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This Billion Dollar Hedge Fund’s Top Tech Picks

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Joe DiMenna founded Zweig-DiMenna Associates with his mentor Martin Zweig in 1984. Seeing as DiMenna’s fund was one of the first to do long/short trading successfully, the fund has grown to have an equity portfolio of over $2.2 billion as of September 30, according to its recently filed 13F documents. Given Zweig’s successful track record, we’ll take a closer look at the fund’s top tech picks in this article, which are Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB), Priceline Group Inc (NASDAQ:PCLN), Tableau Software Inc (NYSE:DATA), and Apple Inc. (NASDAQ:AAPL). 

Ellica / Shutterstock.com

Ellica / Shutterstock.com

#5 Apple Inc. (NASDAQ:AAPL)

 – Shares held (as of September 30): 252,439
– Total Value (as of September 30): $27.84 million

Apple Inc. (NASDAQ:AAPL) is a buyback machine. The company buys back tens of billions of dollars of stock every year, and bought back $13.3 billion worth of shares in the fourth quarter of fiscal year 2015 alone, up from $10 billion in the prior fiscal quarter. Apple’s buybacks will help the stock rise even if iPhone demand growth levels off, which is the primary concern of investors. So far though, iPhone demand is still strong, with Apple’s Greater China sales jumping by 99% year-over-year to $12.5 billion in the fiscal fourth quarter. Gross margin is stable-to-rising slightly. Carl Icahn‘s Icahn Capital LP owned 52.76 million Apple shares at the end of September and believes the company should trade for $240 a share, or more than double their current price.

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#4 Tableau Software Inc (NYSE:DATA)

 – Shares held (as of September 30): 353,748
– Total Value (as of September 30): $28.22 million

Tableau Software Inc (NYSE:DATA) represents a new investment for Zweig-DiMenna Associates, with the fund adding over 350,000 shares of the company to its portfolio in the third quarter. The business analytics software company reported excellent third quarter results, with EPS of $0.14 on revenue of $170.83 million, exceeding estimates by $0.07 per share and $13.09 million respectively. Revenue rose by 63.5% year-over-year and guidance is pretty strong, with the company expecting fourth quarter revenue of $195 million-to-$200 million, beating analyst estimates of $193 million. 45 funds that we track owned approximately 20% of the company’s float at the end of the third quarter. Among those elite funds is Renaissance Technologies, founded by Jim Simons, with a stake of 551,000 shares.

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Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.6% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

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