Will the Deal with Amazon Will Help This e-Commerce Company Gain Hedge Funds’ Attention?

Amazon.com, Inc. (NASDAQ:AMZN) is making headlines today as the stock inched up by over 1% in Thursday intraday trading on the back of the company’s announcement of five new products, including a new Fire tablet priced under $50 that the company claims to be more durable than the new iPad Air and to have more processing power than Samsung Galaxy Tab 3 Lite. Amazon also announced a new Fire tablet designed for Kids and a new Fire HD. Moreover, Amazon also released Fire TV with new 4K Ultra HD feature and Fire TV Gaming Edition that comes with a controler.

Amazon.com, Inc. (NASDAQ:AMZN), boxes, packages,isolated, delivery, shipping,

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Another stock that jumped on the back of news related to Amazon is Shopify Inc (NYSE:SHOP), which surged by over 20% on Thursday after the announcement that Shopify’s platform was chosen as the preferred migration provider for merchants from Amazon Webstore. Under the terms of the collaboration between the two e-commerce companies, Shopify will integrate some of the Amazon’s features such as Login and Pay, Fulfillment, and Selling.

Amazon.com, Inc. (NASDAQ:AMZN) as a company with a solid presence on the market is also much admired by smart money and was one of the favorite e-commerce companies among the investors we track (see which other companies made the list). On the other hand, Shopify Inc (NYSE:SHOP), whose stock started trading earlier this year has yet to capture the attention from investors it deserves and the deal with Amazon will help it in this endeavor. We follow the moves of over 730 large investors as part of our small-cap strategy, which suggests that despite their weak performance, hedge funds are still the perfect investors to emulate. Through backtests spanning through the period between 1999 and 2012, we have determined that hedge funds’ most popular small-cap ideas can beat the market by as much as one percentage point per month on average. Our strategy involves imitating 15 most popular stocks among hedge funds and it has returned 118% since it went live in August 2012, outperforming the S&P 500 ETF (SPY) by over 60 percentage points during this period (see more details here).

With this in mind, let’s take a closer look at how the smart money has been trading both Amazon and Shopify Inc (NYSE:SHOP) lately. According to the latest round of 13F filings, 103 funds from our database held $10.46 billion worth of Amazon.com, Inc. (NASDAQ:AMZN)’s stock, equal to roughly 5.20% of the company at the end of June, significantly up from 96 investors with stakes valued at $8.40 billion in aggregate a quarter earlier. Among these funds, the largest holdings were reported by Ken Fisher‘s Fisher Asset Management, which owns 2.49 million shares, and Andreas Halvorsen’s Viking Global, which added Amazon.com, Inc. (NASDAQ:AMZN) to its equity portfolio during the second quarter and disclosed holding 2.28 million shares in its latest 13F. Chase Coleman’s Tiger Global Management was another investor that initiated a substantial position in Amazon during the period and owns 747,000 shares, according to its latest 13F.

In Shopify Inc (NYSE:SHOP), on the other hand, only 13 funds among those that we track disclosed positions worth $48.70 million, which was equal to around 2% of the company at the end of June. The largest position among these funds was held by Panayotis Takis Sparaggis’ Alkeon Capital Management, which owns 251,000 shares. Tiger Global Management and Israel Englander‘s Millennium Management  were more cautious and added only 70,000 shares and 65,000 shares to their respective equity portfolios. However, the latest developments and the subsequent 38% growth of the stock since its IPO in May, will definitely help Shopify Inc (NYSE:SHOP) to gain more attention from hedge funds.

Correction: This article previously incorrectly stated that Jamie Zimmerman’s Litespeed Management was the largest shareholder of Shopify among the investors from our database. Litespeed does not own shares of Shopify, according to its latest 13F filing. 

Disclosure: none