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Quarterly Filings

Q2 2022 Filings Insights

Same top names, a passing of note, a look at strategies

Nathan Innis
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Top 10 Names in the Hedge Fund Universe

The song remains the same, to cite Led Zeppelin, but someone turned down the volume.

Figure 1: Top 10 Names in the HFU, compared to previous quarter. Viewed on the Novus Platform Hedge Fund Ownership Dashboard.
Data source: Public 13F Filings.

The Top 10 names within the Novus Hedge Fund Universe (HFU) stayed the same over the second quarter of 2022. Bank of America and Chevron both moved up one notch, while Amazon and Visa both moved down one. Apple, Microsoft, and Alphabet stayed in their 1-2-3 slots. American Express dropped two, while Coca-Cola moved up by two, and Meta Platforms stayed in its position rounding out the Top 10.

Position sizes, though, were mainly lower. Microsoft, Visa, and Meta did pull small increases while Coke and Chevron clearly found favor among hedge fund managers. Still, when you add up the percentage size total of the Top 10, the sum drops from 16.48% to 15.88%, suggesting that funds are looking farther down the list for winners.

Even so, it will be a long time before Apple falls from its perch. Even with this month’s erosion, the hedge fund universe is still more than twice as invested in the largest tech giant in Silicon Valley than it is in the largest tech giant in Seattle.

Figure 2: Amazon.com Inc Security Price, Benchmark Return, and Total Return from June 2021 to June 2022. Viewed on dashboard exclusive to Novus Platform clients. Data Source: Public 13F Filings.

Amazon seems to have attracted the most attention in the time frame, as its stock price peaked at the end of the first quarter and hit its trough at the end of the second. The number of shares held by 13F filers climbed from $16.4 million to $323.3 million, but the market value dropped from $53.4 billion to $34.3 billion.

If you're looking for more insights from top hedge funds as well as aggregate trends, take a look at our Hedge Fund Ownership dashboard.

Managers in the News

Julian Robertson (1932-2022)

In a world of big money and bigger egos, such as the hedge fund space, the word “titan” gets thrown around a lot. There can be no dispute, though, that Julian Hart Robertson, Jr., deserved the appellation.

He left his native North Carolina for the U.S. Navy, then for a Wall Street job with Kidder, Peabody. He founded Tiger Management in 1980 with $8 million under management and rode the dot-com bubble to the $22 billion mark. At some point, though, he decided he was done with the game. After making some bad bets, most notably on US Airways, Robertson liquidated the Tiger Fund in 2000 and turned to other pursuits ranging from philanthropy to viticulture to art collection. His lifetime charity contributions exceeded $2 billion.  

And, of course, mentorship. Some of his disciples became known collectively as the Tiger Cubs. Among them is Chase Coleman, who has the distinction of running the namesake Tiger Global Management; despite its lineage, though, Tiger Global, should not be confused with Robertson’s Tiger Fund. The Tiger Fund is long out of business. Tiger Global is one of many funds led by Tiger Cubs—each carrying on Robertson’s legacy.  

Our research blog is no stranger to the Tiger Cubs. We’ve compiled the full list of what we covered on the topic:

  1. Like Tiger, Like Cub (2014)
  2. The Tiger Cub Hedge Funds Accomplish an Unbroken Streak (2015)
  3. Tiger Cubs: The Latest Trades and Biggest Bets (2015)
  4. Catching Up With The Tiger Cubs in 2016
  5. How Similar Are Tiger Hedge Fund Portfolios? (2017)
  6. Catching Up With The Tiger Cubs in 2017
  7. Are Tiger Cubs Evolving Into Tiger Quants? (2018)
  8. Catching up with the Tiger Cubs in 2019
  9. Tiger Cubs During Covid-19 (2020)

None of the above could have been written without Julian Robertson and his influence. Robertson is survived by three children. His wife, Josephine, died in 2010.

Daniel Loeb

Daniel Loeb, founder of Third Point, is certainly one of the more colorful stars in the hedge fund universe. While others might be content to let their money do the talking for them, Loeb is known for his often brutal honesty in explaining his investment theses. He has attached letters to SEC filings railing against specific instances of one of his two pet peeves: boards of directors comprised of the CEO’s good ol’ boy network and prep school cronies who feel entitled to Wall Street careers. Business Insider publishes a “best of” page of Loeb’s hot takes. It's a jaw dropper.

