Daniel S. Och‘s $67.1 billion hedge fund, OZ Management, recently filed its 13F form with the SEC for the reporting period of March 31. The technology sector represented the largest component of its equity portfolio, accounting for 20% of its total value, and we’ll study those picks in this article. The top tech picks include Yahoo! Inc. (NASDAQ:YHOO), eBay Inc (NASDAQ:EBAY), Twitter Inc (NYSE:TWTR), QUALCOMM, Inc. (NASDAQ:QCOM) and Micron Technology, Inc. (NASDAQ:MU). Let’s take a closer look at the activity in these holdings during the first quarter.
Och’s net worth stands at about $3.9 billion after 21 years of establishing his New York-based fund that today has offices in London, Mumbai, Beijing and Hong Kong. OZ Management is one of the only publicly-traded hedge fund firms in the world and shares of the company are up by 6.08% year-to-date. The market value of OZ’s equity portfolio stood at $30.85 billion at the end of March, as compared to $37.14 billion at the end of the previous quarter. The turnover ratio for the first quarter was particularly high at 180.69%.
Insider Monkey tracks hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. These stocks were able to generate alpha because of their lower risk profile. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month. These stocks were slightly riskier, so their monthly alpha was 80 basis points (read the details here). We believe the data is clear that investors will be better off by focusing on small-cap stocks rather than large-cap stocks.
Coming back to OZ’s tech holdings, Yahoo! Inc. (NASDAQ:YHOO) topped the list after OZ increased its stake by 62% to 14.65 million shares valued at $650.88 million. Marissa Mayer, Yahoo! Inc. (NASDAQ:YHOO)’s CEO has made quite a few acquisitions during her tenure in order to breathe some life into the company, but according to many critics none of them have actually worked. Yahoo’s core operations, excluding the company’s stake in Alibaba and Yahoo Japan, continue to be receiving almost zero valuation on the stock market and Yahoo’s stock has depreciated by nearly 11.5% year-to-date. Yet Yahoo! Inc. (NASDAQ:YHOO)’s appetite for more acquisitions might not be satiated just yet and the next candidate could possibly be the online business reviewing company Yelp Inc (NYSE:YELP), which is seeking a potential acquirer, though some analysts believe that is a downright bad idea. Among Yahoo! Inc. (NASDAQ:YHOO)’s other prominent stockholders are James Dinan’s York Capital Management and Christian Leone’s Luxor Capital Group.
Next in line is eBay Inc (NASDAQ:EBAY), which is scheduled to sever off its payment arm PayPal this year, with discussions regarding the valuation of the $72.17 billion company’s e-commerce operations bordering on the pessimistic side. OZ’s stake in eBay Inc (NASDAQ:EBAY) was comprised of 10.54 million shares valued at $608.01 billion after a 34% hike to the stake during the first quarter. The company’s stock has appreciated by 5.86% year-to-date amid first quarter financial results that beat analyst estimates for both EPS and revenue, while the total payments volume rose by 18% to $61 billion. The famous activist investor Carl Icahn of Icahn Capital is the largest shareholder of eBay Inc (NASDAQ:EBAY) among the investors we track.
A new stake was re-initiated in Twitter Inc (NYSE:TWTR) consisting of 4.50 million shares valued at $225.55 million, this after the fund closed off its previously-held position in the company during the first quarter last year. The holding represents 0.73% of the fund’s portfolio value. Twitter Inc (NYSE:TWTR)’s stock is up by 3.43% so far this year, as compared to the Internet Content & Information industry’s average gains of 1.29% during the same period. Earlier this year Twitter Inc (NYSE:TWTR) acquired the livestreaming app Periscope as well as the social media talent agency Niche for a total of $86 million. Recently the company announced its plans to issue 1.26 million shares to purchase the e-commerce ad tech platform TellApart. Another prominent stockholder of Twitter Inc (NYSE:TWTR) is Ken Griffin‘s Citadel Investment Group.
The fund also held call options underlying 4.11 million shares of QUALCOMM, Inc. (NASDAQ:QCOM)’s stock, valued at $284.67 million. This represented an increase of 16% in the stake during the quarter. The $115.8 billion company’s stock is down by 4.4% year-to-date. QUALCOMM, Inc. (NASDAQ:QCOM) is planning to stir its buyback program by selling some $10 billion worth of debt. Aside from Och, other money managers betting on QUALCOMM, Inc. (NASDAQ:QCOM) include billionaires Barry Rosenstein and Ken Fisher.
Micron Technology, Inc. (NASDAQ:MU)’s stake was also increased by 35% during the quarter to 13.22 million shares valued at $358.79 million. The holding contributed 1.16% to OZ’s portfolio value. Micron Technology, Inc. (NASDAQ:MU)’s stock has slumped by nearly 25% year-to-date. Samsung’s expansionary efforts in the DRAM/NAND space have hurt the company lately and analysts forecast shrinking margins for Micron Technology, Inc. (NASDAQ:MU) in the future, leading Drexel Hamilton to recently downgrade the company to ‘Hold’. David Einhorn’s Greenlight Capital is a major shareholder of the company and held 33.55 million shares at the end of March.
Disclosure: None
