TheChek News Flow

* XP Inc (XP): First off, it’s worth pointing out that there really weren’t many consensus new buys in the last quarter of 2019. Not to mention, the few that appeared in numerous hedge fund portfolios were the result of either an initial public offering (IPO), like XP, or some other corporate transaction occurring. Funds that show new positions in XP include Hound Partners, Duquesne Family Office, Tiger Global, Third Point, Lone Pine Capital, and Maverick Capital. The company is a provider of brokerage, investment advisory, and asset management services in Brazil. It IPO’d at $27 per share in a $2 billion debut and now trades around $41. As with any IPO, some funds will merely flip the shares for a quick profit so next quarter’s filings will reveal if any of them are playing this as a longer-term holding.

* Unitedhealth (UNH): This was the only stock that funds bought in the open market with consensus. During Q4, Maverick, Brave Warrior Advisors, Sequoia Fund, and Viking Global all initiated new stakes. Healthcare stocks in general took a hit late last year on fears that Democratic presidential candidates on the far left would push Medicare for All plans that would hurt industry stalwarts. UNH is the largest health insurer in America.

* Bristol Myers Squibb Contingent Value Rights (BMY/R or BMYRT): Celgene (previous ticker CELG) was acquired by Bristol Myers Squibb (BMY) during the quarter and as a result of the transaction, CELG shareholders received 1 share of BMY, $50 in cash, and one tradeable Contingent Value Right (CVR) per each share of CELG owned. Per the deal’s press release, this CVR “will entitle the holder to receive a payment of $9.00 in cash if certain future regulatory milestones are achieved.” This is essentially a binary wager, as shareholders will get $9 or nothing. It’s dependent on whether three pipeline drugs are approved by certain dates. The drugs are ozanimod (multiple sclerosis), liso-cel (lymphoma), and bb2121 (multiple myeloma). The latter will have to receive approval from the FDA by the end of 2020, while the other two need to be approved by the end of Q1 2021.

>>> Consensus Increased Positions

* Facebook (FB): While the social media giant has faced all kinds of scrutiny regarding potential regulatory issues, data privacy issues, and more, the company continues to print money as an ad-targeting machine. Funds that bolstered their exposure to the name include Tiger, Duquesne, Lone Pine, Coatue, and Viking. Its Instagram platform has been stepping more into e-commerce, its messaging play WhatsApp will be rolling out WhatsApp Pay in various countries, while its legacy Facebook platform has been experimenting with things like dating.

* Uber Technologies (UBER): Shares of the ride-hailing, food delivery, and freight company were acquired by Duquesne, Lone Pine, Tiger Global, and Viking. Tiger and Viking in particular really ramped up their exposure in a big way and it’s now their 8th and 5th largest holdings respectively. The company has recently seen growth accelerate as it tries to become profitable by year-end.

* Fidelity National Information (FIS): Funds such as Maverick, Duquesne, Third Point, and Farallon all accumulated more shares of the financial services technology company.

* Monster Beverage (MNST): Coatue, Maverick, and Viking were among some of the hedge funds that sized up their position in this energy drink maker. The recent dip in shares was caused by Coca Cola’s (KO) entrance into the energy drink market with Coca Cola Energy. Coca Cola also owns 17% of MNST and part of the bull thesis has always been that KO could one day possibly acquire the rest of MNST. Their new beverage entry adds a new wrinkle to the relationship, though MNST has already faced competition from the likes of RedBull, Rockstar, and 5-hour Energy.

* Booking Holdings (BKNG): The online travel giant that houses entities like Booking.com and Priceline was sold by the likes of Farallon, Coatue, and Lone Pine. The travel space has always looked over its shoulder at Google, who they rely heavily on for advertising to generate leads. While Google makes a pretty penny from these companies (they’ve historically been the company’s biggest ad customers), that hasn’t stopped them from exploring ways to extract more value as the top of the funnel in travel searches.

* Mergers / Buyouts / Corporate Activity: Celgene (CELG), Sotheby’s (BID), Tiffany & Co (TIF), Altaba (AABA), & Fitbit (FIT): Funds throughout the issue will show ‘sold’ positions in all of the above names, but really this is a result of various corporate transactions closing. Celgene was bought out by Bristol Myers Squibb (BMY). Sotheby’s (BID) was taken private by Patrick Drahi. Tiffany & Co (TIF) will be purchased by Bernard Arnault’s LVMH Group. Altaba (AABA) – the former holding company that owned a large stake in Alibaba - no longer trades. And lastly, Fitbit was purchased by Google.

* Microsoft (MSFT): This is now the third time in a row that MSFT lands on this list. The most likely explanation is risk management and position sizing, given that MSFT shares have performed so well and swelled position sizes. Funds that trimmed exposure before year-end included Tiger, Maverick, Hound, Viking, Duquesne, Lone Pine, and Tiger Global. Duquesne in particular cut its position in half after owning the software giant for many years. Despite this cut, it still remains their second largest position. While historically known for their Windows and Office software, Microsoft’s Azure cloud computing segment has been the real growth driver lately.

* Alibaba (BABA): Position sizes in the dominant Chinese e-commerce company were reduced by Sequoia, Duquesne, Viking, Farallon, Maverick, Tiger Global, and Lone Pine during the fourth quarter. While this didn’t affect the company at the time of their sales, BABA recently noted that it will see weakness from the spread of the coronavirus in the country as quarantines and fear have disrupted supply chains and caused economic activity to drop drastically in the first few months or the new year.

* Amazon (AMZN): Hedge funds that reduced exposure to Jeff Bezos’ e-commerce and cloud computing giant include Pennant Investors, Duquesne, Sequoia, Coatue, Lone Pine, Tiger Global, and Viking. There weren’t necessarily any big catalysts to trigger the selling during the quarter and AMZN shares largely traded sideways. Perhaps this was merely a case of locking-in some gains or freeing up some capital to deploy into new opportunities.