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.
Amazon.com, Inc. (NASDAQ:AMZN) is the 3rd most popular stock among hedge funds in our list of 742 hedge funds as 150 of these funds reported ownership of long stakes in the company at the end of the third quarter, more than 145 funds a quarter earlier. The stock is up over 15% year-to-date. Ken Fisher’s Fisher Asset Management owns 1.97 million shares of the company. In the fourth quarter, Amazon expects a revenue of $42.0-45.5 million, versus the consensus of $44.58 million.
Billionaire Warren Buffett’s Berkshire Hathaway and D. E. Shaw’s D E Shaw are among the 145 hedge funds in our database which have long positions in the Apple Inc. (NASDAQ:AAPL), as of the end of the third quarter. The stock is up by 6% year-to-date. President-elect Donald Trump has recently offered a tax cut for Apple if it brings back its manufacturing from China and Taiwan. The offer reportedly includes a 20% cut in the corporate tax rate and a 10% repatriation tax holiday to bring back money from abroad to the US.
Allergan plc Ordinary Shares (NYSE:AGN) experienced a slight decrease in the hedge fund sentiment in the third quarter, as 115 funds in our database reported long stakes in the company at the end of September, compared to 131 funds a quarter earlier. However, these funds still hold over $10.59 billion worth of the company’s stock, which accounts for 15% of the total float. The stock has lost over 38% year-to-date. The New Jersey-based pharmaceutical company recently acquired Chase Pharmaceuticals Corporation, a clinical-stage biopharmaceutical company, for an upfront payment of $125 million with some additional potential regulatory and sales milestone payments. John Paulson’s Paulson & Co owns 3.89 million shares of Allergan, as of the end of the third quarter.