"Sadly, your ineptitude is not limited to your failure to communicate with bond and unit holders,” Loeb wrote in 2005 to Irik Sevin, Star Gas Partners’ then-CEO. A review of your record reveals years of destruction and strategic blunders which have led us to dub you one of the most dangerous and incompetent executives in America." 

That’s just one example. Imagine what Loeb would have to say if he wasn’t into yoga and meditation.

Loeb’s aggressive pen comes with the territory, though. He’s in the activist space, buying up board seats on struggling companies and firing the executives that he sees as the sources of the struggles. By way of this strategy, Third Point has had significant effects on companies as diverse as Yahoo, Sony, and Nestle.  

And now Loeb has a new target: Disney. His latest letter to CEO Robert Chapek was much more polite in tone than some of his previous missives, but he made it clear he intended to be an activist shareholder. While he leads off with, “Dear Bob: Congratulations on a terrific quarter,” he gave Chapek a five-point list of changes he’d like to see at the Mouse.

The first is general cost cutting. Loeb is notorious for his disdain of waste but he didn’t specify any precise areas to be trimmed. No doubt that will come. He also wants Disney to maintain its dividend holiday, initiated during the Covid lockdown, so that more cash is available for other purposes.

He also wants to see two strategic moves on Disney’s part: buy the rest of Hulu from Comcast immediately then spin off its cash-cow ESPN subsidiary to shareholders. Lastly, without naming names, he suggested that Disney’s board of directors has “gaps in talent and experience” and that Third Point “would be happy to make an introduction” to candidates who fill those gaps.

Even if the language in this note was cordial, it accompanied an SEC filing stating that Third Point has acquired $1 billion in Disney stock.

Figure 3: Notable entries for Third Point in Q2 2022. Viewed on the Novus Platform. Data source: Public 13F Filings.

You can explore Third Point on the Novus Platform free through the end of the quarter on our Manager Analysis Insights dashboard.

General Trends

Can you buy the hedge fund universe in one ETF?

The S&P 1500 is a benchmark for success, not a recipe for it.

So why is there so little difference between the components of the hedge fund universe and the SPDR Portfolio S&P 1500 Composite Stock Market Index?

Figure 5: Sector Comparison for Novus Hedge Fund Universe Equity-Only and SPDR Portfolio S&P 1500 Composite Stock Market ETF for Q2 2022. Data Source: Public 13F Filings.

While the HFU is less invested in the tech sector than the buy side as a whole, there’s not a whole lot of difference elsewhere. It is somewhat more bullish in the Industrials and Energy sectors than the broader market, offsetting the lower exposure to Tech.

There can still be a huge difference in returns between the SPDR portfolio and the hedge funds, because there could still be a huge difference in the actual stocks within those sectors. For example, the HFU pays less attention to Elon Musk than the average retail investor, so Tesla—the fourth-most popular stock in the U.S.—isn’t represented in the hedge funds’ Top 10. The above chart shows a bit less interest in the Consumer Discretionary sector among hedge funds; disinterest in such meme stocks as Tesla probably has a lot to do with it.

Explore more information like this on our Hedge Fund Ownership dashboard.

Bear Market Questions

And the bear market continues . . . During such times, it is critical to ask your managers high caliber questions. We compiled 13 Questions to Ask Asset Managers During a Bear Market  to inspire data-backed conversations during turbulent markets.

Grab your copy by filling out the form below.

13 Questions to Ask Asset Managers During a Bear Market

Novus Platform users can apply these questions to their own portfolios using this template. Not a client yet? Click here to request a demo.    

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The Novus Platform is not an investment advisor, broker dealer, or financial institution and does not offer or provide advice regarding analysis of securities or effecting transactions in securities.  The Novus Platform does not endorse or promote any mentioned investment management firm or any fund managed by any such firm.  The purpose of the information herein is to demonstrate the capabilities of the Novus Platform.

Certain of SEI Investments Company (the “Affiliates) provide multiple different advisory services and sponsors many different investment products. In so far as any of the firms or products discussed herein are utilized by the Affiliates for their own investment services or products, SEI maybe incentivized to favor or disfavor such firm or product in these materials, which represents a potential conflict of interest. For example, these Affiliates may be economically incentivized to seek to increase assets with a manager discussed herein and therefore provide positive commentary about such manager. SEI is committed to providing a professional standard of service to its clients, and, accordingly endeavors to identify and manage any such conflicts of interest so that SEI acts in the best interests of its clients.

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Our team of world-class client management analysts will introduce you to our product, tailoring the conversation to your specific needs and interests.