Hedge Fund Buys and Sells: Notable Trends

A look at the top trades in the 4th quarter

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Rupert Hargreaves
Mar 11, 2021
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Looking through the 13F reports filed by hedge funds over the past few weeks, it's clear that these investors are betting on technology.

Some of the most significant acquisitions in hedge fund portfolios in the last quarter of 2020 were in the technology media or telecom sectors. I think that shows just how important the technology sector has become to the world and the financial markets over the past 12 months.

Even the Oracle of Omaha,

Warren Buffett (Trades, Portfolio), has been expanding his holdings of technology stocks over the past few quarters.

Indeed, the most considerable addition to Berkshire Hathaway's (

BRK.A, Financial) (BRK.B, Financial) equity portfolio in the fourth quarter of 2020 was the acquisition of Verizon Communications Inc. (VZ, Financial).

Tech investments

During the second half of 2020, Berkshire acquired 147 million shares of Verizon, making it the sixth-largest position in the equity portfolio with a 3.2% portfolio weight.

The most popular technology stock overall among hedge funds in the fourth quarter of 2020 was Microsoft Corp. (

MSFT, Financial). Chase Coleman (Trades, Portfolio)'s Tiger Global Management, Daniel Loeb (Trades, Portfolio)'s Third Point, David Tepper (Trades, Portfolio)'s Appaloosa Management and Viking Global Investors all added to existing holdings.

Chris Hohn's TCI Fund Management has the most considerable exposure overall to the technology company with 10.5% of the portfolio invested. Viking Global has 7.2% of its portfolio invested in Microsoft, making it the largest position in the portfolio, closely followed by BridgeBio Pharma Inc. (

BBIO, Financial).

When it comes to the most popular stocks among hedge funds, Microsoft sits in the top 10. Facebook Inc. (

FB, Financial) is one of the top five holdings, and it was also widely brought by hedge funds in the fourth quarter of 2020.

The list of firms that boosted their holdings of the social network in the fourth quarter looks similar to those that added to Microsoft. Appaloosa increased its allocation by 14%, taking the holding up to an 8.2% portfolio weight.

Facebook is now the fourth-largest holding Tepper's portfolio. The other top three holdings all have exposure to technology as well. The largest is T-Mobile US Inc. (

TMUS, Financial), which has a 9.9% portfolio weight. That is followed by Amazon.com Inc. (AMZN) (9.6%) and Micron Technology Inc. (MU, Financial) (9%).

At the end of 2020, the overall equity value of Tepper's portfolio was $6.7 billion. Of this total, around $2.5 billion or 37% was invested in these top four tech holdings.

In terms of big bets, Pat Dorsey's Dorsey Asset Management had 22% of its portfolio invested in the social media network at the end of 2020, its largest position by far.

Another big bet position by a well-known hedge fund was Himalaya Capital Management's 48% allocation to chip manufacturer Micron. Unfortunately, this figure is a bit misleading because it's based on Himalaya's 13F report, which only details U.S. stock holdings. The fund, which is managed by Chinese investor

Li Lu (Trades, Portfolio), reportedly manages more than $20 billion, of which less than 10% is invested in U.S. securities.

At the end of 2020, the Micron holding was worth around $860 million. Based on the assumption that Himalaya manages $20 billion, this implies it makes up 4.3% of the portfolio, although this figure is only a rough estimate.

Nelson Peltz (Trades, Portfolio)'s Trian Fund Management was busy building its large holding of Comcast Corp. (CMCSA, Financial) stock in the final quarter of last year. It boosted the size of the holding by 27%, taking it to just under 20 million shares, or 15.4% of the $6.8 billion equity portfolio. Following these deals, Comcast has become the fund's third-largest holding, but Peltz was also selling his other large, non-tech holdings in the quarter, Procter & Gamble Co. and (PG, Financial) and Sysco Corp. (SYY, Financial). These were the second and first-largest positions in the portfolio respectively at the end of the year.

Considering the general overall switch away from non-tech shares into tech shares, I wouldn't be surprised if Peltz has continued reducing P&G and Sysco while buying Comcast during the first quarter.

Disclosure: The author owns no stocks mentioned.

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Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers everything value investing for ValueWalk and other sites on a freelance basis.