Last week, as it approached the end of the latest round of 13F filings, was pretty busy for experts at Insider Monkey, who have been gathering data and identifying the most popular stock picks among our database that consists of around 700 best-performing hedge funds. In an interview with Business News Network‘s Frances Horodelski on Monday, Insider Monkey’s co-founder and managing editor, Meena Krishnamsetty provided some of the key highlights that can be taken from the huge amount of data that was revealed in 13F filings with the Securities and Exchange Commission. Some of the stocks that have been mentioned during the interview were TransCanada Corporation (USA) (NYSE:TRP), Apple Inc. (NASDAQ:AAPL), Allergan, Inc. (NYSE:AGN), International Business Machines Corp. (NYSE:IBM), and BlackBerry Ltd (NASDAQ:BBRY).
Before we discuss what we can take from the latest round of 13F filings, you should check out Meena’s interview with BNN from a couple of months ago, where she described in more detail the importance of reading these filings and provided more details about Insider Monkey’s strategy.
Regarding TransCanada Corporation (USA) (NYSE:TRP), Meena said that there has been a lot of activity around this stock during the third quarter. The company was included in the equity portfolio of 34 hedge funds during the July-September period, versus 11 in the previous quarter. All these funds own around $1.78 billion woth of TransCanada Corporation (USA) (NYSE:TRP)’s stock, which represent around 5% of the company. The increased in activity, Meena explained, comes from the fact that hedge funds tend to share ideas sometimes.
Among hedge funds bullish on TransCanada is Daniel Och‘s OZ Management, which owns 7.21 million shares as of the end of September, the stake being added during the third quarter.
“[…] They [hedge fund managers] go golfing, they have investment ideas dinners. So, when we see that the hedge fund activity in TransCanada Corporation (USA) (NYSE:TRP) jumped to 34 hedge funds, versus 11 from last quarter, we suspect that there is a lot of piggybacking,” Meena said.
On the other hand, Apple Inc. (NASDAQ:AAPL) has seen only one new hedge fund initiating a stake during the third quarter. Moreover, the aggregate value of 153 funds that own stakes in Apple, has decreased to $22.51 billion, versus $25.22 billion held by 152 funds at the end of June. Meena explained this movement by the fact that Apple Inc. (NASDAQ:AAPL)’s stock appreciated during the last several months, which is why investors trimmed their stakes to pick some profits, but they are still holding shares of Apple Inc. (NASDAQ:AAPL) in their equity portfolios.
Carl Icahn is one of the largest shareholders of Apple, owning 52.76 million shares at the end of September.
Allergan, Inc. (NYSE:AGN) has been another popular choice by investors, and it looks like it is going to pay-off, since the company announced today that it will be acquired by Actavis plc (NYSE:ACT) in a $66 billion transaction, which has sent the stock surging on Monday. However, the deal might leave Bill Ackman, the manager of Pershing Square, unhappy, since he has been trying to purchase Allergan in a joint entity with Valeant Pharmaceuticals Intl Inc (NYSE:VRX). However, the relatively long proxy fight between Allergan, Inc. (NYSE:AGN) on one side and Pershing Square with Valeant on the other, some investors became impatient. In this way, a total of 100 hedge funds held the company in their equity portfolios at the end of September, versus 108 funds in the previous quarter.
Another key point that could be taken from the latest round of 13F filings was Waren Buffet raising Berkshire Hathaway’s stake in International Business Machines Corp. (NYSE:IBM) by 304,000 shares to 70.48 million shares, and inching up holdings in several other companies, as well as initiating two new positions. However, International Business Machines Corp. (NYSE:IBM)’s stock took a hit last week, on the back of disappointing financial results. Nevertheless, with Mr. Buffett being a long-term investor, this decline has not affected him much. Moreover, Meena added that Mr. Buffett’s long-term approach should be kept in mind, while following his activity, since he has a different strategy from the majority of hedge fund managers that held a stock for an average period of one year.
BlackBerry Ltd (NASDAQ:BBRY) was another Canada-based company that was discussed by Meena during the interview. The stock witnessed a decrease in popularity among hedge funds with only 17 funds disclosing long positions, versus 29 in the previous quarter. This can be explained by BlackBerry Ltd (NASDAQ:BBRY)’s stock significantly appreciating over the last several months, as CEO John Chen is trying to turn the company around with new products and widely-mediatized events.
As it was in the previous quarters, one of the top investors in BlackBerry Ltd (NASDAQ:BBRY) is Prem Watsa‘s Fairfax Financial Holdings, which owns 46.65 million shares of the company, unchanged over the quarter.
In general, Meena said that large-cap stock picks among hedge funds managed to outperform the S&P 500 in the last several months, but only by a very small margin, with large caps returning 5.2%, versus S&P 500’s return of 4.8%.