According to my research, the second quarter of 2019 was a busy period for some of the world's most significant hedge funds.
As equity markets put in one of their best performances on record for the first half of any year, hedge funds were able to take some money off the table for some stocks and redeploy this capital into their favorite bets.
According to my research, the most acquired stock of all hedge funds in the second quarter of 2019 was Google parent company Alphabet (GOOG, Financial).
Taking the opportunity
Alphabet had a tough second quarter. After rising to a high of nearly $1,300 at the end of April, it slumped on anti-trust concerns and poor earnings at the beginning of May. The stock dropped from a high of nearly $1,300 to below $1,050 at the beginning of June, a staggering decline for one of the world's largest and fastest-growing tech companies.
Hedge funds didn't waste any time taking advantage of this opportunity. Some of the biggest names in the industry swooped on Alphabet, including Chris Hohn's TCI Fund Management, which increased its position by 45%, and David Tepper (Trades, Portfolio)'s Appaloosa Management, which boosted its holding by nearly 40%. After this buying, Alphabet makes up just over 20% of TCI's $19 billion portfolio according to 13-F and GuruFocus data.
Aggressive buying
Wells Fargo (WFC, Financial) was another firm hedge funds swooped on in the second quarter. As the stock slipped on growth worries and repercussions for the fake accounts scandal, hedge funds across the spectrum started buying.
Leon Cooperman (Trades, Portfolio) bought the stock for his portfolio, initiating a position with a 1.1% portfolio weight. So did Mark Hillman (Trades, Portfolio) at the Hillman fund. Tom Gayner (Trades, Portfolio)'s Markel Asset Management boosted its holding by 23%, and Hancock Classic Value added 23%.
Some of the largest funds in the value world, including Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) continue to own a position but did not make any changes during the second quarter.
Moving down the list of the most bought stocks in the second quarter of 2019, one of the most interesting "most-bought" stocks is Mohawk Industries (MHK, Financial), Inc. This flooring provider seems to be a value fund favorite. The stock added around 20% in the second quarter and has since fallen by around a third, so it'll be interesting to see if firms have been buying more during quarter three.
Some of the biggest names to boost their holdings of this retailer in the second quarter include Richard Pzena (Trades, Portfolio)'s Hancock Classic Value and Thomas Gayner's Markel Asset Management. Markel boosted its position by 44%, but even after this increase, the stock is only a 0.3% portfolio weight.
Berkshire buying
Other stocks featuring on the list of the most-bought stocks by hedge funds last quarter are UnitedHealth (UNH, Financial), Berkshire Hathaway and Bristol-Myers Squibb (BMY, Financial). As I've covered in another article, one of the most high-profile funds buying Berkshire in the last quarter was Bill Ackman (Trades, Portfolio)'s Pershing Square.
Other value investors who see value in Warren Buffett (Trades, Portfolio)'s conglomerate include Glenn Greenberg (Trades, Portfolio)'s Brave Warrior Advisors. This value investor bought 1.3 million Berkshire B-shares during the three months to the end of June, making the position 14% of his $1.9 billion Brave Warrior portfolio. Allan Mecham's Arlington Value Capital was also a buyer. The position makes up 29% of Mecham's $1.5 billion portfolio. And finally, the Kahn Brothers' (Trades, Portfolio) investment group added a stake of just 3,200.
Hedge funds were also buyers of chemicals group Dow Inc. (DOW, Financial) last quarter. Lee Ainslie (Trades, Portfolio)'s Maverick Capital led the pack, adding to its position by 40%. The hedge fund owns 1.8 million shares. Leon Cooperman (Trades, Portfolio)'s Omega Advisors also added the stock to its portfolio, and Thomas Russo's Gardner Russo & Gardner bought just over 15,000 shares for the portfolio.
Disclosure: The author owns shares in Berkshire Hathaway and Wells Fargo.
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