Hedge funds ended 2019 by sticking with what works.
The 15 most popular stocks among hedge funds were unchanged for the fourth consecutive quarter, according to Novus, which tracks U.S. stock holding holdings reported by hedge funds in their quarterly 13F filings. The only difference Novus recorded in the fourth quarter was a slight change in the order of popularity.
More interesting were the several stocks ranking below this group of crowded holdings that enjoyed an especially large surge in hedge fund support during the fourth quarter compared to the previous three-month period.
According to Novus, Microsoft remained the most widely-held stock among hedge funds with at least 293 hedge fund owners at the end of the fourth quarter. The cloud and software giant has been the favorite of hedge fund managers since the third quarter of 2018.
Who can blame them? The stock has tripled since the end of 2016 and was already up about 17 percent this year through Thursday.
At year-end, Microsoft was the largest U.S. long position of Adage Capital Management. Those that established new positions in the fourth quarter included Taconic Capital Advisors, which made the stock its second largest U.S. long bet.
Amazon, which now ranks second in popularity with 278 hedge fund investors, by far enjoyed the largest number of net new shareholders among the most widely owned hedge fund stocks during the three-month period.
According to Novus, 35 hedge funds established new positions in the e-commerce pioneer in the fourth quarter, while 19 hedge funds liquidated their stakes.
Facebook slipped one notch in the ranking to third place with 266 hedge fund investors, followed by each of the two classes of Google owner Alphabet.
[II Deep Dive: Hedge Funds Cling to Most Popular Stocks]
Outside of the top 15, several stocks enjoyed a huge jump in net new owners during the fourth quarter.
For example, ride hailing app Uber Technologies had 99 hedge fund investors at year-end after 60 initiated positions during the period, versus just 14 that liquidated their holdings.
Institutional Investor previously reported on this apparent development after noticing several major hedge funds sharply boosted their stakes in Uber, including Tiger Global Management, Viking Global Investors, Light Street Capital, and Darsana Capital Partners. Others established new positions in the company, including Eminence Capital and Balyasny Asset Management.
These investors appeared to be bottom-fishing the stock with the hope the company will eventually make a profit.
Luxury jeweler Tiffany also enjoyed a net increase in hedge fund ownership, with 45 new investors in the fourth quarter, bringing the total to 90. In this case, however, investors were probably seeing a potentially lucrative arbitrage play.
In October LVMH Moet Hennessy Louis Vuitton made a hostile bid for the company for $120 per share in cash. Tiffany’s stock has surged more than 51 percent since October 18.
In the fourth quarter, the stock became the second largest U.S. long of Carlson Capital after it initiated a position of 1.68 million shares. York Capital Management, Balyasny Asset Management, and P. Schoenfeld Asset Management were also new investors in the fourth quarter.
Hedge fund investors also warmed up to drug giant Bristol Myers Squibb at the end of 2019. Altogether 155 firms held a position in the company, which recently acquired Celgene, after 55 initiated a position and just 11 completely dumped their stakes. The stock is up about 30 percent since the end of the third quarter.
