As the coronavirus spread across the world earlier this year, hedge fund managers sought safety in companies set to benefit from social quarantines and enforced lockdowns.
Maverick Capital and Melvin Capital Management were among the firms buying Amazon.com Inc. stock on a net basis. Microsoft Corp. and Charter Communications Inc. were also among the most-bought stocks by money managers in the first three months, according to data compiled by Bloomberg. Demand for cloud computing, home shopping and, of course, cable television and internet streaming has soared as global efforts to combat the pandemic shut offices and stores, and kept people inside. The buying came as investors fled the markets, with the S&P 500 Index falling 20% in the period.
Below we look through the wave of hedge fund data that was disclosed in filings for the first quarter. It gives a glimpse into some of the biggest and most secretive managers.
Keep in mind, the public filings don’t show non-U.S. traded securities or wagers against stocks, nor do they show the price at which a fund bought or sold a security.
The chart below shows the big picture. It plots about 250 U.S. stocks, combining in each dot two measures: the change in value of hedge fund positions and the performance of the equity in the first half of the second quarter of this year. Scroll over the dot for 1Life Healthcare Inc., a popular stock with hedge funds including Maverick. Since going public at the end of January, the provider of tech-driven primary-care clinics, which is backed by Google, surged more than 100% this year.
PayPal Holdings Inc. was a less-favored stock as the payments company faced a slowdown in the first quarter with more people forced to conduct business online. Tiger Global Management trimmed its position, while Eminence Capital and Suvretta Capital Management exited their stakes. Since then, the company has forecast a stronger second quarter and growth in electronic transactions across the board.
The FAANGs—Facebook Inc., Amazon, Apple Inc., Netflix and Google parent Alphabet Inc.—have had a stellar second quarter so far, rallying at least 18% through May 19 as quarantined consumers engaged even more in online services. But that performance follows a tough first quarter for Facebook, Apple and Alphabet, during which their stock prices fell by double digits. That decline may have presented buying opportunities for funds.
D1 Capital piled into Facebook in the first quarter, increasing its stake by 70%, while Soroban and Baupost Group started new positions in the social-media giant.
While Netflix is among the stocks funds sold, it’s still one of the top holdings for many big name managers. The stock, one of the S&P 500’s best performers this year, was scooped up by Coatue and Stan Druckenmiller’s family office. Some managers that sold shares may have done so as part of portfolio rebalancing.
Looking at Amazon, Melvin snapped up shares, keeping the stock as its biggest long U.S. holding. Maverick and Soroban Capital Partners each started new stakes, with the latter’s worth nearly $600 million as of March 31.
Hedge funds often move in groups, piling into or getting out of the same stocks at roughly the same time. The chart above shows the most and least popular stocks by the number of firms that bought or sold them in the first quarter. Raytheon Technologies Corp., IHS Markit Ltd. and UnitedHealth Group Inc. were among the most loved names, while Boeing Co., NXP Semiconductors NV and Bank of America Corp. were less sought-after.