Microsoft Corporation (MSFT), Alibaba (BABA), Intel Corporation (INTC): Wrong Bets For Hedge Funds

Billionaire Ken Fisher had the second largest positions in each of Bank of America and Intel Corporation (NASDAQ:INTC). Both of these stocks lost more than 13% during the quarter. Other value investors, First Eagle Investment Management and Pzena Investment Management, also bet big on Intel Corporation (NASDAQ:INTC) and got burned. Overall, Intel Corporation isn’t one of the 50 most popular stocks among hedge funds and its popularity declined even further preceding its double digit loss during the first quarter.

United Parcel Service, Inc. (NYSE:UPS) is even less popular than Intel Corporation (NASDAQ:INTC). There were only 38 hedge funds with a total investment of $2 billion in United Parcel Service, Inc. (NYSE:UPS) shares. Half of this amount came from just two investors: Greenhaven Associates and Bill & Melinda Gates Foundation, the latter of which was probably attracted to UPS’ 3% dividend yield. It isn’t uncommon for billionaire Bill Gates’ foundation to invest in stable dividend stocks. We believe dividend stocks will deliver better returns than long-term Treasury bonds over the next couple of decades.

The last stock in our list is Microsoft Corporation (NASDAQ:MSFT). ValueAct Capital had 22% of its 13F portfolio in the stock and they kept buying Microsoft shares during the first quarter as the shares plunged nearly 12%. Microsoft Corporation was one of the 10 most popular stocks among hedge funds at the end of December (see the complete list). Hedge funds had nearly $18 billion invested in the software giant. We usually don’t like mega-cap stocks unless they are the target of activist investors. We like the stock’s 3% yield and believe that ValueAct may deliver surprising gains in Microsoft Corporation (MSFT) shares as it did with Adobe.

Disclosure: None