TheChek News Flow

* JPMorgan Chase (JPM): This quarter’s 13F portfolio snapshot coincides perfectly with the pandemic market sell-off, offering interesting insights as to what stocks have been on managers’ watchlists for some time. That said, they didn’t all necessarily agree on what stocks to buy. While the following stocks grace the consensus buy list, the degree of consensus is not high by any means compared to these lists on a historical basis. Funds that acquired shares of JPMorgan Chase included Maverick Capital, Omega Advisors, and Viking Global.

* Facebook (FB): This stock would be the one exception where there was a high degree of agreement because it graces both the ‘consensus new buy’ list as well as the ‘consensus add’ list on the next page. The type of investor that was attracted to the social media giant was also quite wide-ranging. As shares sold off, the usual growth / GARP (growth at a reasonable price) / compounder investors were attracted to the name. But this time around value investors were also dipping their toes in. Baupost Group, Brave Warrior Advisors, and Omega Advisors all established new positions. The company has recently put a lot of money to work, spending $5.7 billion to acquire a 9.99% stake in Jio Platforms in India to deepen its position in a country that’s very important to them. Jio houses the company’s popular and inexpensive wireless carrier Reliance Jio as well as JioMart, the company’s e-commerce platform. Some analysts have postulated that the tie-up will lead to the creation of a ‘super-app’ akin to WeChat in China. FB also is buying Giphy, an animated gif’s tool for $400 million. Lastly, FB just announced Facebook Shops, a partnership with Shopify (SHOP) that will allow merchants to customize shops on its Facebook and Instagram platforms, as it starts to move beyond advertising.

* Blackstone Group (BX): While shares of this private equity giant were scooped up by the likes of Farallon Capital, Maverick Capital, and Pershing Square, it’s worth pointing out they did so only with very small position sizes. Interest rates are low and there is a wide range of business outcomes for many industries right now, leading many to believe private equity could be quite active this year.

* Wells Fargo (WFC): This is another big moneycenter bank that was bought by some hedge funds in the first quarter. Maverick, Tiger Management, and Appaloosa all show new positions. Some investors feel that banks could be in for a rought near-term ride given that interest rates have fallen and there are potential loan losses lurking from a cascade of carnage in the business world due to the coronavirus.

*Facebook (FB): As mentioned on the previous page, this stock graces both the ‘consensus new buy’ and ‘consensus increase’ lists. This is also the second consecutive quarter FB has been on this particular list. Funds that boosted position sizes include Maverick, Farallon, Duquesne Family Office, Lone Pine Capital, and Tiger Global

* Amazon (AMZN): Shares of the e-commerce and cloud computing giant were purchased by Pennant

Investors, Duquesne, Third Point, Coatue Management, and Lone Pine. Duquesne in particular really ramped

up their exposure to the name and it’s now their top holding. Obviously, AMZN has benefited from the

pandemic as consumers turn to its main website for online orders but also to its Whole Foods grocery platform

for online ordering, delivery, and pick-up as people adapted to the new world of social distancing and stay-athome orders.

* Fidelity National Information (FIS): For the second quarter in a row, FIS lands on this list. Funds that sized up their positions this time around include Maverick, Duquesne, Viking, and Farallon. FIS is a financial services technology company where a good chunk of its business sees recurring revenue. The company merged with Worldpay last year.

* UnitedHealth Group (UNH): Shares of the largest health insurer in the US were accumulated by Maverick, Brave Warrior, Sequoia Fund, and Lone Pine.

* Caesars Entertainment (CZR): Funds that exited this casino name include Appaloosa, Coatue, Maverick,

and Paulson. The company has an agreement in place to be acquired by Eldorado Resorts (ERI). The deal has

already been delayed due to regulatory review and Caesars is owed millions of dollars in ‘ticking fees’ for each

day that goes by without a deal. ERI and CZR recently both sold some casinos in order to help with any

potential objections to their tie-up. Given the coronavirus’ impact on casinos, this situation is still very fluid.

* XP (XP): After appearing on the ‘consensus new buy’ list last time around, XP quickly finds itself on the ‘consensus sold’ list just one quarter later. The main reason it was on the buy list to begin with was due to the completion of its initial public offering (IPO). The company is a provider of brokerage, investment advisory, and asset management services in Brazil. It IPO’d at $27 per share in the fourth quarter. Last quarter’s issue cautioned that hedge funds will often flip IPO shares for a quick trade and that’s exactly what happened here, as half those funds already exited their small positions (Hound, Lone Pine, and Third Point).

* Middleby Corp (MIDD): Hedge funds that exited their MIDD stakes entirely include Coatue Management, Maverick Capital, and Viking Global.

* The Medicines Co (MDCO): This stock only lands on this list due to merger activity. Due to its deal with Novartis closing, shares no longer trade. As such, Bridger Management, Duquesne, Farallon, Greenlight Capital, and Maverick no longer show positions.

* Microsoft (MSFT): This is now the fourth consecutive quarter that MSFT lands on this list. In the past, the most likely explanation for the sales has been position sizing, given that MSFT shares have performed so well and swelled positions. Given the volatility in Q1 however, it’s a little harder to pinpoint the rationale, as different funds probably trimmed stakes for different reasons due to their volatility and risk management playbooks. For instance, some funds might simply cut exposure across the board. Others might reduce winners to funnel funds into really beaten down opportunities. And some managers might have sold for company specific reasons. The last one seems unlikely given that many of MSFT’s businesses are actually benefiting from the pandemic. But the point remains that there are simply too many variables to know the ‘why’ for certain. Funds that sold some MSFT shares this time around include Tiger, Glenview Capital, Hound, Duquesne, Farallon, Coatue, and Tiger Global.

* Alphabet (GOOGL): Pennant, Tiger Global, Glenview, Omega, Brave Warrior, and Sequoia all reduced exposure to this share class of Google’s parent company. Again, given the volatility, there could be a myriad of reasons for why funds reduced positions. But one company specific reason could be the impact from coronavirus. As businesses start to struggle, advertising budgets are often one of the first things to get cut. And while Google is somewhat more insulated than other ad industry players given its dominant position in online/mobile ads, it also has large exposure to certain verticals that have been severely impacted, like travel. Booking.com for instance, has been one of Google’s top advertisers for years, spending billions on the platform.

* Adobe (ADBE): This company has benefited from a shift from software licenses to subscription revenue as it is essentially a ‘toll’ on digital creativity via its suite of products like Photoshop, Lightroom, and more. In a normal, trending market the rationale for trimming this position would likely be position size related due to share outperformance. But given the situation, each manager is going to have their own playbook for how they react to volatility. Funds that trimmed exposure to ADBE include Coatue, Tiger, Appaloosa, Third Point, and Lone Pine.