TheChek News Flow

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- Bank of America (BAC): This is the second consecutive quarter that hedge funds have accumulated BAC shares. Managers including Tiger Management, Blue Ridge Capital, Coatue Management, Third Point, and Lone Pine Capital all started brand new stakes. This is mainly a play on rising interest rates and the potential for less regulation. A few funds also decided to buy other megabanks like Wells Fargo (WFC) and JPMorgan Chase (JPM), while others added smaller regional banks to the portfolio. That said, BAC was by far the most consensus pick both in terms of quantity of funds and size of position.

- Symantec (SYMC): Hedge funds including Tiger Global, Coatue Management, and Lone Pine Capital all initiated positions in SYMC. During the fourth quarter, Symantec acquired LifeLock (LOCK), an identity theft protection service, for $2.3 billion. This will join SYMC’s existing Norton cybersecurity offering as it looks to diversify its product offering. The company also announced a new CFO during the quarter. Back in August, Symantec also purchased Blue Coat, an internet security firm, for $4.65 billion.

- Monsanto (MON): Merger arbitrage names attracted many managers this quarter. Monsanto shares were bought by the likes of Berkshire Hathaway, Glenview Capital, and Greenlight Capital. The company is being bought by Bayer AG (pending regulatory approval) for $66 billion, or $128 per share in cash. There seems to be some skepticism from other investors around the deal’s potential to close, as there’s currently a wide deal spread. MON shares currently trade around $109.

- Time Warner (TWX): Farallon Capital, Paulson & Co, and Third Point all scooped up shares of TWX during Q4. The company is being acquired by AT&T (T), pending regulatory approval. On the campaign trail, Donald Trump hinted he would try and block the deal. However, now that he’s in office, it’s unclear if he’ll still pursue that action. Various media reports have hinted that Trump’s administration would look for various conditions to be placed on the merger, even going as far to suggest Jeff Zucker should step down or the CNN television network should be spun-off. TWX shareholders will receive $107.50 per share comprised of $53.75 in cash and $53.75 in AT&T stock. Per the deal, “The stock portion will be subject to a collar such that Time Warner shareholders will receive 1.437 AT&T shares if AT&T’s average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T’s average stock price is above $41.349 at closing.”

- Shire (SHPG): Hedge funds such as Bridger Management, Omega Advisors, Tiger Management, Viking Global, Maverick Capital, and Lone Pine Capital all accumulated more shares of SHPG during Q4. This stock has also been listed by a few sellside firms as a ‘best idea for 2017.’ Management has been working on integrating Baxalta and commercializing Xiidra.

- Microsoft (MSFT): Tiger Management, Farallon Capital, Lone Pine Capital, Viking Global, and ValueAct Capital all added to their positions during the fourth quarter. (However, it’s worth highlighting that in the first quarter ValueAct has been reducing its MSFT stake.)

- Liberty Global (LBTYK): This is the fourth consecutive quarter that shares of John Malone’s European cable giant have been accumulated by hedge funds in the newsletter. Managers such as Viking Global, Glenview Capital, Brave Warrior Advisors, and SPO Advisory all bought more. Shares had previously sold off for a couple of reasons: ‘Brexit’ fears hit the company’s UK cable unit, Virgin Media, and it earns revenues in British Pounds (the Pound saw a steep decline post-Brexit 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

- Facebook (FB): In reality, this is more of a ‘mixed activity’ name. It’s included on this list though because there certainly were a lot of funds adding to their positions. Tiger Management, Appaloosa Management, Blue Ridge Capital, Maverick Capital, and Viking Global all enlarged their FB position sizes. That said, a decent number of other managers were also out trimming their stakes, so just keep that in mind.

- Kinder Morgan (KMI): This stock was liquidated by the likes of Berkshire Hathaway, Lone Pine Capital, and Pennant Capital during the fourth quarter.

- Teva Pharmaceutical (TEVA): Managers such as Bridger Capital, Glenview Capital, and Viking Global all sold their positions. Teva closed on its acquisition of Allergan’s (AGN) generic drugs business.

- AIG (AIG) Warrants: Funds such as Blue Ridge Capital, Fairholme Capital, and Hound Partners all liquidated their longstanding AIG Warrant positions. This was an extremely successful investment for many of them as they bought the TARP warrants right after the financial crisis and rode them higher as insurance giant AIG recovered.

- Charter Communications (CHTR): This is the fourth consecutive quarter CHTR positions have been trimmed by various managers. The company closed on its acquisition of Time Warner Cable and Bright House and is now the second largest cable player in the US. The stock is up 80% over the past year and the funds that have been selling are trimming their positions by 10-15% for the most part to lock-in some profits and for risk management purposes most likely, as position sizes have swelled due to the share gains. Funds that trimmed their stakes in Q4 include Third Point, Blue Ridge, Tiger Global, SPO Advisory, and Lone Pine.

- Alphabet (GOOG): Hedge funds that reduced their exposure to Google’s parent company during the fourth quarter included Pennant Capital, Tiger Global, Maverick, Coatue, and Lone Pine. That said, the company continues to be a core holding for many hedge funds as some managers also own the other share class (GOOGL).

- Apple (AAPL): Maverick Capital, Appaloosa, Third Point, and Coatue all sold some AAPL shares during Q4. The stock has performed well, and some funds probably wish they held onto those shares a bit longer, as the stock has done nothing but go up in 2017 thus far. It’s gone from a low of $88 last May to current highs of $136. Sales of the iPhone have met or exceeded expectations after sentiment on the name had soured a bit in 2016. The company is set to release the next iteration of the iPhone (rumored to be either iPhone 8 or iPhone X) later this year. They’re also rumored to be working on projects centered on television and automobiles, while CEO Tim Cook has also mentioned augmented reality as an area of interest for the company.

- Mastercard (MA): This has been a long-term holding for various funds and many have just locked-in some profits as shares continue their march higher. Maverick, Tiger Global, Blue Ridge, and Viking all trimmed their positions during the fourth quarter. Some funds have added Visa (V) shares to the portfolio recently as well, so it might be a case of simply shifting some of that exposure. Many managers choose to own both V and MA, as they’re pure plays on the payment processing oligopoly and don’t bear credit risk.