>>> Consensus Buys
* MercadoLibre (MELI): Funds such as Third Point, Viking Global, and Tiger Global initiated new stakes in this South American e-commerce player. Dubbed the ‘eBay of South America’ the company operates a selling platform and online payments arm. The company has posted growth in users, gross merchandise value (GMV), and payments, but at the same time they have large exposure to Argentina, which is facing potential threats of a recession and hyperinflation.
* iQiyi (IQ): Hedge funds like Omega Advisors, Tiger Global, and Viking Global show new stakes in this company that recently completed an initial public offering (IPO). This is Baidu’s (BIDU) streaming video service in China. Dubbed ‘the Netflix of China,’ the company is poised to benefit from secular trends. At the same time, they face intense competition from the likes of Tencent Video and also Alibaba’s Youku Tudou.
* United Airlines (UAL): There weren’t a lot of consensus new buys this quarter, and UAL rounds out the list as Coatue Management, Tiger Global, and Appaloosa all show new positions. The airline industry has consolidated and the thesis is that rational activity should prevail going forward. Warren Buffett’s Berkshire Hathaway famously acquired a handful of airline stocks back in the third quarter of 2016 and continues to hold.
>>> Consensus Increased Positions
* Facebook (FB): This is the highest number of funds that have bought one stock in a given quarter in the newsletter’s history. So if you’re looking for a consensus buy among top funds, this was it in the first quarter. This isn’t a complete list, but funds such as Hound Partners, Third Point, Tiger Global, Coatue, Lone Pine, and Viking Global were all out accumulating more shares. The stock sold off on a flurry of bad news, as the company was hit with questions surrounding Russia’s use of the platform in the 2016 US election, as well as a separate data privacy issue with Cambridge Analytica. Shares have already recovered from the sell-off, as CEO Mark Zuckerberg testified before Congress to address concerns. Bulls point to a dominant social media platform enjoying massive network effects that’s also seemingly cheap on valuation given its growth, while bears point to the looming threat of potential regulation and other headline risks.
* Alphabet (GOOG): Hedge funds were also out accumulating shares of another tech giant: Google’s parent company. Managers including Tiger Management, SPO Advisory, Farallon, Appaloosa, Maverick Capital, and Lone Pine all increased their position sizes. This is another stock that bulls argue is quite cheap considering it trades at similar multiples as other blue chip stocks, but is still growing much faster and has exposure to some big potential future trends like A.I. / machine learning, autonomous vehicles, and more.
* Microsoft (MSFT): If it’s not evident yet, tech stocks were all the rage in the first quarter. Funds seem to favor these giants that haven’t stopped growing and have overwhelming market power in their respective industries. Managers that acquired more MSFT shares were Farallon, Maverick, Lone Pine, Viking, and Tiger Global. While this activity is notable, it’s also worth pointing out that longtime holder ValueAct sold completely out of their concentrated position during Q1.
* Monsanto (MON): This is the second consecutive quarter that MON has ended up on this list. This time around, mainly arbitrage-focused firms were buying: Paulson & Co and Farallon, though Berkshire Hathaway was also a buyer. The company is set to merge with Bayer, as the deal has been approved by regulators.
>>> Consensus Sold Positions
* Comcast (CMCSA): Cable stocks were sold en masse by hedge funds during the quarter. Appaloosa, Pennant Capital, Tiger Global, and Tiger Management all exited their CMCSA stakes entirely. Recently, concerns surrounding ‘cord cutting’ have re-surfaced as investors cast a skeptical eye on the company’s video subscriber numbers. And perhaps more importantly, investors haven’t been fond of Comcast’s recent bid for Sky in the UK, deeming this potential acquisition as ‘empire building’ and perhaps something that would water down CMCSA’s set of assets. Management, however, points out to their past history of successful acquisitions and sees value in Sky. This situation has a few moving pieces though, as 21st Century Fox (FOX) had been trying to acquire the rest of Sky, but then received a takeover offer from Walt Disney (DIS) themselves. The situation remains fluid.
* Charter Communications (CHTR): Once a hedge fund favorite, this stock seems to be falling slightly out of favor with some managers. Coatue Management, Hound, Lone Pine, and Tiger Global all exited their stakes. The cable company faces the same video subscriber concern as Comcast above. Many other managers still own CHTR, though sentiment seems to have shifted as some of management’s projections haven’t quite come to roost as of late. The company will eventually be rolling out a wireless service to complement its other internet and TV offerings as they look to grow the number of consumer relationships and are less focused on pushing price at the moment.
* Dell Technologies (DVMT): Funds including Coatue Management, Omega Advisors, and Third Point all liquidated their stakes in this tech giant.
* Time Warner (TWX) & Express Scripts (ESRX): Both of these stocks are risk arbitrage trades, as they’re involved in pending mergers. TWX is set to be acquired by AT&T (T) pending regulatory approval, while ESRX is being acquired by Cigna (CI). Funds that sold out of TWX include Coatue, Third Point, and Viking. Funds that exited ESRX include Brave Warrior, Baupost Group, and ValueAct. Many times, funds not running arbitrage strategies will exit shares before a deal closes to put the capital to work in another investment idea. There’s no way to know for certain that’s the case here, but it’s one potential explanation.
>>> Consensus Decreased Positions
* Apple (AAPL): Funds reducing exposure to the iPhone maker include Maverick, Greenlight, SQ Advisors, and Coatue Management. Concerns over the company’s iPhone sales hit the stock over the past few months. While those concerns proved to be unfounded based on the company’s recent results, sentiment seems to have shifted in the stock. Investors are mainly pointing to it as a capital return story, as the company unveiled a massive stock buyback due to the recent tax law changes that allowed them to repatriate their massive overseas cash pile. And while these funds were reducing AAPL positions, it’s also worth pointing out that Warren Buffett went the opposite direction and bought billions of dollars worth of shares during the quarter.
* Alibaba Group (BABA): This is the second consecutive quarter this stock shows up on this list. Shares have recently traded sideways after having a huge 2017 performance-wise. Funds that reduced position sizes in this Chinese e-commerce giant include Third Point, Appaloosa, Coatue, and Lone Pine.
* Liberty Global (LBTYK): This European cable giant pops back on this list again after a brief absence. Hedge funds selling shares this quarter were Glenview Capital, Brave Warrior, SQ Advisors, and SPO Advisory. The company recently announced a deal where they’ll be selling some assets to Vodafone (VOD), pending approval.
* Conduent CNDT): Firms reducing their exposure to this stock include Pennant Capital, Glenview Capital, and Greenlight Capital. This business process services company was formed as a divestiture from Xerox (XRX) back in 2017.
* Visa (V): This global payments giant has been a strong performer over the years. As such, it seems likely that they’re taking profits while maintaining a position. Hedge funds that sold some V shares include Glenview, Maverick, and Viking Global.