Hedge funds with equity portfolios of at least $100 million are required to disclose their holdings with the Securities and Exchange Commission (SEC) no later than 45 days after the end of a calendar quarter, with the most recent deadline for the reporting period of March 31 landing on May 15. This process reveals to investors the holdings of some of the top hedge funds in the world and their sentiment towards stocks, both positive and potentially negative. The latest round of filings has revealed that some prominent hedge funds have unloaded their holdings in the stocks of both Apple Inc. (NASDAQ:AAPL) and Alibaba Group Holding Ltd (NYSE:BABA). The Street’s Scott Gamm reported on ‘TheStreet’ about these developments.
“Billionaire Dan Loeb’s $10.9 billion Third Point hedge fund sold its ten million share ownership in Chinese commerce company Alibaba (BABA) during the first quarter. The fund also purchased 3.3 million shares of Yum! Brands (YUM) and maintained its stake in auction house Sotheby’s (BID). That’s according to the fund’s 13F filing, which the Securities and Exchange Commission requires all hedge funds to file, 45 days after the end of the quarter. It reveals what stocks each fund holds. Friday was the deadline to file the form. Meanwhile, Leon Cooperman’s Omega Advisors, a $6.2 billion fund, sold its stake in Apple (AAPL) – some 383,000 shares – during the first quarter. It also sold roughly 86,000 shares of Anadarko Petroleum (APC). The fund also upped its stake in JPMorgan Chase (JPM) to about 1.1 million shares, from 941,000 during the fourth quarter of 2014,” Gamm reported.
Apple Inc. (NASDAQ:AAPL), which owns one of the most profitable businesses ever, has been the preferred stock among investors in our database for several quarters and appeared well on its way to being the most popular stock among funds yet again for the current filing period. However, that doesn’t mean that all investors are sold on the future prospects of Apple. Billionaire Leon Cooperman’s Omega Advisors sold off its entire 383,790 share stake in Apple Inc. (NASDAQ:AAPL) during the first quarter. As Gamm noted, Cooperman’s Omega Advisors’ equity portfolio stands at $6.2 billion as of the latest reporting period. In addition to Cooperman’s sale of 86,000 shares of Anadarko Petroleum (NYSE:APC) and purchase of 159,000 shares of JPMorgan Chase & Co. (NYSE:JPM), his fund also opened a $105.64 million position in Humana Inc (NYSE:HUM), which we ranked as the number one potential takeover target in 2015.
In comparison to Apple, Alibaba Group Holding Ltd (NYSE:BABA) has had a rather disappointing 2015, with stock prices going down by more than 15% this year. That, among other things, led to former CEO Jonathan Lu resigning this month, replaced by Daniel Zhang. Gamm reported that Dan Loeb’s Third Point hedge fund sold all 10 million of its shares in the Chinese e-commerce giant during the first quarter, before that leadership change was announced. Shares of Alibaba Group Holding Ltd (NYSE:BABA) are up by 6% since the announcement. While Loeb sold out of Alibaba during the quarter, Gamm added that Loeb’s hedge fund did purchase 3.3 million shares of Yum! Brands, Inc. (NYSE:YUM), the global chain of fast-food outlets including KFC and Pizza Hut. The company’s expansion into the Chinese market, while not without hiccups, has piqued the interest of investors like Loeb, who believes it will recover from the food-safety issues that recently dented its reputation there.
We follow the top picks of investors like Leon Cooperman and Dan Loeb because even though most investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research have proven otherwise. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our strategy in August 2012, our small-cap strategy has obtained returns of more than 139%, beating the S&P 500 Total Return Index by more than 135% during that time (see the details).
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