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Which is the Most Popular Company Among Hedge Funds?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Alphabet Inc (NASDAQ:GOOG).

Is Alphabet Inc (NASDAQ:GOOG) a buy here according to hedge funds? Investors who are in the know are betting on the stock. The number of long hedge fund bets increased by 11 recently. Our calculations also showed that GOOG ranks fifth among the 30 most popular stocks among hedge funds. However, that’s a little bit misleading because we treat GOOG and GOOGL tickers separately. GOOGL is the fourth most popular stock. This means, overall, Alphabet is actually most popular company among all hedge funds, surpassing Microsoft Corp (NASDAQ:MSFT), Facebook Inc (NASDAQ:FB) and Amazon.com Inc (NASDAQ:AMZN) by a very large margin.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Boykin Curry EAGLE CAPITAL MANAGEMENT

Let’s check out the latest hedge fund action encompassing Alphabet Inc (NASDAQ:GOOG).

How have hedgies been trading Alphabet Inc (NASDAQ:GOOG)?

At Q4’s end, a total of 141 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GOOG over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

GOOG_mar2019

When looking at the institutional investors followed by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the most valuable position in Alphabet Inc (NASDAQ:GOOG). Eagle Capital Management has a $1.8796 billion position in the stock, comprising 7.7% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $1.0736 billion call position; the fund has 0.6% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass John Armitage’s Egerton Capital Limited, William B. Gray’s Orbis Investment Management and Farallon Capital.

Now, specific money managers have jumped into Alphabet Inc (NASDAQ:GOOG) headfirst. Generation Investment Management, managed by David Blood and Al Gore, initiated the most outsized position in Alphabet Inc (NASDAQ:GOOG). Generation Investment Management had $467.8 million invested in the company at the end of the quarter. Andrew Hahn’s Ursa Fund Management also made a $272.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Andreas Halvorsen’s Viking Global, Mick Hellman’s HMI Capital, and Ryan Pedlow’s Two Creeks Capital Management.

Let’s now review hedge fund activity in other stocks similar to Alphabet Inc (NASDAQ:GOOG). We will take a look at Berkshire Hathaway Inc. (NYSE:BRK-B), Facebook Inc (NASDAQ:FB), Alibaba Group Holding Limited (NYSE:BABA), and Johnson & Johnson (NYSE:JNJ). This group of stocks’ market valuations are closest to GOOG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRK-B 87 21379350 3
FB 161 14869125 -3
BABA 113 11471017 -14
JNJ 73 5212191 10
Average 108.5 13232921 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 108.5 hedge funds with bullish positions and the average amount invested in these stocks was $13233 million. That figure was $12832 million in GOOG’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Johnson & Johnson (NYSE:JNJ) is the least popular one with only 73 bullish hedge fund positions. Alphabet Inc (NASDAQ:GOOG) is not the most popular stock in this group but as we said earlier it is the fifth most popular stock among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on Alphabet as the stock returned 14.4% and outperformed the market as well.

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

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