Hedge Funds Shuffle Positions on Facebook, Amazon, Netflix, Alphabet Shares

Major investors like George Soros adjusted their stakes in FB, AMZN, NFLX, and GOOGL last quarter

Feb 15, 2017 at 11:39 AM
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Regulatory filings have shaken up the stock market lately, as hedge funds report changes to their stakes in publicly traded companies. One popular grouping of tech names -- Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc (NASDAQ:GOOGL), or "FANG" stocks -- has been impacted. Below, we'll take a closer look at how institutional investors have been aligning themselves on shares of the four tech giants.

"Golden Cross" Could Burn Facebook Skeptics

Yesterday, filings from the Securities and Exchange Commission (SEC) revealed Tiger Global Management and Soros Fund Management took large stakes in FB, while Appaloosa LP increased its holdings by 47%. Conversely, Omega Advisors cut its stake by 75%.

Technically speaking, Omega could end up regretting its decision. FB's 50-day moving average just crossed above its 200-day, creating a "golden cross." The last time this happened -- in mid-2013 -- it preceded a massive long-term rally. At $132.90, the social media stock is already up nearly 31% year-over-year.

Options traders, meanwhile, are counting on Facebook Inc's momentum to continue. In the past 10 weeks, traders have bought to open 1.80 calls for every put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Notably, the corresponding call/put volume ratio ranks in the top one-fifth of readings from the last year.

Amazon Put Options Gaining Popularity

Temasek Holdings and Omega Advisors took new stakes in AMZN, while Tiger Global Management increased its holdings to 1.4 million shares. Investors are likely impressed by the stock's 61% year-over-year gain to trade at $839.23 -- and they're not the only ones. Today, Oppenheimer raised its price target to $970 from $900, anticipating higher record highs from the outperformer.

That said, AMZN has been facing congestion in the $840 neighborhood in 2017. This area rests just below the stock's all-time peak of $847.21 from October. As the shares tangle with resistance, options traders have been scooping up puts at an accelerated clip. Amazon.com, Inc.'s 10-day ISE/CBOE/PHLX put/call volume ratio of 1.09 rests just 10 percentage points from 12-month high. While some put buyers could be speculating on a pullback, others may be shareholders hedging against the same.

Netflix a Candidate for Upgrades

The Growth Fund of America yesterday reported a 5.4% passive stake in NFLX. Having bought shares in the last quarter of 2016, the hedge fund is sitting pretty. Already this year, the stock has advanced over 14%, and was last seen hovering near $141.58.

Despite Netflix, Inc.'s technical exploits, skepticism remains high on Wall Street. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.09 sits only 4 percentage points shy of a 12-month peak. Not to mention, two-fifths of covering analysts currently maintain a "hold" or worse rating on the shares. From a contrarian perspective, a capitulation among the doubters could drive NFLX even higher.

Soros Ups the Ante On Alphabet

SEC filings revealed Tiger Global Management and Paulson & Co took stakes in GOOGL, while Soros Fund Management boosted its holdings by more than 59%. On the other side of the ledger, Jana Partners dissolved its stake. This, despite the stock's 17% year-over-year gain to trade at $841.28, as well as steady long-term support from its 50- and 320-day moving averages.

The brokerage community is sold on Alphabet Inc shares, handing out 29 "buy" or better endorsements, against just one "hold" and one "strong sell." However, put buying has ramped up, per the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.85 -- in the 89th annual percentile. It's possible some of these options traders are "vanilla" bears, while others could be GOOGL shareholders bracing against an unexpected stock drop.

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