Top performing TMT Hedge Funds agree on two things: Comcast and Netflix
|September 15th, 2014||
|A recent analysis of the top five long-term performing Technology, Media & Telecom Hedge Funds has revealed that the top funds have taken a special liking to Comcast Corp (CMCSA) and Netflix Inc (NFLX). |
The top five TMT hedge funds include Tiger Global Management, Lone Pine Capital, Lansdowne Partners, The Children's Investment Fund, and Matrix Capital Management. To make the top five list, the funds had to be ranked on:
(1) Barron’s Best 100 Hedge Funds List, which required a 3 year Compound Annual Return of at least 12.25% through the end of 2013
(2) Hedge Tracker’s Top 50 TMT Hedge Fund List, which only includes funds that have more than 50% of their U.S. equity assets invested in Technology, Media and Telecom companies as of 6/30/2014
At the end of Q2, all of the top TMT funds, with the exception of Matrix Capital, held an equity stake in Comcast Corp (CMSA). Combined, the four hedge funds hold approximately $2.5 billion in the broadcasting and cable company behemoth. Paul Ruddock’s Lansdowne has the largest stake, having reported holdings of 27.1 million shares.
Comcast’s stock is up 8.8% year-to-date, and ended the week at $56.98, just shy of its 52-week high. Equity analysts have the stock’s one year target estimate at $63.19, according to Thomson/First Call, making me bullish on the stock’s prospects.
Netflix Inc (NFLX) has also attracted the top TMT hedge funds, with Tiger Global, Lansdowne, and Matrix Capital holding a combined $690 million in the streaming media company. Lansdowne is also the largest stakeholder among the TMT funds, holding 424k shares in NFLX.
Netflix has had a stellar year so far, having seen its stock price jump 29% YTD, ending the week at $476.55. Notably, the stock is trading above the $486.56 one year target estimate of $63.19, according to Thomson/First Call equity analysts. While I don’t have the NFLX as strong buy, I would recommend adding it to your portfolio if it dips below $475.
While the Top TMT hedge funds allocate the majority of their assets to Tech, Media and Telecom stocks, they also make some bets in other industries. Outside of TMT, the top funds have demonstrated a particularly liking to credit card company MasterCard Inc (MA) and military aerospace components manufacturer Transdigm Group Inc (TDG). Combined, Tiger Global, Lone Pine Capital, and The Children's Investment Fund have $2.1B invested in MasterCard, while Matrix Capital, Tiger Global, and Lone Pine have $693 million invested in Transdigm.
MasterCard’s stock is down -10.5% YTD, ending the week at $75.62. Thomson/First Call has a one year target estimate of $88.90, highlighting a potential buying opportunity. Conversely, Transdigm’s stock is up 14.6% YTD, ending the week at $188.51. Thomson/First Call has a one year target estimate of $191.60, highlighting how TDG has some upside potential.
Hedge Tracker’s The Top 50 TMT Hedge Fund rankings are compiled on a quarterly basis using hedge fund firms’ overall U.S. equity assets under management. The TMT list includes the top hedge funds that have more than 50% of their U.S. equity assets invested in U.S. listed Technology, Media and Telecom companies. To view the Top TMT Hedge Fund list in its entirety, please visit the Top Hedge Fund portal. .
For Detailed Investor Profiles on these Investors, click below: