When it comes to internet stocks as an investment choice, one sometimes isn’t sure whether to be surprised by their popularity or just take it in stride. The latest from Citi notes that Facebook Inc (NASDAQ:FB) is the favorite large cap pick in 2014 among hedge funds, followed by Google Inc (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN). Among small to mid cap picks for 2014, hedge funds favored HomeAway, Inc. (NASDAQ:AWAY), Pandora Media Inc (NYSE:P) and Groupon Inc (NASDAQ:GRPN).
Facebook is still a favorite
In the survey, 65% of the respondents said that they were bullish on the outlook of the internet industry in this year whereas 58% were already overweight in their portfolios. This finding could suggest additional demand in the industry in 2014.
The stocks that got the least picks were, Twitter Inc (NYSE:TWTR), Tripadvisor Inc (NASDAQ:TRIP) and Netflix, Inc. (NASDAQ:NFLX), among large caps. Hedge funds picked YuMe Inc (NYSE:YUME), Zulily Inc (NASDAQ:ZU) Zillow Inc (NASDAQ:Z) most infrequently in SMID internet stocks.
No excitement for Twitter
The surprise here is of course the lack of enthusiasm for Twitter Inc (NYSE:TWTR), which has gained nearly 50% since its IPO in November. It seems hedge funds are not so convinced that there is any further upside from where the stock is currently trading. In comparison, Facebook Inc (NASDAQ:FB) has gained 42% over its debut price, after suffering through a pretty bad run since its IPO in May 2012 to the mid of 2013.
Facebook and Google in hedge fund holdings
[drizzle]Citi’s estimation is based on an online survey in which only 42 hedge funds responded, so the sample data is not large enough to rely on fully. At present, the hedge funds who owned Facebook Inc (NASDAQ:FB) through the end of 3Q2013 were D.E.Shaw (10.9 million shares) and Rob Citrone’s Discovery Capital (5.9 million shares). Other than these there are a bunch of tiger cubs who uniformly own Facebook Inc (NASDAQ:FB). Coatue Management, Lone Pine Capital, Viking Global, Steadfast Capital and Maverick Capital own more than a million shares of the social media company.
As for Google Inc (NASDAQ:GOOG), the top holders among hedge funds include, Janus Capital, Lansdowne Partners, Dodge & Cox and D.E.Shaw. Coatue Management, Lone Pine Capital, Adage Capital, Discovery Capital, Blue Ridge Capital and Joho Capital also own major positions.