Do Hedge Funds Love Amazon.com, Inc. (AMZN)?

Reymerlyn Martin

Sat, Nov 23, 2019, 6:53 PM

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Amazon.com, Inc. (NASDAQ:AMZN) based on that data.

Amazon.com, Inc. (NASDAQ:AMZN) shareholders have witnessed an increase in activity from the world's largest hedge funds lately. Our calculations also showed that AMZN ranked #3 among the 30 most popular stocks among hedge funds (see the video below for previous rankings).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a large number of gauges market participants can use to assess publicly traded companies. Some of the most underrated gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can beat the S&P 500 by a solid margin (see the details here).

We're going to take a glance at the key hedge fund action surrounding Amazon.com, Inc. (NASDAQ:AMZN).

What have hedge funds been doing with Amazon.com, Inc. (NASDAQ:AMZN)?

Heading into the fourth quarter of 2019, a total of 168 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in AMZN over the last 17 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Amazon.com, Inc. (NASDAQ:AMZN). Fisher Asset Management has a $3.0587 billion position in the stock, comprising 3.4% of its 13F portfolio. On Fisher Asset Management's heels is Eagle Capital Management, managed by Boykin Curry, which holds a $1.5867 billion position; 5.6% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass Andreas Halvorsen's Viking Global, Chase Coleman's Tiger Global Management and Stephen Mandel's Lone Pine Capital. In terms of the portfolio weights assigned to each position Skye Global Management allocated the biggest weight to Amazon.com, Inc. (NASDAQ:AMZN), around 29.6% of its portfolio. North Fourth Asset Management is also relatively very bullish on the stock, designating 18.1 percent of its 13F equity portfolio to AMZN.

Consequently, specific money managers were leading the bulls' herd. Egerton Capital Limited, managed by John Armitage, initiated the most valuable position in Amazon.com, Inc. (NASDAQ:AMZN). Egerton Capital Limited had $264.5 million invested in the company at the end of the quarter. Robert Pitts's Steadfast Capital Management also initiated a $229 million position during the quarter. The following funds were also among the new AMZN investors: Benjamin A. Smith's Laurion Capital Management, Alexander Mitchell's Scopus Asset Management, and Gregg Moskowitz's Interval Partners.

Let's go over hedge fund activity in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). These stocks are Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), Berkshire Hathaway Inc. (NYSE:BRK-B), and Facebook Inc (NASDAQ:FB). This group of stocks' market valuations resemble AMZN's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GOOGL,147,12321541,18 GOOG,136,15584517,10 BRK-B,99,22272006,6 FB,179,20837470,-3 Average,140.25,17753884,7.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 140.25 hedge funds with bullish positions and the average amount invested in these stocks was $17754 million. That figure was $22965 million in AMZN's case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Berkshire Hathaway Inc. (NYSE:BRK-B) is the least popular one with only 99 bullish hedge fund positions. Amazon.com, Inc. (NASDAQ:AMZN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately AMZN wasn't nearly as successful as these 20 stocks and hedge funds that were betting on AMZN were disappointed as the stock returned 0.6% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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