Hedge Fund Hotels: Amazon.com, Inc. (AMZN) in 2020

Hedge funds started to disclose their holdings at the end of 2019 in new 13F filings. They have 45 days from the end of each quarter to disclose their positions in publicly traded US stocks, options, and convertible debt. Insider Monkey tracks more than 750 hedge funds and usually more than half of these hedge funds will wait until the last day to file their 13Fs with the SEC. Fortunately, our experience shows that aggregate hedge fund sentiment towards most stocks don’t change much. In this article we are going to take a look at how hedge funds have been feeling about a stock like Facebook Inc (NASDAQ:FB) and compare its performance against hedge funds’ favorite stocks.

Amazon.com, Inc. (NASDAQ:AMZN) investors should pay attention to an increase in support from the world’s most elite money managers lately. Our calculations also showed that AMZN consistently ranked second, third, or fourth among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings) over the last 4 quarters.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that historically hedge funds’ stock picks outperformed the market by a large margin. That’s why hedge fund industry became a $3 trillion industry. However,  you can’t outperform the market by replicating the entire portfolio of an average hedge fund anymore. Luckily Insider Monkey came up with proprietary algorithms to identify the best stock picks of the best hedge fund managers. We have been sharing a portfolio of around 15 hand picked stocks in our monthly newsletter since March 2017 and generated a cumulative return of 87% vs. 47.7% S&P 500 ETFs during the same period (see the details here).

We leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap trading at an enterprise value/operating profit ratio of 1 (this isn’t a typo). In January, we recommended a position in a dividend stock with a PE ratio of less than 7 that is growing its earnings and yields 11%. Keeping this in mind let’s review the fresh hedge fund action surrounding Amazon.com, Inc. (NASDAQ:AMZN).

Amazon.com (NASDAQ:AMZN), The Washington Post (NYSE:WPO), Berkshire Hathaway Inc. (NYSE:BRK.A), Apple Inc. (NASDAQ:AAPL)

What does smart money think about Amazon.com, Inc. (NASDAQ:AMZN)?

At the end of the third quarter, a total of 168 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMZN over the last 17 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Fisher Asset Management held the most valuable stake in Amazon.com, Inc. (NASDAQ:AMZN), which was worth $3058.7 million at the end of the third quarter. On the second spot was Eagle Capital Management which amassed $1586.7 million worth of shares. Viking Global, Tiger Global Management, and Lone Pine Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Skye Global Management allocated the biggest weight to Amazon.com, Inc. (NASDAQ:AMZN), around 29.61% of its 13F portfolio. North Fourth Asset Management is also relatively very bullish on the stock, earmarking 18.07 percent of its 13F equity portfolio to AMZN.

As industrywide interest jumped, key money managers were breaking ground themselves. Egerton Capital Limited, managed by John Armitage, initiated the most outsized position in Amazon.com, Inc. (NASDAQ:AMZN). Egerton Capital Limited had $264.5 million invested in the company at the end of the quarter. Robert Pitts’s Steadfast Capital Management also initiated a $229 million position during the quarter. The following funds were also among the new AMZN investors: Benjamin A. Smith’s Laurion Capital Management, Alexander Mitchell’s Scopus Asset Management, and Gregg Moskowitz’s Interval Partners.

Let’s now review hedge fund activity in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). We will take a look at Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), Berkshire Hathaway Inc. (NYSE:BRK-B), and Facebook Inc (NASDAQ:FB). All of these stocks’ market caps are similar to AMZN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GOOGL 147 12321541 18
GOOG 136 15584517 10
BRK-B 99 22272006 6
FB 179 20837470 -3
Average 140.25 17753884 7.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 140.25 hedge funds with bullish positions and the average amount invested in these stocks was $17754 million. That figure was $22965 million in AMZN’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Berkshire Hathaway Inc. (NYSE:BRK-B) is the least popular one with only 99 bullish hedge fund positions. Amazon.com, Inc. (NASDAQ:AMZN) is not the most popular stock in this group but that’s because of Facebook. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Top 20 hedge fund stocks also returned 4.5% so far in 2020 and beat the market by an additional 3 percentage points. Unfortunately AMZN wasn’t nearly as successful as these 20 stocks and hedge funds that were betting on AMZN were disappointed as the stock returned 0.5% in 2020 and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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