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Blue Hawk Investment Group Has Mixed View on Facebook and Intuitive Surgical

Blue Hawk Investment Group, LLC is the management company of the Blue Hawk Fundamental Growth Fund, LP. Insider Monkey has recently published a copy of Blue Hawk Investment Group’s Q1 2020 investor letter. A copy of the letter can be downloaded here. Jake DuBois is the fund’s founder and managing member. The fund was founded in 2016. For Q1 2020, the fund reported a net return of -10.01%, while the S&P 500 returned -20.00%.

In the said letter, Jake DuBois highlighted a few stocks and Facebook Inc (NASDAQ:FB) is one of them. Facebook is a social media and technology company based in California. Year-to-date, Facebook stock lost 12.7% and on April 21st it had a closing price of $170.80. Its market cap is of $511.7 billion, and FB is trading at a price-to-earnings ratio of 27.93x. Here is what Jake DuBois said:

“Traffic to Facebook and its related properties has exploded of late, surprising nobody. This seems like it would be a boon for the stock, but Facebook makes money through advertising, and we anticipate spending will be down due to the cyclical nature of advertising and slowdowns in various industries, such as travel and retail, that typically are material spenders on the platform (we estimate that these two industries represented between one quarter and one third of digital advertising in 2019). On balance, we have used Facebook as a source of cash to fund new ideas, but we still own a material position and believe it’s a mistake to sell secular winners for cyclical reasons – as long as the balance sheet is strong. With an eye-popping $55 billion in net cash, Facebook has a fortress of a balance sheet. Down 33% from highs and trading at a very reasonable mid-cycle normalized multiple, we think Facebook is one of the safest long-term bets out there.”

In Q4 2019, the number of bullish hedge fund positions on FB stock increased by about 3% from the previous quarter (see the chart here).

Blue Hawk Investment Group’s comments on Intuitive Surgical

In the said letter, Jake DuBois also highlighted Intuitive Surgical Inc (NASDAQ:ISRG) stock. Intuitive Surgical is the industry leader in robotic assisted surgery. Here is what Jake DuBois said:

“When news of voluntary procedure delays at hospitals was announced, Intuitive Surgical proceeded to drop 40% from its peak. Investors feared hospitals’ budgets could be overrun by the pandemic, limiting ISRG’s future growth. The stimulus bill provided relief to hospitals, alleviating our concern on future demand. We had a conversation with a Healthcare analyst peer, and we discussed recession-proof names that could potentially snap back as the market panic cleared. With a $3 billion net cash position on the balance sheet, we put Intuitive Surgical at the top of that list. We bought 75 shares at $365 during the month and hold a 5-6% position in the name.”

In Q4 2019, the number of bullish hedge fund positions on ISRG stock increased by about 13% from the previous quarter (see the chart here).

Disclosure: None. This article is originally published at Insider Monkey.

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