Amazon, Monsanto, Activision: Hedge Funds Loved These 5 Stocks The Most in Q2

After nearly a year of brutal underperformance, the Goldman Sachs hedge fund VIP list, a collection of the most popular stocks among a select group of hedge funds, has finally entered a period of outperformance, besting the S&P 500 by 470 basis points over the past six weeks. While the results may not signal that hedge funds as a whole have finally turned the corner, it does bode well when looking for investment ideas based on which stocks they were buying the most in the second quarter, heading into this strong run.

With that in mind, we’ve poured over the aggregate hedge fund ownership data pertaining to thousands of companies and found five that had large boosts in hedge fund ownership during the second quarter. Those stocks are Amazon.com, Inc. (NASDAQ:AMZN), Visa Inc (NYSE:V), Monsanto Company (NYSE:MON), Activision Blizzard, Inc. (NASDAQ:ATVI), and Pioneer Natural Resources (NYSE:PXD). We’ll take a look at the hedge fund activity in them during the quarter among the funds in our system and see how they’ve been performing of late in this article.

It should be noted that the total number of 13F-filing hedge funds in our database declined to 749 for the June 30 reporting period, from 766 for the March 31 reporting period.

Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Visa Inc (NYSE:V)

– Number of Hedge Funds With Long Positions (as of June 30): 118
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $9.33 billion

Visa kicks off our list, being held by 118 hedge funds in our system on June 30, up from 106 on March 31. That vaulted Visa into seventh in terms of hedge fund ownership, and it also ranked as the favorite finance stock among the billionaire-led hedge funds in our system. Some of the new Visa shareholders during the quarter included Peter A. Wright’s P.A.W Capital, James Crichton’s Hitchwood Capital, and Matthew Tewksbury’s Stevens Capital.

Visa Inc (NYSE:V) is currently embroiled in a standoff with Wal-Mart Stores, Inc. (NYSE:WMT) in Canada, where the retailer stopped accepting Visa cards at three locations in Thunder Bay, Ontario in advance of a threatened nationwide rollout over high fees. While Wal-Mart still insists that the rollout for the rest of the country will move ahead soon, there is some speculation that the Thunder Bay stores were used as a test run and that Wal-Mart likely hasn’t been pleased with the sales results. It’s also possible that those three locations were simply being used as a bargaining tool to try and get Visa to back down, and that Wal-Mart never had any real intention of rolling out a Canada-wide block. In any event, it appears that Wal-Mart (which offers store-branded MasterCards) may blink first and back off of its demands, which would be great news for Visa and its shareholders.

Amazon.com, Inc. (NASDAQ:AMZN)

– Number of Hedge Funds With Long Positions (as of June 30): 145
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $19.82 billion

There was also a net total of a dozen new shareholders of Amazon during the second quarter, as it jumped to second overall with 145. Those investors owned $19.82 billion worth of Amazon’s shares, which ranked fifth overall. New investors of Amazon during the quarter included Louis Navellier’s Navellier & Associates, Leon Shaulov‘s Maplelane Capital. and Charles Clough’s Clough Capital.

Amazon.com, Inc. (NASDAQ:AMZN) just announced that its Prime subscribers in select markets will now be able to order vehicles (or rather, a specific vehicle, for now) for test drives, as Amazon dabbles in yet another creative way to make its Prime service more appealing and potentially unlock another revenue stream through partnerships with dealers. As of now, only the 2017 Hyundai Elantra can be scheduled for a test drive and only in the Los Angeles and Orange County areas.

On page 2, we’ll check out three more stocks that saw huge leaps in hedge fund ownership during the second quarter.

Pioneer Natural Resources (NYSE:PXD)

– Number of Hedge Funds With Long Positions (as of June 30): 74
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $3.56 billion

It’s not totally surprising to see an energy stock make the list, as the sector has started to rebound from what was likely rock-bottom. There were 13 more hedge funds in our database with long positions in Pioneer Natural Resources on June 30 than there were on March 31. New investors of the company included Jim Simons’ Renaissance Technologies, John Griffin’s Blue Ridge Capital, and David Stemerman’s Conatus Capital.

Pioneer Natural Resources (NYSE:PXD)’s output was strong during the second quarter, as it topped its own estimates by producing 233,000 barrels of oil equivalent per day, topping its previous guidance by 6,500 at the mid-point. Production is being spurred by the company’s version 2.0 completed wells, and it has now completed 37 version 3.0 wells, with the early returns from those wells being even stronger than the enhanced 2.0 version when the chokes are fully opened. Pioneer expects to have 80 version 3.0 wells in production by the end of the year.

Activision Blizzard, Inc. (NASDAQ:ATVI)

– Number of Hedge Funds With Long Positions (as of June 30): 68
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $4.10 billion

After being in a dogfight for several quarters with Electronic Arts Inc. (NASDAQ:EA) over which would be crowned hedge funds’ favorite video game stock, Warcraft developer Activision Blizzard blew past its rival in the second quarter, with ownership of the stock among hedge funds that we track jumping to 68 from 52, while EA’s figure rose to 58 from 56. Dan Loeb’s Third Point, Eric Bannasch’s Cadian Capital, and Ben Gambill’s Tiger Eye Capital were among the many new Activision Blizzard shareholders.

Activision Blizzard, Inc. (NASDAQ:ATVI)’s smash hit Overwatch has topped 15 million players since its launch a little over two months ago, pushing the company’s monthly active users across all of its online games to a record 33 million. In addition to its other online hits World of Warcraft and Hearthstone: Heroes of Warcraft, Activision Blizzard also has a new Call of Duty game coming later this year, as well as an expansion for the popular online shooter/RPG Destiny.

Monsanto Company (NYSE:MON)

– Number of Hedge Funds With Long Positions (as of June 30): 87
– Aggregate Value of Hedge Funds’ Holdings (as of June 30): $5.32 billion

Monsanto easily tops the list, though it did so because of merger news, which often sends hedge fund ownership soaring as merger arb funds get in on the action. However, given that Monsanto never did end up reaching an agreement with any company, unlike several others during the quarter which had jumps in hedge fund ownership, we decided to include it on this list. In total, there were 36 more hedge funds long Monsanto on June 30 than on March 31, among them Clint Carlson‘s Carlson Capital, Eric Mindich’s Eton Park Capital, and Thomas Steyer’s Farallon Capital.

If the host of hedge funds newly-long Monsanto Company (NYSE:MON) were hoping for its acquisition, it has disappointed them in the third quarter by rejecting another offer from Bayer, which would create a chemicals juggernaut. While Monsanto has expressed a willingness to be acquired for the right price, Bayer may be willing to force the issue if a deal can’t be reached by launching a hostile takeover bid. Handelsblatt reported last week that the German company is weighing whether to “turn directly to shareholders” should a deal with Monsanto’s management not materialize.

Disclosure: None