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Tiger Cubs Buy Facebook Winning Big

Posted on June 5th, 2018

Facebook Inc.’s (FB) stock had a terrible first quarter of 2018, with shares of the social media company plunging by over 17 percent. User privacy became front-page news after questions arose on Facebook’s practices of sharing its user’s data. Despite all the negative headlines, one group of investors took advantages of the fears of others, stepping in and buying shares of the company, in what now looks like a genius move.

The Tiger cubs, a group of hedge funds which trace their origins back to famed investor Julian Robertson of Tiger Global Management, were adding to their positions of Facebook as a group, according to data compiled by WhaleWisdom. As a group, their stake in Facebook grew from a combined portfolio holding of 4.4 percent to a combined 6.38 percent, an increase of 2 percentage points, making it the largest holding for the group.

Holdings Climb

The holdings increased to a combined market value of $5.4 billion, up from $3.8 billion in the fourth-quarter, a rise of 42.1 percent. A move that paid off in a big way, because since the end of the first-quarter shares of Facebook have climbed by 21.4 percent and closed at a record high of $193 on June 2.

Doubling Up

Viking Global nearly doubled its position in Facebook during the first quarter, making it the largest purchaser amongst the Tiger cubs. They upped their holdings by 5.485 million shares, to about 9.35 million in total. Lone Pine wasn’t far behind, adding 3.3 million shares during the quarter, also nearly doubling their previous position, to 7.7 million shares.  Tiger Global, nearly doubled its holdings as well, adding another 2.5 million shares, upping its stake to 4.97 million shares.

Hedge Funds Buying

Hedge Funds, in general, were aggressively buying shares of the stock in the quarter, with the total number of aggregate 13F holdings climbing by 27 percent to 170.48 million shares, from 134.22 million shares in the fourth-quarter. Overall, total institutions upped their holdings to 1.723 billion or about 90 bps.

Analysts Get More Bullish

Despite all the negative headlines, analyst’s views for Facebook have improved since the start of the year. EPS estimates for 2018 have jumped by roughly 12.5 percent to $7.48 per share, while estimates for 2019 have climbed by 8 percent to $8.78 per share. Meanwhile, revenue estimates for 2018 have jumped by 5.7 percent to $56.7 billion, while the outlook for 2019 has improved by 6.6 percent to $71.75 billion.

To some, the period in late March was a time filled with fear, as Facebook’s shares where plunging amongst the uncertainty and potential fallout. However, to others, it created a great buying opportunity, and the Tiger cubs as a group saw the opportunity to buy shares on the fear of others, and it paid off in a big way.

This entry was posted on Tuesday, June 5th, 2018 at 8:30 am and is filed under 13F, Hedge Fund News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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