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Hedge Funds Are Losing Their Appetite for FANGs


Amazon aside, the FANGs appear to be losing some luster with big hedge funds. The FANGs refer to Facebook (FB), Amazon.com (AMZN), Netflix (NFLX) and Google's parent Alphabet (GOOGL). The stocks have been hugely popular with hedge funds, many of which have made a killing as the stocks have surged.

That could be changing. Other than Amazon, exposure to the other FANG stocks declined in the second quarter for the 50 largest hedge funds, according to data from FactSet Research. Hedge funds decreased their exposure to Facebook and Netflix by $1.2 billion each and sold about $1 billion worth of Alphabet shares.

Amazon continued to be popular, with the group adding stakes worth a total of $1.6 billion. Amazon was the largest purchase for Millennium Management and D.E. Shaw & Co, which bought shares worth $336 million and $1 billion, respectively, according to FactSet.

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Overall, tech remains quite popular with hedge funds. The market value of tech stocks held by the 50 largest funds increased by more than $8 billion in the second quarter, exceeding every other sector.

Most popular was Spotify Technology (SPOT). Funds built a $3.5 billion stake in the digital music streaming service, led by Tiger Global Management, which amassed shares worth $2.5 billion, accounting for 12.6% of its overall equity assets of $19.7 billion. Tiger also added to its stake in the South American e-commerce site MercadoLibre (MELI), increasing its position by $540 million. Tiger was also one of the few big funds to buy more of Facebook, adding shares worth $517 billion at the end of the second quarter.

Altaba (AABA) also proved popular with hedge funds, which added $3.2 billion in exposure to the stock. Altaba is the stub company left after the firm sold most of its Yahoo assets to Verizon Communications (VZ). Altaba's primary value is now a 15% stake in Alibaba Group Holding (BABA), the Chinese e-commerce giant. That stake alone was recently worth $79 billion, accounting for more than 85% of Altaba's net assets, according to a favorable Barron's take on the stock in June.

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Altaba was the largest purchase for activist hedge fund Elliott Management, which bought a stake worth $1.5 billion at the end of the second quarter, accounting for 7% of its equity assets, according to FactSet.

Some tech and telecom stocks fell out of favor, including Broadcom (AVGO), Liberty Broadband (LBRDK), and Western Digital (WDC). Funds dumped $2.7 billion worth of Broadcom, whose attempted merger with Qualcomm (QCOM) was blocked by the Trump administration.

Apple (AAPL) wasn't one of the original FANGs, of course, but it remains quite popular in the hedge fund world. Funds added $1.3 billion worth of Apple stock with Renaissance Technologies --a $94.2 billion fund--plowing $800 million into the shares.

Warren Buffett  is also still a fan of the iPhone maker. Buffett bought $6.4 billion worth of Apple in the second quarter, building his stake to more than $46 billion, according to the latest 13F regulatory filings for his holding company, Berkshire Hathaway (BRK.A). Apple was Buffett's largest stock purchase in the second quarter--his next biggest purchase was Delta Air Lines  (DAL) at $216 million, though he appears to see less value in other airlines, decreasing his exposure to American Airlines  (AAL) and United Continental Holdings (UAL).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Technology , Stocks
Referenced Symbols: FB , AMZN , NFLX , GOOGL , SPOT



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