Hedge funds filed their Q1 equity holdings over the last couple of days. While many of the stock picks and exits were expected, like everyone buying Hess Corp. (NYSE:HES) and Dell Inc. (NASDAQ:DELL) which are targets of proxy fights from their famous shareholders, there are also some moves that stood out. Here are the surprise buys/sells from the top investors in hedge fund industry.
Loeb Exits Morgan Stanley, Already!
If we look at Dan Loeb’s Third Point, his fund exited its entire position in Morgan Stanley (NYSE:MS) by selling 7.75 million shares.
Why is this surprising? Mostly because the way Dan Loeb talked about Morgan Stanley (NYSE:MS) in his Q1 letter gave off the vibe that this was going to be a long term holding. He also had serious insights to share about the company’s management, and criticized the bank’s huge bonus plan which was reduced days after Loeb made his holding public in the 4Q2012 investor letter. The position was acquired at an average buying price of $16.77—assuming Third Point sold it at $23, the fund netted a gain of $48 million on the position.
Another surprise was Loeb cashing in on his position in Yahoo! Inc. (NASDAQ:YHOO). Third Point sold 11 million shares of the search provider in Q1 but still holds 60 million shares of Yahoo! Inc. (NASDAQ:YHOO). Loeb had not reduced the holding since he repurchased it in the third quarter of 2011.
Tiger Global, Tiger Consumer Buy J.C. Penney Company, Inc. (JCP)
The troubled holding of Bill Ackman got some anchorage when CEO Ron Johnson resigned and later legendary investor George Soros disclosed a position in the company. Now more support is here, as Chase Coleman’s Tiger Global and Patrick McCormack’s Tiger Consumer both bought J.C. Penney Company, Inc. (NYSE:JCP) in the last quarter. Tiger Global initiated a position with 5.35 million shares while Tiger Consumer bought 3.37 million shares.
J.C. Penney Company, Inc. (NYSE:JCP)’s recovery is cementing, and BAML just released a note today that said that the capital structure was stabilizing. Warren Buffett also said that the chain store has the potential to recover, although he does not have a position.
Barry Rosenstein’s JANA Buying GROUPON, ZYNGA
In 4Q2012, we saw several Tiger cubs moving in the daily deals company. However this time the most notable buy came from JANA Partners. The fund bought 21.9 million shares of Groupon Inc (NASDAQ:GRPN) which has added significant activity in the stock since the position was disclosed. Groupon Inc (NASDAQ:GRPN) is up 4.6 percent today, and has been consistently rising since May 8 when Q1 earnings were released, so JANA and all the Tiger cubs who have held onto this one are gaining big.
Another surprise was JANA buying 25.4 million shares of Zynga Inc (NASDAQ:ZNGA). As the news broke of this holding, Zynga shares went into exuberant buying mode, and the stock rose to $3.6 yesterday. Zynga has been recovering its lost market value since February of this year.
Chanos Buys Apple, Tepper Cuts It
While there are several investors who sold Apple Inc. (NASDAQ:AAPL), the dominant trend was towards buying in Q1. Jim Chanos, the bearish investor, showered some confidence on Apple Inc. (NASDAQ: AAPL) in the last quarter. His short-based hedge fund Kynikos Associates bought 29,100 shares of the tech giant. We know it is a small position but for Chanos it is a notable move.
David Tepper was among the few who added a stake in Apple in 4Q2012, at a time when almost every other hedge fund sold it. So Tepper selling 372,661 shares of the company (40 percent of his position) and reducing his holding to 540,000 shares, came as a surprise. In retrospect, David Tepper’s take on Apple Inc. (NASDAQ:AAPL) was lukewarm as he discussed his views on CNBC, just days before Appaloosa Management’s 13F came out, so that could have been a hint. Before this reduction, Tepper had sold shares of Apple in 2Q2012, but that was when shares traded significantly higher than in 1Q2013.
Einhorn Selling All Techs Except Apple
David Einhorn’s Greenlight Capital has been buying up Apple Inc. (NASDAQ:AAPL) and that is no surprise, however it looked like he was buying Apple and selling virtually all other tech stocks in last quarter. Einhorn exited Google Inc (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) in Q1. His fund also slashed positions in Microsoft Corporation (NASDAQ:MSFT) and Seagate Technology PLC (NASDAQ:STX) over the same period. Seems like Einhorn is taking profits on all other techs as his darling Apple regains its lost stardom, which should be soon as we do not remember the last time Einhorn was wrong.