Hedge funds bought up about $1.37 billion in Facebook Inc. (FB) stock overall in the first three months of the year, according to a report by Bloomberg. Individual funds like Viking Global Investors accounted for large portions of the investment; Viking more than doubled its stake, ending the quarter with $1.49 billion worth of FB stock. Other funds started new positions in the social media platform.
After 13F filings are made available to the public, analysts and individual investors look to their favorite star money managers, determining how they changed their portfolios over the past few months in order to get a sense of how the market moved and, perhaps, what they can do with their own investments after the fact.
While 13F filings are a wonderful way to gain insight into an individual firm or money manager's strategies, they can also provide a sense of broader trends that swept the hedge fund world when viewed more generally. For instance, sometimes hedge funds undergo a large-scale rotation of sectors that they focus their investments in. Other quarters, there are standout stocks that seemed to be on many different buy or sell lists.
Mid-March Slump a Buying Opportunity
Facebook has been making headlines in the new year, and not always for the right reasons. In March, information emerged suggesting that Cambridge Analytica had gathered data on tens of millions of Facebook users without their consent. The surrounding controversy, particularly involving the 2016 election, led Facebook founder Mark Zuckerberg to face a Senate committee hearing several weeks ago.
In response to the news, the price of FB dipped, falling to the low $150s per share in the middle of March. Hedge fund managers jumped at the chance to buy what they saw as a long-term earner at a bargain price. Coatue Management founder Philippe Laffont explained that he expects Facebook's "world class management team will do everything they need to do to put these issues to rest."
While many funds were buying up FB stock at a discounted price, other funds decided to sell. These include Citadel and JANA Partners, Moore Capital Management and others. This is a reminder that, even when many top-performing hedge funders move in a particular direction, that's no guarantee that everyone will follow suit.
It's important to keep in mind that 13F reports only present a portion of a hedge fund's full investments, and that the data is necessarily backward-looking. Investors should keep these factors in mind before basing any future investment decisions on past actions.