Some of the world’s biggest equity hedge funds held back from ramping up bullish bets in the third quarter, likely missing out on a 10% rally in the S&P 500 since the end of September.
Firms including Chase Coleman’s Tiger Global Management and Lee Ainslie’s Maverick Capital made relatively modest additions to their portfolios after incurring heavy losses earlier in the year. They also continued to reduce their largest holdings.
The conservative posture may eventually look prescient if, as some economists and business leaders predict, the Federal Reserve’s recent string of interest rate increases tips the economy into a recession, reversing recent market gains.
Tiger Global, on pace for its worst year on record with a loss of 54.6% through October, added just five new companies to its US holdings. Three of those stakes were valued at less than $100 million each at the end of the third quarter -- and one, PayPal Holdings Inc. was worth less than $5 million. The hedge fund exited 14 stocks.
Maverick reported 183 new buys, though most of those positions were worth less than $500,000 each. Ainslie’s biggest new purchase was a $120 million stake in Avantor Inc., a provider of chemicals and advanced materials to industries including health care and biopharma.
Last month, Coatue Management founder Philippe Laffont said his firm still had 70% to 80% of its assets in cash after slashing positions earlier this year. The firm’s biggest purchase was a $178 million stake in Lam Research Corp., a semiconductor equipment supplier. Most of Coatue’s 16 new stock holdings were valued at less than $50 million.
The firm reduced positions in some of its largest holdings, including Tesla Inc., Amazon.com Inc., JD.Com Inc., Microsoft Corp. and Facebook parent Meta Platforms Inc.
Monday was the deadline for thousands of institutional investors, including hedge funds, pension funds and endowments, to report certain US equity holdings to the Securities and Exchange Commission through quarterly 13F filings.
Other Highlights:
• Andreas Halvorsen’s Viking Global Investors ramped up its stake in Elevance Health Inc. by 59%, making it the hedge fund’s biggest US equity investment. The shares gained 5.9% this year. Viking slashed its stake in former top holding T-Mobile US Inc. by 64%, leaving the wireless carrier as the firm’s 17th-largest position.
• Even though Coatue pared its Amazon stake, the retail behemoth was a popular buy among other hedge funds, which collectively snapped up about 9 million shares last quarter. That’s according to an analysis of 679 firms -- more than half of the total that needed to file by Monday. About 121 hedge funds increased their Amazon positions, while 100 pared them.
• Activist hedge fund Jana Partners disclosed a new 4% stake in health care services provider Enhabit Inc., whose shares have tumbled 50% this year.
--With assistance from Sabrina Kharrazi, Francesca Maglione, Dayana Mustak, Scott Deveau, Miles Weiss and Bill Austin.
This article was provided by Bloomberg News.