Hedge Funds Boost Financials, Trim Tech and Other 13F Highlights

  • Money managers add JPMorgan, Bank of America, Goldman and more
  • Some firms reverse course to cut holdings in Facebook, Apple

Hedge fund managers jumped on the Trump train in the last three months of 2016, boosting their stakes in financial companies and reducing their holdings in technology firms.

Financial institutions have risen 22 percent since Donald Trump won the U.S. presidential election on Nov. 8, on optimism that his administration will reduce regulations, cut taxes and spur deal making. Shares of Goldman Sachs Group Inc. hit a record high Tuesday. Technology shares, meanwhile have risen just 9.3 percent since the election, as measured by the S&P 500 Information Technology Index, about the same as the overall market.

The biggest new buys at Stephen Mandel’s Lone Pine Capital in the fourth quarter included a $493 million purchase in PayPal Holdings Inc., a $491 million stake in PNC Financial Services Group Inc. and a $479 million stake in Bank of America Corp, according to government filings Tuesday. Louis Bacon’s Moore Capital Management increased its exposure to financials and lenders including a new $94 million position in the exchange-traded Financial Select Sector SPDR Fund.

The sector accounted for a third of the firm’s U.S. equity holdings at the end of the year. Tudor Investment Corp. continued to boost its stake in financial companies to 26 percent of its equity allocation from about 15 percent a year ago.

Bullish on Banks

The value of hedge fund stakes mostly rose in the fourth quarter on the promise of less regulation and more fiscal spending.

Hedge FundJPMorganBank of AmericaGoldman SachsCitigroupWells FargoMorgan Stanley
Third Point$453M387M95.8M
Blue Ridge308M39.2M85.2M306M
Lansdowne235M673M-13.4M
Coatue162M325M
Eton Park138M132M
Adage96.2M44M125M77.6M302M
PointState9M-185M69M-100M226M82.2M
Tudor10.4M3.2M-1.5M-22.8M-10.6M19.8M

Source: filings 

By comparison, the reduction in holdings of tech companies by several firms was a reversal from the third quarter, when many of the marquee money managers added to their holdings in expectation of a Hillary Clinton win helping the industry.

In the fourth quarter, Third Point, Millennium Management, Melvin Capital Management and Moore Capital were among firms that slashed their stakes in Facebook Inc. Viking Global Investors decreased its stake in Amazon.com Inc. by $1.23 billion. Shares of the online retailer fell about 10 percent last quarter.‘

Apple Inc., long a hedge fund favorite, lost the love of Chase Coleman’s Tiger Global Management and Aaron Cowen’s Suvretta Capital Management. The two firms sold out of their stakes, worth $407.6 million and $293.9 million at the end of last year, respectively. Coatue Management, the technology-focused hedge fund led by Philippe Laffont, halved its  position, leaving it with 3.2 million shares as of Dec. 31.

Bearish on Tech

The value of hedge fund stakes mostly fell in the fourth quarter on concerns that immigration restrictions would set back hiring.

Hedge FundFacebookAppleNetflixAlphabet (A/C)MicrosoftAmazon
Third Point-$296M-68.4M-105M (A)
Coatue-106M-365M-104M-20.9M (C)-43.8M
Adage-40M16.6M34.6M-24M (A) -48.2M39.2M-46.7M
PointState33.3M-5M-78.1M (A)-185M-369M
Tiger Global42.2M-408M147M (A) -73.6M132M-87.6M
Maverick215M-224M-25.1M (C)
Point72-304M-123M34.6M-243M (A) -32.2M22.7M-223M
Lone Pine-119M-171M (C)109M-113M
Viking Global-222M-28M541M-146M (A) 188K577M-1.23B

Source: filings

Och-Ziff Capital Management Group LLC, Discovery Capital Management and PointState Capital were also among funds that cut holdings of gaming company Activision Blizzard Inc. during the fourth quarter as holiday video-game sales disappointed.

One exception to the tech selloff was Salesforce.com. Jana Partners and Sachem Head Capital Management bought 3.2 million and 2.1 million shares, respectively, during the quarter.

In contrast to many industry peers, George Soros’s family office added a new position in Facebook, and increased its stake in Alphabet Inc. and Netflix Inc., but it exited Intel Corp. and some other technology companies.

While Time Warner Inc. and AT&T Inc. announced one of the year’s biggest deals during the fourth quarter, most managers declined to bet on its completion through risk-arbitrage trades. One possible reason: Trump in a campaign speech vowed to block the takeover on the same day it was unveiled by the two companies.  

Even managers who did bet on the deal’s completion did so in relatively small doses. Paulson & Co. bought 2.86 million Time Warner shares during the fourth quarter, while Third Point acquired 3 million shares and Abrams Capital Management purchased 3.05 million, according to filings.

Paulson also cut its stake again in insurer American International Group Inc.

How Paulson Scales Back on AIG While Sitting on Board

Even as the future of health-care stocks have been less clear since Trump’s victory, David Tepper’s Appaloosa Management added to investments in the sector. His largest new buys were in Teva Pharmaceutical Industries Ltd., Pfizer Inc. and Mylan NV. He also added to his holding in Allergan Plc, which was worth almost $900 million at the end of the quarter.

— With assistance by Miles Weiss, and Hema Parmar

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