>>> Hedge Fund Consensus Buy List
Consensus New Buys
* Snowflake (SNOW): This was one of the hotly anticipated tech IPOs of the year and firms including Viking
Global, Lone Pine Capital, Coatue Management, Tiger Global, and Berkshire Hathaway all show stakes in the
company. Snowflake is a data warehouse provider, which basically allows companies to manage and extract
insights from their data. It runs a cloud-native database platform that is neutral and as such works with all three
of the major cloud computing services like Amazon AWS, Microsoft Azure, and Google Cloud Platform.
Their IPO prospectus noted that new customers were up 101% year-over-year, and their dollar based net
expansion rate (DBNER ~ a measurement of how much more customers spend over time) was 158%, and
revenue growth was up 121%. Frank Slootman currently leads the company and he previously successfully
brought ServiceNow (NOW) public.
* Reinvent Technology Partners (RTP.U): With specialty purpose acquisition companies (SPACs) all the rage these days, it should come as no surprise that hedge funds have gotten in on the act as well. This particular SPAC was founded by LinkedIn co-founder Reid Hoffman and Zynga founder Mark Pincus. It’s targeting a private business to bring public with this vehicle and is looking in their sector of expertise: technology. It raised $600 million and hedge funds that show new positions include Baupost Group, Third Point, Tiger Global, and Greenlight Capital.
* KE Holdings (BEKE): This is yet another IPO that drew attention from hedge funds. Managers that show
new stakes include Tiger Global, Coatue, Lone Pine, and Farallon. KE Holdings, or “Beike,” is a Chinese
online housing platform. It also operates Lianjia, which is one of China’s top real estate brokerages. For
Western readers, Beike is basically building kind of a mix of Zillow and the multiple listing service (MLS).
* Expedia (EXPE): As the sector rotation from work-from-home stocks to economically sensitive stocks has
started on and off again, more managers are dedicating some capital to the latter. Given that travel stocks have
been hit hard due to the pandemic, they also provide the potential for a snapback should the world begin to
return to normal (as evidenced by these stocks’ positive reaction to the COVID vaccine trial news). Funds that
chose online travel agency Expedia for their exposure include Tiger Management, Duquesne Family Office,
Coatue Management, and Third Point.
Consensus Increased Positions
* T-Mobile (TMUS): Last quarter, T-Mobile Subscription Rights were one of the consensus new buys among
hedge funds in the newsletter. These rights gave holders the ability to acquire TMUS shares, which is very
likely why TMUS now lands on the consensus increase list this quarter. Funds that now show increased
allocations to the wireless service provider include Pennant Investors, Maverick Capital, Duquesne, and
Viking. Given all of these funds used to own the Subscription Rights, it seems safe to assume they exercised
them.
* Microsoft (MSFT): This is the second consecutive quarter that hedge funds were adding to their existing
MSFT stakes. Funds that boosted exposure to the tech giant include Tiger Management, Appaloosa, Farallon,
Duquesne, Lone Pine, Viking Global, and Tiger Global. The company continues to ride the cloud computing
trend behind its successful Azure platform. It has also benefited from the work-from-home trend as its
Microsoft Teams platform has gained millions of users this year. The company also just released its next
gaming platforms: Xbox Series X and Series S. They also acquired gaming studio Bethesda, further signaling
their intent to continue to build out their Game Pass subscription offering.
* Uber Technologies (UBER): Shares of the ridehailing and food delivery giant were acquired by Tiger,
Bridger Management, Coatue, and Tiger Global during the third quarter. UBER largely traded sideways during
the third quarter when they would have been buying, so it’s hard to pinpoint a specific catalyst apart from
sector rotation. That said, since the end of the quarter, shares have since broken out after the company reported
earnings. While their rides revenue is obviously down due to the pandemic (-53%), their delivery revenue was
up 125% year-over-year.
* Fidelity National Information Services (FIS): This stock was accumulated by Duquesne, Hound Partners,
Viking Global and others. The company provides payment and financial services solutions and last year
acquired Worldpay.
>>> Hedge Fund Consensus Sell List
Consensus Sold Positions
* JD.com (JD): Hedge funds such as Maverick, Ruane Cunniff, and Viking Global all exited their stakes in one
of the three major Chinese e-commerce players.
* Caesars Entertainment (CZR): This had largely become a risk arbitrage play due to its merger with Eldorado
Resorts. Now that the merger has closed, many funds no longer hold positions
* Costco (COST): Berkshire Hathaway and Coatue were some of the biggest names to liquidate exposure to the
membership bulk savings retailer. The fact that Berkshire sold must have pained Warren Buffett’s business
partner Charlie Munger, who has been a longtime bull on the company and at last check owned COST shares
personally.
* Salesforce (CRM): Lone Pine and Viking are a few of the big names that liquidated exposure to this software
as a service giant. It’s hard to pinpoint an exact reason for their sales, but perhaps they were just locking in
profits on the high-flying name.
* T-Mobile Subscription Rights (TMUSR): As detailed on the previous page, these rights expired during the
quarter and the majority of funds exercised them to buy shares of TMUS common stock. Funds that previously
owned these Rights included Duquesne, Maverick, Pennant, and Viking.
Consensus Decreased Positions
* Amazon (AMZN): This is the second consecutive quarter that hedge funds have trimmed AMZN exposure.
And it might just simply be a case of taking some profits and reducing position sizes that have swelled. After
all, AMZN is up over 60% this year. The company has benefited from the pandemic as more people are
staying at home and utilizing e-commerce instead of visiting traditional brick and mortar retail. Not to
mention, the company’s cloud computing division (AWS) has benefited from the work-from-home trend.
* Alphabet (GOOG): This is now the third straight quarter this stock lands on the decrease list. Funds that
reduced exposure this time around include Brave Warrior, Tiger, Hound, Maverick, Baupost, Appaloosa, and
Ruane Cunniff. Last quarter’s issue noted that the conclusion from antitrust hearings was basically that it’s not
‘if’ an antitrust case would be brought against them, but ‘when.’ And that came to fruition as The Justice
Department sued Google for abusing its dominance in online search and advertising. That said, the bull
counterargument to this development is that any regulation could actually have the opposite intended effect: it
could just entrench incumbents further and make it more expensive and harder for upstarts to compete. GOOG
shares haven’t really traded down since news of the suit.
* PayPal (PYPL): The online payment processor has been another big winner of the pandemic, with more
commerce being conducted online instead of in-person. Shares are up 72% for the year so it seems likely funds
were taking some profits off the table. Managers that decreased their position sizes include Duquesne,
Appaloosa, Tiger Global, Lone Pine, and Coatue. Despite the reduction, some of these managers maintain
quite large positions. For instance, PYPL is Coatue’s top holding and Lone Pine’s 6th largest holding.
* Alibaba (BABA): Managers that reduced exposure to China’s e-commerce giant include Farallon, Maverick,
Appaloosa, and Tiger Global. Since quarter-end, the IPO of its financial affiliate Ant Group was pulled by the
Shanghai Stock Exchange after founder Jack Ma apparently ridiculed regulators. The Wall Street Journal
reported that Xi Jinping himself made the decision to pull it.