In this article we will analyze whether Amazon.com, Inc. (NASDAQ:AMZN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Amazon.com, Inc. (NASDAQ:AMZN) going to continue its strong 2020 performance? Prominent investors were buying. The number of bullish hedge fund positions improved by 28 recently. Amazon.com, Inc. (NASDAQ:AMZN) was in 273 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 251. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AMZN ranked #1 among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In today’s marketplace there are tons of formulas stock traders have at their disposal to analyze their stock investments. A duo of the less utilized formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outclass their index-focused peers by a very impressive margin (see the details here).
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At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind let's take a glance at the fresh hedge fund action regarding Amazon.com, Inc. (NASDAQ:AMZN).
Do Hedge Funds Think AMZN Is A Good Stock To Buy Now?
At the end of December, a total of 273 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 202 hedge funds with a bullish position in AMZN a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, SB Management held the most valuable stake in Amazon.com, Inc. (NASDAQ:AMZN), which was worth $7386.3 million at the end of the fourth quarter. On the second spot was Fisher Asset Management which amassed $5753.7 million worth of shares. Arrowstreet Capital, D E Shaw, and Tiger Global Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SB Management allocated the biggest weight to Amazon.com, Inc. (NASDAQ:AMZN), around 41.74% of its 13F portfolio. VGI Partners is also relatively very bullish on the stock, earmarking 26.36 percent of its 13F equity portfolio to AMZN.
With a general bullishness amongst the heavyweights, key money managers have jumped into Amazon.com, Inc. (NASDAQ:AMZN) headfirst. Rokos Capital Management, managed by Chris Rokos, created the largest position in Amazon.com, Inc. (NASDAQ:AMZN). Rokos Capital Management had $382.7 million invested in the company at the end of the quarter. Daniel Sundheim's D1 Capital Partners also initiated a $365.4 million position during the quarter. The following funds were also among the new AMZN investors: John Smith Clark's Southpoint Capital Advisors, Barry Dargan's Intermede Investment Partners, and Jeffrey Talpins's Element Capital Management.
Let's go over hedge fund activity in other stocks similar to Amazon.com, Inc. (NASDAQ:AMZN). These stocks are Alphabet Inc (NASDAQ:GOOG), Alphabet Inc (NASDAQ:GOOGL), Alibaba Group Holding Limited (NYSE:BABA), Facebook Inc (NASDAQ:FB), Visa Inc (NYSE:V), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), and Berkshire Hathaway Inc. (NYSE:BRK-B). This group of stocks' market valuations are similar to AMZN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GOOG,157,20579318,7 GOOGL,179,21902583,17 BABA,156,17892090,-10 FB,242,38233910,12 V,166,23599162,6 TSM,72,11843403,5 BRK-B,110,20795968,1 Average,154.6,22120919,5.4 [/table]
As you can see these stocks had an average of 154.6 hedge funds with bullish positions and the average amount invested in these stocks was $22.1 billion. That figure was $51.5 billion in AMZN's case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is the least popular one with only 72 bullish hedge fund positions. Compared to these stocks Amazon.com, Inc. (NASDAQ:AMZN) is more popular among hedge funds. Our overall hedge fund sentiment score for AMZN is 100. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Unfortunately AMZN wasn't nearly as successful as these 30 stocks and hedge funds that were betting on AMZN were disappointed in 2021 as the stock returned -5.1% since the end of the fourth quarter (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
