Each quarter, investors — and the media — like to focus on the new or increased positions taken by high-profile hedge fund managers that are revealed in the updated quarterly 13F filings with the Securities and Exchange Commission detailing their stock holdings.
However, some of the most interesting data points that emerge from these documents are the onetime big positions that managers suddenly liquidated, especially in activist favorites or hedge fund favorites in general. These transactions often fly under the radar.
Take Richard (Mick) McGuire III’s Marcato Capital Management. In the fourth quarter the activist unloaded its entire stake in the Bank of New York Mellon Corp. As recently as the second quarter, the stock was Marcato’s largest disclosed U.S. long. It was also a winner for the firm, surging nearly 15 percent last year.
Bank of New York remains a significant holding of another activist investor, Nelson Peltz’s Trian Fund Management. In any case, the stock is so far flat this year.
Barry Rosenstein’s JANA Partners also fully unloaded a major position in the fourth quarter. The activist dumped its shares in Johnson Controls, which had become its fifth-largest long after the firm tripled its stake in the company during the third quarter. That wound up being bad timing, as shares of the conglomerate fell more than 11 percent in the fourth quarter.
Meanwhile, the stock is up about 3.6 percent since year-end. Of course, we don’t know what price JANA paid for the stock or at what price it unloaded the shares.
Several hedge fund firms also dumped a slew of stocks that are among the most popular with hedge funds. For example, Chase Coleman’s Tiger Global Management unloaded all of its 3.6 million or so shares in Apple, the most widely held stock among all hedge funds. At the end of the third quarter, the stock had accounted for nearly 6 percent of the Tiger Seed’s U.S. stock portfolio, ranking seventh overall. However, keep in mind the computer and iPhone giant was not one of Tiger Global’s four core holdings, which account for a combined 60 percent of its total U.S. long assets.
Apple also played a role in Tiger Global’s hedge fund’s first-half losses in 2016, which it never was able to overcome. Sure enough, the stock has surged more than 18 percent this year already.
We also earlier reported that Stanley Druckenmiller’s family office, Duquesne Family Office, dumped two large technology positions in the fourth quarter: Alibaba Group Holding, its fourth-largest long at the end of the third quarter, and Broadcom, its seventh largest at the time. We had noted that Druckenmiller, who grew much more bullish after the November elections, heavily shifted his firm’s portfolio in the fourth quarter to emphasize financial stocks.
Meanwhile, Melvin Capital, headed by SAC Capital alumnus Gabriel Plotkin, liquidated its entire stake in Amazon.com. At the end of the third quarter, the hedge fund held 175,000 shares of the e-commerce giant, making it the firm’s fourth-largest holding. It was the firm’s largest long at the end of the second quarter, but it cut its stake by nearly 50 percent in the September three-month period. The stock, however, is up more than 14 percent since year-end.
Elsewhere, Discovery Capital Management liquidated its stake in Ctrip.com International, the Chinese online travel agency. In the third quarter the macro firm headed by Tiger Cub Robert Citrone had doubled its position in the stock, which became the firm’s second-largest U.S. long, accounting for 4.86 percent of the U.S. stock portfolio.
Bad timing. The stock has surged about 17 percent since year-end.
Finally, Julian Robertson Jr.’s Tiger Management dumped its stake in Bristol Myers Squibb Co. In the third quarter the family office for the hedge fund icon had established a new stake that accounted for 5.11 percent of its U.S. equity assets. So far, Robertson is not regretting the move. Since year-end the stock is down more than 8 percent.
