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Why Wedgewood Partners is Betting on Facebook (FB) Stock

Alex Smith
·3 min read

Wedgewood Partners recently released its Q3 2020 Investor Letter, a copy of which you can download here. The Fund returned 10.77% for the third quarter of 2020. Meanwhile, the benchmark S&P 500 Index and the Russell 1000 Value Index gained 8.93% and 5.59%, respectively. You should check out Wedgewood Partners' top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Wedgewood Partners highlighted a few stocks and Facebook Inc (NASDAQ:FB) is one of them. Facebook Inc (NASDAQ:FB) is a social media company. Year-to-date, Facebook Inc (NASDAQ:FB) stock gained 28.3% and on October 16th it had a closing price of $265.93. Here is what Wedgewood Partners said:

"Facebook’s revenues grew +12% constant currency despite the near total shutdown of economic activity during the month of April. The vast majority of Facebook’s revenues are derived from small businesses, many of which have borne the brunt of lockdowns. To combat the sudden disappearance of foot traffic, these businesses are initiating or accelerating the adoption of digital customer acquisition strategies provided by Facebook’s vast ecosystem, including instant access to over 2 billion daily users. We continue to carry Facebook as one of our largest holdings as its value proposition is difficult to copy, yet the stock trades at still somewhat reasonable multiples relative to large cap peers."

Gil C / Shutterstock.com

Earlier this month, we published an article revealing that Facebook Inc (NASDAQ:FB) stock has outperformed the S&P 500 Index in the trailing one year period.

In Q2 2020, the number of bullish hedge fund positions on Facebook Inc (NASDAQ:FB) stock decreased by about 1% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in Facebook's growth potential. Our calculations showed that Facebook Inc (NASDAQ:FB) is ranked #3 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.