And now it is Amazon’s turn.
Jittery tech-oriented hedge funds are eagerly awaiting the e-commerce giant’s earnings report after Thursday’s close, mindful that investors have been either heavily punishing the stocks of companies reporting disappointing results or greatly rewarding companies serving up good news amid an otherwise sharp drop in tech, internet, and telecom stocks.
The ramifications of Amazon’s news will be enormous for several high-profile hedge funds, many of which are coming off one to two years of large losses. Sure enough, in anticipation of Thursday’s report, shares of Amazon dropped 5.56 percent Wednesday to close at $121.40.
The Nasdaq, and stocks in general, sold off sharply on Wednesday, in part because the previous evening Alphabet had reported earnings and revenues that were better than expected, but the cloud computing results were disappointing. Shares of the two classes of Google’s parent fell roughly 9.5 percent on Wednesday.
On the other hand, Microsoft, which also reported results Tuesday evening, was rewarded with a roughly 3 percent gain on Wednesday, even as the Nasdaq fell 2.4 percent.
Another hopeful sign: Shares of Facebook parent Meta Platforms are expected to be up Thursday after a Wednesday evening report that quarterly revenues and earnings had beat expectations and a signal that operating profits will come in better than expected next quarter thanks to expense reductions. Meta was up 2.3 percent in after-hours trading after losing more than 4 percent on Wednesday.
That’s life in the tech lane these days, where hedge funds and investors in general fear the jig is up — at least for now — for these previously surging and now high-priced stocks. Who can blame hedge funds — many of which are coming off two straight years of losses — for being uneasy in advance of the earnings announcement from Amazon, the largest cloud computing company in the world?
A number of high-profile hedge funds have major positions in the company, none more notable than that of Jamie Sterne’s Skye Global.
In the second quarter, Skye boosted its stake in Amazon by 17 percent, which accounted for nearly half of Skye’s total assets as of the end of the second quarter, the most recent period for which this information is publicly available. Microsoft accounted for a further 19 percent of assets. So a positive report from Amazon should give Skye a huge boost.
As of the end of the third quarter, Skye was up about 36.7 percent for the year after dropping 8 percent in September, according to an investor.
Third Point, meanwhile, established a large new stake in Amazon in the second quarter, a position that instantly became the multistrategy firm’s third-largest U.S.-listed long. At the end of September, Amazon was Third Point’s fourth-largest long and Microsoft was the second largest.
David Tepper’s Appaloosa Management also took a large new position in Amazon in the second quarter. Rokos Capital Management, which previously had owned only about 50,000 shares of Amazon, bought more than 2.22 million shares last quarter, making it the macro firm’s third-largest U.S.-listed common stock long position. Elsewhere, Amazon is now Balyasny Asset Management’s second-largest U.S.-listed common stock long, after that firm nearly tripled its stake in the second quarter.
Microsoft’s and Meta’s strong results, meanwhile, were good news for at least two high-profile hedge fund firms. As of the end of the second quarter, they were the two largest U.S.-listed longs of Tiger Global Management, accounting for more than 36 percent of the portfolio’s assets, and of Whale Rock Capital Management, where they combined to account for more than 16 percent of assets.
Meta alone also represented more than 18 percent of U.S. assets at Darsana Capital Partners.
Hence the jitteriness during this earnings season.
