It's getting close to 13F filing season and several stocks such as Amazon and JPMorgan are in the spotlight because of it. Furthermore, Microsoft is also in the spotlight due to an unrelated issue concerning some of its software. Without further ado, let's analyze why traders are watching each stock and how the smart money is positioned among them.
Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
MacroGenics Inc (NASDAQ:MGNX) shares are up 13% in after hours on Wednesday after it announced positive results from the Phase 3 SOPHIA study of Margetuximab in patients with HER2-Positive Metastatic Breast Cancer. Specifically, the study met first sequential primary endpoint of progression-free survival (PFS) in head-to-head with current standard of care (trastuzumab and chemotherapy). CEO Scott Koenig said, “At ASCO, we will also present data from our Phase 1 study that show HER2-specific T-cell and antibody responses in margetuximab-treated patients. These data are consistent with the hypothesis that margetuximab facilitates the cooperation of both innate and adaptive immune responses, an emerging paradigm in immuno-oncology.”
Microsoft Corporation (NASDAQ:MSFT) is in the spotlight after it warned of a bug that has been patched but that is 'highly likely' to be exploited by malware.According to Microsoft's blog, "This vulnerability is pre-authentication and requires no user interaction. In other words, the vulnerability is ‘wormable’, meaning that any future malware that exploits this vulnerability could propagate from vulnerable computer to vulnerable computer in a similar way as the WannaCry malware spread across the globe in 2017. While we have observed no exploitation of this vulnerability, it is highly likely that malicious actors will write an exploit for this vulnerability and incorporate it into their malware." The patching may have lessened the blow, as Microsoft shares are relatively unmoved in extended market trading. Of the around 700-740 elite funds we track, 174 funds owned $24.67 billion of Microsoft Corporation (NASDAQ:MSFT) on December 31, versus 170 funds and $31.96 billion respectively on September 30.
Warren Buffett's Berkshire Hathaway's Amazon.com, Inc. (NASDAQ:AMZN) position has finally been revealed, and it's pretty sizable. According to the 13F data, Buffett's company had 483,300 shares wroth of Amazon worth around $860.6 million at the end of March. While it's a relatively big position for any other stock, Amazon has traded for around a 920 billion market cap recently and Buffett himself isn't responsible for the purchase. One or perhaps both of his investing lieutenants was. It should be noted that Buffett's lieutenants first bought Apple and then Buffett himself jumped in, so there is still a chance for Buffett to potentially make a purchase himself down the road.
Speaking of Buffett's 13F moves, Berkshire Hathaway also added more shares of JPMorgan Chase & Co. (NYSE:JPM) and Red Hat, Inc. (NYSE:RHT). In terms of the former, Berkshire Hathaway added 9.398,538 in the first quarter of JPM, bringing his total position to 59.5 million shares worth over $6 billion at the end of March. JPMorgan is widely regarded as one of the best banking stocks in the sector. Berkshire Hathaway also added 934,679 shares of RHT in Q1, increasing his position by 22% to over 5.1 million shares. That position was worth around $933 million at the end of March.