The first quarter of 2016 was an extremely volatile period for US stocks, especially for those that belong to the technology sector. To understand the kind of wild swings that tech stocks underwent during that period, all one needs is to take look at the chart of The S&P North American Technology Sector Index during the first three months of 2016. While in the initial half of the quarter the index plummeted heavily, losing over 15% of its value, it swiftly changed its course during the second half, recouping all the losses it made earlier and ending the quarter with marginal gains. This sudden spurt in volatility came as a surprise to most hedge funds, a number of whom started selling their holdings in droves. There were also a few funds that took advantage of this volatility by accumulating stocks of their liking. Since there were a lot of interesting moves made by leading hedge funds in a number of tech stocks during the January-March period and we can’t discuss each of them, in this post, we will focus on the five major moves that hedge funds made during that period.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
LinkedIn Corp (NYSE:LNKD)
Let’s start with LinkedIn Corp (NYSE:LNKD), which lost almost half of its market-capitalization during the first quarter after providing weaker than expected guidance for fiscal 2016. Jim Simons‘ Renaissance Technologies, which held 360,000 shares of the company at the end of 2015, sold its entire stake in LinkedIn Corp (NYSE:LNKD) during the first quarter. Despite the better than expected first quarter numbers the company released recently, shares of the professional social network are finding it hard to climb up after the first quarter beating and currently trade down 43.57% year-to-date. On May 18, the company announced that it is working towards safeguarding the 117 million user accounts, which were compromised during a 2012 hack attack and whose passwords a hacker has been trying to sell on the dark web’s illegal marketplace – The Real Deal. Hedge funds that boosted their stake in the company during the first quarter included Ricky Sandler‘s Eminence Capital, which upped its holding by 240% to 1.2 million shares.