What Hedge Funds Think About Internet Search Stocks

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Microsoft Corporation (NASDAQ:MSFT)’s Bing browser was second among search engines in terms of both volume of searches, and unique monthly visitors, edging out Yahoo in each category. Bing searches accounted for 4.53% of global searches in January thanks to its 350 million unique monthly visitors, while it held a 19.7% share of the U.S market, up 150 basis points from the previous year. Online search advertising for Microsoft Corporation (NASDAQ:MSFT) was also up 23% according to the company’s most recent financial results for the fourth quarter of 2014.


Microsoft Corporation (NASDAQ:MSFT) nearly caught Google in terms of fund ownership last quarter, dipping to 114 from 119, but closing the gap to 6 from 18. Invested capital also dipped, but far surpassed Google’s at $17.87 billion, down from $19.66 billion at the end of the third quarter. That places Microsoft sixth among all companies in terms of capital investment by tracked funds.

Jeffrey Ubben remains a strong believer in Microsoft after playing a role in guiding the company’s transition towards building around its underappreciated and high growth assets. Ubben’s fund ValueAct Capital held 74.24 million shares of Microsoft at the end of 2014.

Lastly is Yahoo! Inc. (NASDAQ:YHOO) and its Yahoo! Search, which ranked third globally with 4.13% of the search volume in January, and 300 million unique monthly visitors. In Yahoo’s most recent quarterly results, search ad revenue remained flat. However the company’s mobile ad revenue share is expected to increase to 4.2% in 2016 from 3.2% in 2014 according to a December report by eMarketer, surpassing Twitter Inc (NYSE:TWTR) for third in that metric, behind only Google and Facebook Inc (NASDAQ:FB).

There was a lot of fund activity in Yahoo! Inc. (NASDAQ:YHOO) during the fourth quarter, related to the company’s valuable investment in Alibaba Group Holding Ltd (NYSE:BABA). Fund ownership increased to 99 during the fourth quarter from 94, and capital investment leapt to $7.59 billion from just $5.31 billion, though partly on the strength of Yahoo’s strong quarter, as shares rose 26.41%. Several funds opened large new positions on Yahoo during the fourth quarter, including James Dinan’s York Capital Management, Christian Leone’s Luxor Capital Group, and Daniel S. Och’s Oz Management. Each initiated stakes of more than 8.99 million shares during the fourth quarter.

Disclosure: None

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