Over the past week, 13F reports from the world's biggest and best-performing hedge funds have been rolling in.
A note on 13Fs
Any asset manager with more than $100 million of assets under management is required to file one of these reports 45 days after the end of each calendar quarter, detailing positions in the common stock portfolio at the end of each quarter.
While they can be a good starting point to find investing ideas, 13Fs only tell us which equities hedge funds owned at one point in time. They do not tell us why the hedge fund owned the stock or if it is building or liquidating a position.
What's more, these reports only provide a limited snapshot of investment holdings. They do not detail non-U.S. stock holdings, credit investments or cash holdings.
Put simply, 13F reports only provide limited insight into the secretive world of hedge funds. Still, combing through these reports can reveal some interesting trends.
Hedge funds love Microsoft
The most acquired stock last quarter was technology giant Microsoft (MSFT, Financial). Among the funds I follow that owned a position, Chris Hohn's TCI Fund Management held 20.5 million shares at the end of the first quarter, giving it a 14% portfolio weight after it increased its position by 43% during the three months to the end of March.
Chase Coleman (Trades, Portfolio)'s Tiger Global Management was also busy increasing its position in the company during the first three months of the year. Tiger Global hiked its holding by 15% to 13.7 million shares. Microsoft now makes up 7.4% of the hedge fund's portfolio. It's the second-largest holding after JD.Com (JD, Financial).
Stephen Mandel's Lone Pine Capital was another big name fund adding to its position in the first quarter. Lone Pine increased its holdings by 24% to 7.8 million shares. This buying pushed the holding up to 6.7% of Lone Pine's U.S. equity portfolio, as detailed on the 13F report. That made it the second-largest holding in the portfolio at the end of March. Shopify (SHOP, Financial) was the largest holding with a 6.9% portfolio weighting.
Altimeter Growth Corp. 2
Looking through the list of the most bought stocks by hedge funds last quarter, many of the usual names appear. Companies like Wells Fargo (WFC, Financial) and United Health (UNH, Financial) have been top buys for several quarters. Other tech names, such as Facebook (FB, Financial), are not surprising considering the performance these stocks have put in over the past few quarters and the propensity for hedge funds to pile into momentum trades.
However, one name does stick out: Altimeter Growth Corp. 2 (AGCB). Altimeter is a special purpose acquisition company (SPAC) formed by Altimeter Capital targeting the tech sector.
Altimeter Capital is a $16 billion investment firm run by Brad Gerstner. It has seen successes like Priceline (BKNG), Expedia (EXPD, Financial), Uber (UBER, Financial), Twilio (TWLO), Hubspot (HUBS, Financial) and Snowflake (SNOW).
The first Altimeter SPAC has already announced a merger with Southeast Asia's largest ride-hailing company, Grab Holdings, so it would appear as if hedge funds are betting that the investment group will find another winner for its second SPAC.
Some of the big-name firms that jumped into Altimeter Growth Corp. 2 during the first quarter included David Tepper (Trades, Portfolio)'s Appaloosa Management, Seth Klarman (Trades, Portfolio)'s Baupost Group, Lee Ainslie (Trades, Portfolio)'s Maverick Capital, Daniel Loeb (Trades, Portfolio)'s Third Point, David Einhorn (Trades, Portfolio)'s Greenlight Capital and Chase Coleman (Trades, Portfolio)'s Tiger Global Management. The average stake size was around 1.5 million shares.
I should note that many funds were also buying other SPACs in the quarter, but this was the only name with such an impressive shareholder register.
Disclosure: The author owns no share mentioned.
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