13F data for the last quarter of 2018 is now starting to trickle out. These documents give us a great insight into the world of hedge funds.
Any hedge fund with more than $100 million in assets under management has to file a 13F with the SEC detailing its top U.S. equity positions. However, these reports do not contain detailed analysis on other assets, such as debt, cash and private equity. They provide only a snapshot of the equity portfolio at one point in time and are also backward-looking, so they should not be relied upon for trading decisions.
Still, these findings can give us some great insight into what hedge funds are thinking, particularly hedge fund thought as a group as we can see where the industry thinks there is more value to be found in the market on a sector-by-sector basis.
13F trends
Looking through the 13Fs that have been filed so far, for example, we can see that one of the most-bought stocks last quarter was social network Facebook (FB, Financial).
Some big names decided to initiate and add to their positions in the company last quarter, including Stephen Mandel's Lone Pine Capital, which boosted its position by 73% and owned 6.7 million shares in Facebook at the end of the fourth quarter. I should also note that Stephen Mandel stepped down as the manager of Lone Pine earlier this year, but this position was likely initiated under his watch.
Interestingly, David Tepper (Trades, Portfolio)'s Appaloosa Management reduced its position in Facebook by nearly 60%. It seems this seasoned hedge fund manager decided to take a huge amount of risk off the table in the fourth quarter. He reduced virtually all of his equity holdings including the firm's largest holding, Micron (MU, Financial), which used to be worth $1 billion. After selling nearly 60% of the position, Tepper owned just 16 million shares at fourth quarter-end, although it is still the largest position in the portfolio, accounting for 26% of the equity assets.
Despite the bank's involvement in the 1MDB scandal, Goldman Sachs (GS, Financial) also proved popular with hedge fund managers in the fourth quarter of 2018.
eBay Inc. (EBAY, Financial) was another popular company. As I have already covered, Seth Klarman (Trades, Portfolio)'s Baupost initiated a stake in the online auction site during the fourth quarter, worth a total of $600 million. The position makes up 5.3% of the firm's overall equity portfolio and is a top 10 position for Klarman. Pat Dorsey's Dorsey Asset Management was also a buyer during the last three months of 2018.
The second most sought-after company after Facebook appears to be Alphabet Inc. (GOOG, Financial). A huge number of hedge fund managers decided to initiate or increase their positions of Alphabet during the fourth quarter of last year. The largest buyer was Chris Hohn's TCI Fund Management.
TCI had an enormous position in the parent company of Google already, but it clearly wasn't big enough as Hohn decided to increase his stake by 5% over the three months to the end of 2018. The position made up 15% of TCI's $20 billion equity portfolio at the quarter's end and was second only to 21st Century Fox (FOXA, Financial) and Charter Communications (CHTR, Financial) in terms of position size.
Tiger Cub Lee Ainslie (Trades, Portfolio)'s Maverick Capital decided to jump headfirst into Alphabet in the fourth quarter, increasing its position size by over 4,000% to just under 213,000 shares. The position is worth 3.2% of the hedge fund's $6.8 billion equity portfolio.
Ainslie also appears to like the look of financial services company Charles Schwab (SCHW, Financial). His hedge fund increased its holding by 53% in the fourth quarter of 2018, and it now makes up 4.7% of the overall equity portfolio.
Maverick wasn't the only hedge fund buying Schwab at the end of last year. Glenn Greenberg (Trades, Portfolio)'s Brave Warrior Advisors boosted its position by 2.4% to just under six million shares and Lou Simpson (Trades, Portfolio)'s SQ Advisors increased its holding by 10%.
Disclosure: The author owns no share mentioned.
