Today on Cook's Kitchen, I wanted to show you which big funds were buying some of my favorite stocks in Q4 of 2019. And I show you a quick, simple and fun way to access the 13F filings that reveal where the big money is flowing into, and out of.
Using Nasdaq.com, I look at the top holders and top buyers in Tesla TSLA and four other "disruptive innovators," to borrow the primary theme of Catherine Wood, chief architect of the ARK Invest ETF family with over $12 billion AUM.
In spite of their $7,000 price target on TSLA, ARK actually had to sell 38% of their position in Q4 because it appreciated so much and exceeded their position limit threshold. But they still held over 720,000 shares as of 12/31/2019.
It was also good to see Renaissance Technologies buying 3.2 million shares of TSLA to bring their haul to 3.9 million. But then again, the Jim Simons algorithmic juggernaut tends to be a very active trading house and this position could be much smaller now.
Still, it's proof that some of the best quant models in the world were such aggressive buyers in Q4 -- and that break above resistance at $350-400 may have been one of their triggers. (Be sure to watch the video attached to this article to find out who sold almost all 8 million of their TSLA shares in Q4 before the massive price surge!)
You can learn more about the Wall Street "math club" Simons started, after giving up being a professor in 1980, in the new book The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman.
Different Whales, Different Oceans
In the video that accompanies this article, I show you how I'm actually using the older version of the Nasdaq.com website because it has a very clean and easy to use presentation.
Oh, and I can confirm now that the "BAMCO" entry I saw for Tesla with 1.6 million shares was indeed that visionary and steadfast bull Ron Baron who set a $1,000 price target in 2017 and just reiterated his long-term view of the revolutionary EV maker doing $1 trillion in revenues in 2030.
You can learn more about the extreme bull case for Tesla in this video and article I did a couple of weeks ago...
Tesla to $7,000: Buy the Launch Abort at $500
In today's video, I also explain why, for the most part, it helps to look beyond the steady buying of behemoth investors like Blackrock, Vanguard, Fidelity and State Street because they have so many different entities they need to buy stock for. Their presence in a bull market, with no recession in sight, is vital but it is also more like the reliable ocean currents and tradewinds.
What I like to focus on are the "smart money" managers like David Tepper, who was still buying Micron in Q4, Steve Mandel of Lone Pine Capital, and Andreas Halvorsen of Viking Global, a former Julian Robertson "tiger cub."
Speaking of Mandel, who grew Lone Pine to nearly $40 billion AUM before scaling back a few years ago, I was really pleased to see him adding 788K shares to his large position in Square SQ. Nearly 8.8 million shares puts Lone Pine at #6 on the list of top holders.
And Halvorsen's Viking Global at #4 with just over 10M shares, only added 13K. But that means he hadn't lost his bullish outlook on the premier "fintech" innovator and small business ecosystem.
I told my followers throughout Q4 that even though the Street seemed to temporarily hate SQ, we should be buyers near $60 and look for an eventual rekindling of the love affair. Now that shares have broken above the $82-83 double top of 2019, I see $90 as an easy target and potential new highs above $100 later this year.
These two fund managers, Mandel and Halvorsen, are the kind of stock-pickers I love to follow and it's great to see them in the top ranks of long-term holders.
Awrite! From Edinburgh
Another great find in many 13Fs, the SEC form that institutional investors have to submit with 45 days of quarter's end, was the biggest investment firm you've never heard of.
Baillie Gifford is a UK money manager with over $250 billion AUM that owns more TSLA shares than anyone at 13.8M -- and they added 375K in Q4. The global investment management firm which is wholly owned by 44 partners, all of whom work within the firm, was founded in Edinburgh in 1908 and still has its headquarters in the city.
BG is also the largest shareholder in one of my favorite leaders of the genomics revolution, Illumina ILMN. In fact, with 17.7M shares, they own more than Vanguard or Blackrock, who both hold just over 11 million shares each. And the BG team was still adding in Q4 with 480K new shares!
Baillie Gifford's "go big, or go home" approach to investing is an advantage that comes from the disciplines of long-term thinking and execution. In a recent interview in Canada's Benefits and Pensions Monitor, investment manager Iain Campbell says that investors with the patience and stability to avoid short-term thinking and ignore the noise are still quite rare.
Their motto is "Actual investors think in decades, not quarters."
This idea is more powerful than you might think at first glance and it explains why the market is exploding higher this quarter. Imagine all the short-term focused fund managers who were nervous about the trade war, Brexit, the Fed or valuations last year and they were net sellers of stocks.
With perfect hindsight, one could argue that stocks were suppressed by doubt and worry. Now that they are exploding out of those narratives, many fund managers are forced to chase great investments higher before they completely get away.
The Little Illumina and the Birth of Smart Medicine
Another exciting upstart in the genetics space is Invitae NVTA, the $2 billion provider of medical-grade genomics testing who just reported 148,000 samples and $66 million in revenues for their December quarter, representing nearly 60% growth.
Turns out Ms. Disruptive Innovation herself, Cathie Wood, is the top holder with ARK reporting 10.5 million shares on their 13F, as they added 2.66M shares for a 34% increase in their position.
Invitae is positioned to grow fast into a $5 billion market for regular genetic testing where patients and their doctors are more proactive about healthcare and early detection. I believe that the future of healthcare is "smart medicine" where genetics drives what I call the 3 Proactive P's: Personalized, Predictive, and Preventive.
Here's how CEO Sean George describes the opportunity...
“If it’s about your health, if it’s about the health of yourself looking forward or for your children or for your family, Invitae is providing the answers. Invitae is bringing the same genetic information that the world’s experts across all disease areas and all stages of life are relying on. Indeed, we are becoming the #1 brand with these key opinion leaders and experts. We are the one providing this information. We are the company to go to.”
The CME of Advertising
Finally in today's look at "who's buying our stocks," we have advertising disruptor The Trade Desk TTD. I call this new digital platform "the CME of advertising" because the have turned traditional ad buying with Insertion Orders into a dynamic, algorithmic trading environment with thousands of auctions per hour for internet and OTT (streaming TV) advertising "real estate."
To my very pleasant surprise, those Scottish warlords at Baillie Gifford are in the top 3 holders with nearly 2.8 million shares after adding 53K in Q4.
That's it for this week's dive into the 13Fs, or "what the whales are buying and selling." Leave me your comments on YouTube if you have other stocks you want me to look at!
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators portfolios. Click "Follow Author" above to receive his latest stock research and macro analysis.
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