Hedge funds run by renowned billionaires spend a fortune on analysis of companies and trends before investing money as they have access to advanced resources and tools. Historically hedge funds’ stock picks outperformed the market though the margin of outperformance has been shrinking as hedge funds’ assets under management has been growing. The outperformance is larger in the small and mid-cap space. Our data show the top 30 mid-cap stocks among the best performing hedge funds yielded an average return of 18% over the last 12 months, vs. a gain of 7.6% for the S&P 500 Index during the same period.
The problem with being a billionaire is that you can’t really effectively invest your money in liquid small-cap stocks. That’s why billionaires have been buying larger capitalization stocks more frequently in recent years. They may also think that these stocks are undervalued. In this article we will talk about the stocks on which billionaires are bullish. These stocks include Facebook Inc (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Allergan plc Ordinary Shares (NYSE:AGN).
A total of 149 hedge funds tracked by Insider Monkey were bullish on Facebook Inc (NASDAQ:FB) at the end of the third quarter. Among them include ‘Tiger Cub’ billionaire Andreas Halvorsen’s Viking Global and Stephen Mandel’s Lone Pine Capital which own 18.75 million and 6.25 million shares of the company respectively. Facebook’s stock has gained over 15% year-to-date. In the third quarter, the company reported EPS of $1.09 on $7.011 billion revenue, while the Street had projected $0.97 EPS and $6.92 billion. The company, however, warned of slower growth in the coming months due to the saturation in the ads load capacity.
As of the end of the third quarter, Microsoft Corporation (NASDAQ:MSFT) was owned by 16 hedge funds tracked by Insider Monkey, including billionaire Jeffrey Ubben’s ValueAct Capital, Ken Fisher’s Fisher Asset Management and David Blood’s Generation Investment Management. Microsoft’s stock is up over 9% year-to-date. Earlier this month, investment firm Goldman Sachs upgraded Microsoft to ‘Buy’ from ‘Neutral’ and upped their price target on it to $68 from $60. The firm expects Microsoft’s cloud revenue to more than quadruple to $140 billion by 2020.