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Hedge Funds Double Down on a Crowded Trade

More firms initiated than sold off positions in 18 of the 20 most widely held stocks in the first quarter, according to SEI Novus.

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Hedge funds doubled down on this crowded trade in the first quarter.

More managers initiated than liquidated positions in 18 of the 20 most widely held stocks among this crowd, according to an analysis of first-quarter 13F filings tracked by SEI Novus. SEI Novus has one of the most comprehensive databases of quarterly hedge fund holdings of U.S. stocks. The biggest exception was Microsoft, also the most popular hedge fund stock, which saw a net departure of ten investors in the March quarter.

At the same time, more hedge fund investors reduced the size of their existing positions in the most popular stocks than added to them in the first quarter, suggesting they are still bullish on these stocks but wanted to lock in some profits or reduce their exposure.

In general, 14 of the top 15 stocks among hedge funds were the same at the end of each of the two most recent quarters. The only difference: Chip giant Taiwan Semiconductor Manufacturing Co. replaced energy giant ExxonMobil. Only a few stocks moved up in the rankings: Meta Platforms from fourth to third place and Salesforce from 14th to tenth.

This said, Microsoft and Amazon were by far the most popular stocks among hedge funds at the end of the first quarter, with 386 and 378 investors, respectively. This was down from 409 and 381 at year-end, according to the SEI Novus database. The third most popular stock at the end of the first quarter was Meta Platforms, with 318 investors.

In the first quarter, 20 hedge funds established new positions in Microsoft and 30 bailed on the stock. At the same time, 106 boosted their positions and 188 reduced their stakes.

No major hedge fund firm appears to have liquidated its Microsoft stake in the first quarter, according to regulatory filings. But Viking Global ˿Ƶ did initiate a position, which is now the Tiger Cub’s 16th-largest U.S. common stock long, according to the most recent 13F filing.

In the first quarter, 25 hedge funds established positions in Amazon and 17 exited, for a net increase of eight investors. However, though 137 hedgies added to their stakes, 160 reduced their positions.

Viking increased its stake by about 40 percent in the first quarter, making the e-commerce and cloud computing giant its third-largest long, per its filing. Millennium Management enlarged its position by about 30 percent last quarter, a filing says. Skye Global Management continues to have the biggest bet on Amazon, with the stock accounting for 47 percent of its U.S. assets even after the firm trimmed its stake by more than 8 percent, according to its 13F filing.

Meta moved into the third spot after attracting a net 23 new investors, including Rokos Capital Management. Balyasny Asset Management boosted its stake by 250 percent, making the stock its seventh-largest U.S. common stock long position, according to 13F filings.

The company that saw the biggest net increase in hedge fund ownership was chip giant Taiwan Semiconductor Manufacturing, with 45 new investors and just 11 fully exiting. As a result, it ranked as the 14th most widely held stock among hedge funds, moving up from 27th place at year-end. Several hedge funds established new, relatively small, or midsize positions, including Whale Rock Capital Management, Trian Fund Management, and Kingdon Capital Management, according to their 13F filings.

Valiant Capital Management reported in its first-quarter client letter that it had initiated a stake in Taiwan Semiconductor, making the company its second-biggest long position. But in its first-quarter 13F filing, Valiant disclosed a large position in TSMC call options, but none in the ADRs.

Coatue Management also made a big bet on TSMC, turning a nearly insignificant stake into the firm’s fifth-largest U.S. long. The Tiger Cub is also the largest hedge fund investor.

Here are the 20 most widely held stocks among hedge funds as of March 31, 2024, with the number of firms that hold each one, according to SEI Novus:

  1. Microsoft 386
  2. Amazon 378
  3. Meta Platforms 318
  4. Alphabet “A” 305
  5. Nvidia 274
  6. Apple 254
  7. Visa 238
  8. Alphabet “C” 227
  9. Mastercard 210
  10. Salesforce 194
  11. JPMorgan Chase 193
  12. Berkshire Hathaway 186
  13. Eli Lilly 182
  14. Taiwan Semiconductor Manufacturing 172
  15. Merck 170
  16. Uber Technologies 170
  17. Advanced Micro Devices 169
  18. ExxonMobil 167
  19. UnitedHealth Group 166
  20. Johnson & Johnson 165