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Here is Hedge Fund’s Third Most Popular Stock Pick

We at Insider Monkey have gone over 730 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article we look at what those investors think of Amazon.com, Inc. (NASDAQ:AMZN).

Amazon.com, Inc. (NASDAQ:AMZN) investors should pay attention to a slight decrease in activity from the world’s largest hedge funds lately. Nevertheless our calculations showed that AMZN ranked 3rd among the 30 most popular stocks among hedge funds list.

In the financial world there are many metrics shareholders put to use to appraise stocks. A couple of the less known metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outclass their index-focused peers by a superb amount (see the details here). Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy outperformed the broader market indices in down markets as well.

Bill Miller

We’re going to take a glance at the key hedge fund action surrounding Amazon.com, Inc. (NASDAQ:AMZN).

How are hedge funds trading Amazon.com, Inc. (NASDAQ:AMZN)?

At Q2’s end, a total of 163 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AMZN over the last 16 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

AMZN_oct2019

More specifically, Citadel Investment Group was the largest shareholder of Amazon.com, Inc. (NASDAQ:AMZN), with a stake worth $5355.8 million reported as of the end of March. Trailing Citadel Investment Group was Fisher Asset Management, which amassed a stake valued at $3260.1 million. Eagle Capital Management, Viking Global, and Tiger Global Management LLC were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that Amazon.com, Inc. (NASDAQ:AMZN) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of fund managers who were dropping their entire stakes heading into Q3. At the top of the heap, Glen Kacher’s Light Street Capital cut the biggest investment of the 700 funds followed by Insider Monkey, valued at an estimated $261.4 million in stock, and John Smith Clark’s Southpoint Capital Advisors was right behind this move, as the fund sold off about $106.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds heading into Q3.

Let’s also examine hedge fund activity in other related megacap stocks in the technology sector. We will take a look at Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), and Facebook Inc (NASDAQ:FB). This group of stocks’ market caps are closest to AMZN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AAPL 95 57822722 -3
GOOGL 129 10109482 -18
GOOG 126 11503332 -7
FB 182 21452835 6
Average 133 25222093 -5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 133 hedge funds with bullish positions and the average amount invested in these stocks was $25.2 billion. That figure was $24.2 billion in AMZN’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Apple Inc. (NASDAQ:AAPL) is the least popular one with only 95 bullish hedge fund positions. Amazon.com, Inc. (NASDAQ:AMZN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AMZN wasn’t nearly as successful during Q3 and hedge funds that were betting on AMZN were disappointed as the stock lost 8.3% during third quarter and underperformed 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.

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

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