Even though our data for the latest round of 13F filings shows that investors have been mainly betting on some of the largest and best companies from the tech, financial and healthcare sectors such as Apple, Actavis, and Citigroup, we have seen a significant increase in activity among some other companies. During the fourth quarter, funds that we track have poured significant amounts of capital into several stocks such as JD.Com Inc (ADR) (NASDAQ:JD), Yahoo! Inc. (NASDAQ:YHOO), and Amazon.com, Inc. (NASDAQ:AMZN), among others.
Following the bullish sentiment of big hedge funds with billions in assets under management can provide a competitive advantage for retail investors to obtain above market returns. Even though each individual investor, like David Einhorn of Greenlight Capital, or Steven Cohen of Point72 Asset Management has been able to provide impressive annualized returns over the years, it’s a totally different thing when a larger number of funds start investing in a particular stock. That’s because hedge funds usually acquire large stakes in companies, which means that they must conduct a detail-oriented research when choosing each stock. As such, taken collectively, that is often a good sign that the company’s fundamentals are very strong when multiple funds make moves into it.
That’s why in this article we will look into five stocks that have witnessed a significant increase in capital being invested during the last quarter of 2014.
On the first spot is JD.Com Inc (ADR) (NASDAQ:JD), a large-cap chinese e-commerce company. During the fourth quarter, the number of funds holding the stock only increased to 32 from 31. However, the aggregate value of the positions held by these funds surged to over $4.68 billion from just $508.85 million in the previous quarter. The increase in capital was mainly caused by Lei Zhang‘s Hillhouse Capital Management, one of the top funds that invest in Asian equities. During the fourth quarter, Hillhouse initiated a huge stake in JD.Com, which is valued at $3.53 billion and contains 152.42 million shares, representing roughly 80% of the fund’s equity portfolio.
The stock of JD.Com Inc (ADR) (NASDAQ:JD) lost around 10% during the fourth quarter. However, since the company went public in May 2014, the stock has gained around 30%. Analysts are also optimistic about the company, as the majority have ‘Buy’ ratings for JD.Com Inc (ADR) (NASDAQ:JD). Billionaire Stephen Mandel of Lone Pine Capital and Philippe Laffont of Coatue Management are two other investors bullish on the company as they initiated $204.04 million and $198.78 million stakes that contain 8.82 million shares and 8.59 million shares respectively.
Yahoo! Inc. (NASDAQ:YHOO) has seen an increase in popularity among funds from our database, as well as a significant inflow of capital. At the end of the fourth quarter, 99 funds reported holding shares of the company, versus 94 funds in the previous quarter. In addition, these funds held around $7.59 billion worth of the company’s stock, versus $5.31 billion a quarter earlier. The fact that Yahoo’s stock is undervalued was voiced by several investors in the last couple of months. Yahoo! Inc. (NASDAQ:YHOO) owns two large stakes, in Yahoo! Japan and Alibaba Group Holding Ltd (NYSE:BABA), the latter of which will soon be spun-off into a separate company in order to maximize shareholder value. It was a move that was expected by many shareholders of Yahoo, such as Jeff Smith of Starboard Value, who sent a letter to Yahoo CEO Marissa Mayer proposing a separation from both equity investments (though only Alibaba is being spun off at this time).
In this way, it comes as no surprise that investors have been bullish on Yahoo! Inc. (NASDAQ:YHOO) during the fourth quarter. Aside from Starboard, which owns 7.72 million shares of Yahoo, the company was also added to the equity portfolios of James Dinan’s York Capital Management and Christian Leone’s Luxor Capital Group, which reported ownership of 9.40 million shares and 9.22 million shares respectively in their latest 13F filings.
Investors have also been betting on Amazon.com, Inc. (NASDAQ:AMZN) during the October-December period. Amazon has seen a significant growth in revenue and earnings during the fourth quarter as it went through the holiday season. The company posted sales of $29.33 billion, and earnings per share of $0.45 for the fourth quarter, better than expected and above the same quarter results from last year. After the release of the financial report at the end of January, Amazon.com, Inc. (NASDAQ:AMZN) jumped 12% the same day and is currently up by 21% over the last month. Among investors that raised their exposure to Amazon.com, Inc. (NASDAQ:AMZN) during the fourth quarter are billionaires Ken Griffin and David E. Shaw. Citadel Advisors raised its stake by more than 4,500% to 1.56 million shares, and D.E. Shaw added 686,300 shares bringing it to 818,300 shares at the end of the fourth quarter.
Aside from tech, investors have been also bullish on some financial stocks, particularly Ally Financial Inc (NYSE:ALLY), in which 91 funds reported ownership of $6.29 billion worth of stock, versus 58 funds with $5.08 billion a quarter earlier. Among investors holding shares of Ally Financial Inc (NYSE:ALLY) are also 13 billionaires, which makes the stock one of the favorite financial companies among billionaire investors. The company has recently lost General Motors Company (NYSE:GM) as one of its partners, as the latter decided to conduct those operations once performed by Ally, under its own new financial arm. However, Ally’s management plans to increase its own subprime auto lending in order to deal with the loss of business from GM.
Billionaire Stephen Feinberg of Cerberus Capital Management is the largest shareholder of Ally Financial Inc (NYSE:ALLY) among funds that we track, reporting ownership of 41.52 million shares as of the end of 2014. On the other hand, billionaire Dan Loeb of Third Point cut his fund’s exposure to the lending company by 30% to 30.00 million shares during the fourth quarter.
Finally, there is BlackBerry Ltd (NASDAQ:BBRY), in which the number of funds holding the stock advanced to 25 from 17 during the fourth quarter, while the value of the aggregate positions held by the funds that we track appreciated to $756.82 million from $631.18 million. Blackberry is planning to come back as one of the leading smartphone manufacturers and has already released several new models such as the Passport and Classic, which both sport physical keyboards among other features. Moreover, BlackBerry Ltd (NASDAQ:BBRY) recently updated its mobile OS, which now has access to Amazon’s AppStore after the two companies struck a deal last year.
Prem Watsa continues to be the largest shareholder of BlackBerry Ltd (NASDAQ:BBRY) with 46.65 million shares. In addition to Watsa, Jim Simons of Renaissance Technologies acquired some 2.71 million shares during the October-December period, taking his position to 3.27 million shares.
Disclosure: None
