New Milestone Supports Hedge Fund Sentiments Towards Facebook and Twitter

According to Instagram, of the last 100 million people to join their platform, more than half live in Europe and Asia, with Brazil, Japan and Indonesia among the countries which added the most users as of late. This is important, more so because in a recent letter to investors, Silver Arrow Partners L.P. said that Facebook is in the early stages of monetizing Instagram. Should Instagram ads prove to be a hit, Facebook will get a massive boost in revenue. Ads on Instagram are expected to take off following the wider rollout owing to how much time people are spending on social networks and the appetite of advertisers to get more and more views. CNBC, citing data from eMarketer, says that ad revenue attributable to Instagram is expected to be $600 million in 2015 and is projected to balloon to $1.48 billion in 2016.

If proven to be accurate, this gives hedge funds which are long in Facebook Inc (NASDAQ:FB) a reason to celebrate. Hedge funds, in the second quarter, became more enthusiastic about Facebook, as the number of hedge funds we track with long positions in the stock had increased to 133 from 129 at the end of the previous quarter. Moreover, the total value of their holdings went up a very healthy 24.98% on the quarter to about $8.86 billion, despite just a 4.32% increase in the stock’s price between April and June. Among the hedge funds we follow, Stephen Mandel’s Lone Pine Capital held the most valuable stake in Facebook, owning about 9.76 million shares worth about $837.21 million, up by 21% quarter-over-quarter. Ken Griffin’s Citadel Investment Group increased its stake by 176% to about 5.07 million shares in the said period.

By comparison, the number of funds bullish on Twitter declined to 47 from 64 during the second quarter, while the total value of their stakes slumped to $701.39 million from $1.75 million and amassed around 2.90% of the company at the end of June.

isclosure: None