Prominent hedge fund managers appeared to have made bets that the US economy will continue to expand despite increasing concerns about a broadening trade dispute between the United States and China, Reuters reports.
Hedge funds took new positions in cyclical companies in the second quarter, a reflection of their confidence about the prospects for the US economy, the report said, citing information gathered from regulatory filings.
Activist fund Jana Partners, for instance, added shares of exchange-traded funds that track the S&P 500 and the Russell 2000 indexes, as well as taking new positions in individual stocks such as Wells Fargo and food delivery company GrubHub, the report said.
Third Point added new positions in payment companies PayPal and Visa, while Greenlight Capital, run by billionaire investor David Einhorn, added new positions in low-to-middle income retailers including Dollar Tree, Dollar General and Gap.
The moves came during a quarter in which US gross domestic product increased at an annual rate of 4.1 percent, nearly double the 2.2 percent rate of the first quarter of the year, the report noted.
Meanwhile, some large hedge funds cut their positions in some of the so-called FAANG stocks that led the market higher last year.
Third Point sold all of its holdings in Google parent Alphabet and divested 1 million shares of Facebook, reducing its position in the company by 25 percent. At the same time, it increased its stake in Microsoft by nearly 310 percent, buying 1.7 million shares, according to the report.
Omega Advisors sold all of its position in Netflix and added new holdings in biotechnology companies including Madrigal Pharmaceuticals and Deciphera Pharmaceuticals.
A number of prominent fund managers sharply cut their stake in Apple only weeks before it became the first publicly traded US company to be worth more than US$1 trillion.
Greenlight Capital slashed its stake by 77 percent, while advisory firm Diamond Hill Capital Management is said to have cut its stake by 27 percent.
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