The FANG trade, which includes four tech, high-performing stocks, Facebook (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL), was very popular in 2015. However, in 2016, a lot of critics emerged, questioning the companies’ abilities to continue to expand. In fact, only Facebook’s stock registered gains over the first quarter, while the remaining three stocks delivered negative returns. But, while some argue that these companies have reached maturity, others believe that there is still room to develop. So, let’s take a look at some bullish moves seen in these stocks over the first quarter, and try elucidate if the billionaires in question were right to bet on them – so far.
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).
Let’s start with the only FANG stock that was up during the first quarter. Facebook’s stock gained 9.02% over the January to March period, helped by strong results and sound investments. In spite of the substantial run-up, major hedge funds seemed bullish on the company’s future. Interestingly, billionaire Andreas Halvorsen’s Viking Global started a new position in the company over the first quarter; after acquiring 20.13 million shares, worth almost $2.3 billion by March 31, the firm became the largest shareholder among those we track. Two other noteworthy new stakes were those initiated by Rob Citrone’s Discovery Capital Management (1.71 million shares worth $195 million) and John Paulson’s Paulson & Co, which added 44,000 shares valued at more than $5 million. Finally, it should be noted that, as of the end of the first quarter of 2016, two of the largest hedge fund investors in Facebook were John Armitage’s Egerton Capital Limited and Alex Snow’s Lansdowne Partners. By March 31, these funds held 5.89 million shares and 3.71 million shares of the company, respectively – valued at $672 million and $423 million, correspondingly. This week, Facebook (NASDAQ:FB) is in the spotlight again on the back of the CEO Mark Zuckerberg’s meeting with conservative leaders on Wednesday, to address allegations that the site is politically biased. A former Facebook employee and prominent conservatives have argued that the social media site left “conservative political stories” out of its trending topics list intentionally. The company has denied such allegations. In other news, reports emerged that the social media giant will start selling video ads for other companies, in another step to take on Google.
Amazon.com, Inc. (NASDAQ:AMZN)
Next up is Amazon, which lost 12.17% over the first quarter, but has managed to recuperate since – retrieving a year-to-date gain of almost 4.3%. Moreover, since the start of the second quarter of 2016, the shares are up by 18.7%, having comfortably outperformed all U.S. stock indexes. Among the funds that acquired the stock while its price was lower than it is today are John Griffin’s Blue Ridge Capital, Daniel S. Och’s OZ Management and Jim Simons’ Renaissance Technologies. These three funds all started new positions in the online retailer over the first quarter of the year. As of March 31, their stakes comprised 233,000 shares, 175,000 shares, and 4,100 shares, respectively. To provide some context, Blue Ridge Capital’s stake was valued at more than $138 million by the end of the first quarter. Other bullish positions investors should take into account include those of James Crichton’s Hitchwood Capital Management, which almost tripled its stake over the period, taking it to half a million shares, worth $296 million as of March 31, and of Doug Silverman and Alexander Klabin’s Senator Investment Group, which started a new position comprising 255,000 shares over the January to March interval. The Wall Street Journal recently reported that Amazon.com, Inc. (NASDAQ:AMZN) is getting ready to expand its private label offerings. In coming weeks, the company plans to roll out other private label products – on top of diapers, including food and household items under the Happy Belly, Wickedly Prime and Mama Bear brand names, among others. In addition, on Tuesday, the online retailer expanded its restaurant delivery business to New York and Dallas.