Here’s what hedge funds bought and sold in the last quarter

Equities

Every quarter hedge funds with over $100 million under management have to submit documents to the US Securities and Exchange Commission. This gives traders invaluable insight into what the world’s top money managers have been buying and selling in the past quarter.

Ray Dalio’s Bridgewater Associates, the largest hedge fund in the world, recently filed its latest update. Here are five investments the fund dumped in second quarter.

Ray Dalio’s biggest portfolio changes

The three largest holdings that Bridgewater exited in the second quarter are all ETFs:

  • iShares Barclays 20+ year Treasury Bond
  • iShares iBoxx High Yield Corporate Bond
  • iShares JPMorgan USD Emerging Markets Bond

Dalio also closed a $28.6 million stake in Royal Bank of Canada, and a $25.1 million stake in Toronto-Dominion Bank.

Bridgewater ramps up gold stake, Buffett gets on board

Bridgewater put nearly half a billion dollars into gold during the second-quarter, increasing holdings in the iShares Gold Trust ETF and the SPDR Gold Trust ETF. At almost a billion dollars, the SPDR Gold Trust is the firm’s second-largest holding.

Gold rallied 13% in the second quarter, and hedge funds who held onto or increased their positions will have benefited further thanks to the surge above $2,000 in Q3.

Dalio isn’t the only fund manager to pile into gold in the second quarter. Mason Capital Partners, Sandell Asset Management and Caxton Associates all took up positions on SPDR Gold Trust as well.

Even Warren Buffett, who famously dislikes gold as an investment has joined the party, taking a stake worth $563 million in Barrick Gold – the world’s biggest gold miner.

Gold is a popular inflation hedge because it is priced in dollars – as inflation erodes the value of the dollar, gold prices rise.

What else have hedge funds been buying?

On top of gold, hedge fund managers including George Soros, Dan Sundheim, and Daniel Loeb have been snapping up tech stocks.

Zoom and PayPal saw strong demand thanks to the increased need for their services as more people across the world are forced to work and shop from home. Zoom’s stock price has leapt 327% this year, with users find new applications for the service, such as streaming weddings, as well as the usual business calls.

Soros doubled his stake in Amazon, while Sundheim increased his holdings of Microsoft 74%.

Stay on top of the latest hedge fund changes with our activity tracker

You can find out more about what the world’s top money managers have been buying and selling with our Hedge Fund Confidence tool in the Marketsx online trading platform.

Use it to get sentiment signals on top stocks with data on who’s being buying and selling US shares.

Amazon stock is at record highs, and hedge funds have never been more bullish

Equities

Tech companies surged to record highs yesterday, with Amazon stock closing 2% higher at just below $2,498.00 per share. The move helped fuel another 2% gain for the NASDAQ, which is now trading within 3% of February’s all-time high.

Amazon stock has rallied over 50% from the lows struck in mid-March and is up 32% since the start of the year. Gains have been fuelled by expectations that the company is well positioned to benefit from shifts in consumer behaviour due to the coronavirus pandemic.

Hedge funds bullish on AMZN stock

Hedge funds in particular have never been more bullish on AMZN stock.

Holdings increased by 8 million shares in Q1, with the number of bullish positions on AMZN amongst hedge funds rising 25% to 251. Amazon was the number one stock amongst hedge fund managers at the end of December and March.

Amongst those opening new positions in the first quarter were Jorge Lemann of 3G Capital Partners, Brad Gerstner of Altimeter Capital Management, and David Tepper of Appaloosa Management.

Amazon to benefit from shifts in consumer behaviour and company culture

Social distancing, lockdown measures, and supply shortages in bricks-and-mortar retailers drove consumers online during the first quarter, helping push Amazon sales up 18% internationally and 29% for North America. Q1 earnings, released at the end of April, showed revenue of $75.5 billion and earnings per share of $5.01 for the first three months of 2020; revenue was higher than estimates, while EPS fell short.

Amazon’s Web Services cloud computing business saw sales grow 33% during the period, surpassing the $10 billion mark for the first time. Sales growth continues to slow, but the shift to homeworking could see many more businesses needing to harness the power of the cloud to keep operations running, and this could be a long-term shift in business culture rather than a temporary measure.

Subscriptions to Amazon Prime were up as well; the combination of expedited shipping and video and music streaming proving an offer that is hard to resist while stuck at home. Advertising revenues also climbed, growing 33% to over $3.9 billion. Here, again, Amazon is set to benefit as businesses adapt to the pandemic; more marketing spend is being directed online as other channels, such as event sponsorship, dry up.

However, Amazon is known to spend big, and it looks like Q2 will be no exception. On the Q1 conference call, Jeff Bezos told investors that he expected to spend the $4 billion or more in estimated operating profit from Q2 on “Covid-related expenses getting products to customers and keeping employees safe”. The stock had fallen after hours, but fund managers are betting that the costs will help Amazon to operate more effectively under “new normal” conditions going forward.

What do Wall Street analysts say about Amazon stock?

Amazon holds a “Strong Buy” rating amongst Wall Street analysts, with a price target of $2,673.17 representing a 7% upside. Only one of 41 analysts covered by our Analyst Recommendations tool has a “Sell” rating on the stock.

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