This content is from: Portfolio

Morning Brief: FAANG Stocks Recover a Bit After Huge Selloff

Facebook’s stock slumped on the personal data usage scandal, dragging other high-flying tech shares down with it.

  • By Stephen Taub

What a difference a day makes, especially for the so-called FAANG stocks. Investors who have been betting against the most popular hedge fund stocks on Monday enjoyed $969 million worth of mark-to-market gains, according to S3 Analytics. They could thank the shocking reports surrounding the use of Facebook’s personal data, which spooked other high-flying internet and technology stocks as well as the overall market.

However, after languishing in the red for most of the day, the FAANG stocks rallied late in the day on Tuesday. As a result, short sellers were down $142 million in mark-to-market profits for the day. Still, over the two days they enjoyed a total of $827 million in profits. The six stocks, of course, are Facebook, Apple, Amazon.com, Netflix and the two classes of Google parent Alphabet. Facebook’s Tuesday trading volume of 129 million shares was more than six times its monthly average. “We can expect that a portion of that will be short selling,” S3 noted in a report sent to reporters shortly before the market closed.

Meanwhile, Bloomberg reported that the U.S. Federal Trade Commission is looking into whether Facebook violated terms of a 2011 consent decree over its handing of personal user data, according to Bloomberg. In addition, the U.K. is investigating Facebook. A UK parliamentary committee has asked Mark Zuckerberg to testify about how it acquires, stores, and protects users’ data, according to another report.

Shares of Facebook fell 2.6 percent on Tuesday and are down more than 9 percent over the past two days. Google is down 3.3 percent over the past two days, Apple is down 1.6, Netflix is roughly flat, and Amazon.com is up about 1 percent.

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Credit Suisse raised its price target on hedge fund favorite Micron Technology from $60 to $70 ahead of the chip maker’s expected second-quarter earnings report on Thursday. In a note to clients, the bank says it is still bullish “but a bit more subtle,” noting, “Further upside is warranted as investor confidence in structural drivers unfolds.” At year-end, Micron was the largest individual U.S. long holding of David Tepper’s Appaloosa Management and the third-largest of Izzy Englander’s Millennium Management.

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Point72 Asset Management disclosed in a 13D filing that it owns more than 2.98 million shares of Build-a-Bear Workshop, or 20 percent of the specialty retailer. This is up from its previously disclosed 18.5 percent stake. In a regulatory filing, Steven Cohen’s family office said it bought the stock for investment purposes but stressed it did not increase its stake. Rather, its higher percentage position is due to a stock buyback. However, Point72 converted its position from a passive to an activist investment. At this point it has only used standard boiler-plate language to indicate it may take some sort of undefined future action.

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Former hedge fund manager Jeff Vinik has agreed to invest $12 million in Dreamit, an early-stage venture fund and startup accelerator. He will also become a partner and a member of the board of directors, according to the Tampa Bay Times. Vinik, who closed his hedge fund in 2013 and returned $9 billion, teamed up with Dreamit last May. These days Vinik owns the Tampa Bay Lightning professional hockey team and is a partner of Strategic Property Partners, which plans to develop about 60 acres in downtown Tampa.

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