Big hedge funds dumped China stocks, Apple as market tumbled

NEW YORK (Reuters) - Prominent hedge fund managers sold out of Chinese technology stocks and dumped Silicon Valley majors such as Apple Inc and Facebook Inc while global stock markets cratered during the fourth quarter, according to securities filings released on Thursday.

Activist hedge fund Jana Partners sold out of its position in major Chinese e-commerce company Alibaba Group Holding Ltd and reduced its stake in Apple by approximately 175,000 shares, slicing its position in the company by 63 percent.

Warren Buffett's Berkshire Hathaway Inc shrank its Apple stake to 249.6 million shares from 252.5 million shares in the fourth quarter. Buffett's assistant Debbie Bosanek said in an email to Reuters: "One of the managers other than Warren had a position in Apple and sold part of it in order to make an unrelated purchase. None of the shares under Warren's direction have ever been sold."

Soros Fund Management and David Tepper's Appaloosa Management sold out of their stakes in Apple.

Third Point LLC sold all of its shares of Alibaba and in streaming company Netflix Inc, while reducing its stake in payments company Visa Inc by approximately 200,000 shares, or about 11 percent of its prior position.

Omega Advisors, run by billionaire Leon Cooperman, sold all of its approximately 88,000 shares of Facebook and reduced its stake in Google-parent Alphabet Inc by approximately a third by selling approximately 47,600 shares.

The moves came during a volatile fourth quarter in which fears of slowing economic growth pushed the U.S. benchmark S&P 500 index to the brink of a bear market while stock indexes in China and Germany finished the year down 20 percent or more.

Since then, shares have rebounded sharply on a broad global rally powered by hopes of a new trade deal between the United States and China and the Federal Reserve's decision to slow its pace of U.S. interest rate hikes.

Alibaba is up nearly 23 percent since the start of January, while Netflix is up nearly 34 percent over the same time. Those gains helped power the average hedge fund in January to the largest monthly gain since September 2010, according to Hedge Fund Research.

"While investor optimism dominated in January, significant macroeconomic uncertainty still exists, increasing the likelihood that recent trends toward elevated realized volatility will remain and continue to drive industry performance," said Kenneth J. Heinz, president of HFR.

Quarterly disclosures of hedge fund managers' stock holdings in 13F filings with the U.S. Securities and Exchange Commission are one of the few public ways of tracking what hedge fund managers are selling and buying. But relying on the filings to develop an investment strategy comes with some risk because the disclosures are made 45 days after the end of each quarter and may not reflect current positions.

Along with the sell-off among technology stocks, hedge fund managers added new positions in companies ranging from Mastercard Inc to Salesforce.Com Inc.

Jana Partners added a new position in Salesforce.com by buying approximately 115,000 shares, while Third Point increased its stake in the company by 135 percent by adding another 675,000 shares. Shares of the company are up 16.6 percent since the start of the year.

Tiger Global added a new position in information technology infrastructure management company Solarwinds Corp. Shares of the $5.7 billion market cap company are up 35 percent for the year. Omega Advisors, meanwhile, doubled its stake in CVS Health Corp by buying approximately 401,000 shares. Shares of the company are up 3.7 percent for the year to date.

(Reporting by David Randall; editing by Jennifer Ablan, Phil Berlowitz and G Crosse)

02/14/2019 19:21

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