares. Shares have sold off for a couple of reasons: ‘Brexit’ fears remain as the company’s UK cable unit, Virgin Media, earns revenues in British Pounds (the Pound saw a steep decline postBrexit vote). The company in general is also facing more competition in some of its markets (like the Netherlands) but has been buying back more stock given the increased volatility in its shares. This has been a longtime favorite among hedge funds but shares have vastly underperformed over the past year.
- HD Supply (HDS): Hedge funds such as Appaloosa, Farallon, and Blue Ridge all added to pre-existing positions during the third quarter. The company focuses on three different segments: facilities maintenance, waterworks, and construction.
- Charter Communications (CHTR): In reality, this is more of a ‘mixed activity’ name. While Hound Partners, Blue Ridge, Lone Pine, and Berkshire all increased their positions, a decent amount of funds were also trimming exposure and locking in some gains. The company closed on its acquisition of Time Warner Cable (former ticker TWC) and is now the second largest cable and internet service provider in America. CEO Tom Rutledge will look to turn around those assets as they implement their ‘Spectrum’ brand service. This has been a hedge fund favorite name for quite a few quarters now.
Consensus Sold Positions
- Liberty Global Latin America (LILA & LILAK): This is a tracking stock distributed by Liberty Global (LBTYA / LBTYK) to shareholders and represents their Latin American cable assets. Funds such as Coatue, Glenview, Greenlight, and Maverick all dumped their shares. It’s unclear if they were dumping shares simply because they didn’t want exposure to Latin America and instead only wanted Liberty Global’s European assets, or if they were disappointed with results at LILA which have not been pretty as of late. The company recently purchased Cable & Wireless, a major TV and internet provider in the Caribbean. With this, they greatly expanded their footprint in the region (whereas they previously were mainly exposed to Chile and Puerto Rico). That said, investors have been disappointed by the guidance (or lack thereof) the company has provided and shares are down big this year. And while this is a tracking stock for the time being, the thought is that Liberty Global will eventually spin-off the Latin American assets in their entirety to LBTYA & LBTYK shareholders.
- 21st Century Fox (FOXA): Funds including Appaloosa, Farallon, and Greenlight all completely exited shares of this media company during the third quarter. Media stocks in general have been pressured seemingly all year for various reasons. Many funds were originally drawn to Fox’s attractive set of assets and warmed to the fact that Rupert Murdoch’s sons could be good managers.
- Citigroup (C): This financial was sold by the likes of Baupost Group, Hound, and Omega during Q3. These sales were perhaps ill-timed, as shares of financial companies have since spiked higher after the US presidential election.
- Pioneer Natural Resources (PXD): Hedge funds like Lone Pine, Omega, and Viking Global all dumped their exposure to this energy play during the third quarter. This has been a bit of a controversial name for some investors, as David Einhorn’s Greenlight Capital has been short the name.
Consensus Decreased Positions
- FleetCor Technologies (FLT): This stock has now graced this list in back to back quarters. This time around, it was trimmed by the likes of Pennant, Hound, Farallon, Blue Ridge, Tiger Global, and Lone Pine. This has been a roll-up story in the fleet payments industry.
- Allergan (AGN): While this was once a consensus hedge fund buy, it seems some funds have scaled back their enthusiasm for the name. Hedge funds including Omega, Pennant, Appaloosa, Third Point, and Paulson trimmed their exposure to the name. Carl Icahn sold some shares as well. The company sold its generic drug business to Teva Pharmaceutical (TEVA) and this has turned into a capital return story. That said, shares haven’t really performed well as they’re down 38% this year, including around 24% over the past three months.
- Shire (SHPG): Hedge funds including Tiger Management, Viking Global, Third Point, Lone Pine, and Paulson & Co all cut their position sizes in this pharmaceutical play that aims at developing medicines for rare diseases. Shares have traded largely sideways over the past six months.
- Charter Communications (CHTR): Realistically, this is more of a ‘mixed activity’ name as other funds were also buying more in the third quarter as detailed a few pages ago. However, this is also the third consecutive quarter CHTR positions have been trimmed by various managers. The company recently closed on its acquisition of Time Warner Cable and Bright House. Funds that trimmed their stakes in the third quarter include Glenview, Bridger, Farallon, Third Point, and Tiger Global. It seems likely that the main reason for selling some shares is for risk management purposes as many funds bet big on this company and shares have surged over the past year.