By Matt Doiron
We have processed hundreds of 13F filings from hedge funds and other notable investors for the fourth quarter of 2012; these filings disclose many long equity positions the investor in question had in the portfolio at the end of December. By aggregating 13F filings, we can develop investment strategies including imitating hedge funds' most popular stocks in various categories. The most popular small-cap stocks among hedge funds stand out in particular; these stocks outperformed the S&P 500 by 18 percentage points per year between 1999 and 2009 (read the details). Another way to use this information is by pooling the filings and seeing which stocks in different sectors were the most popular among the filers that we consider. Here are the 10 stocks in the technology sector, which the largest number of hedge funds owned at the end of December:
The top tech pick was Apple (NASDAQ:AAPL) with 134 filers reporting a position. This was down from the third quarter of 2012, and partly because of that Apple lost its place as the most popular stock among hedge funds (check out the most popular stocks). Billionaire David Einhorn's Greenlight Capital increased its stake in Apple last quarter to a total of 1.3 million shares (see more stocks Einhorn was buying).
Hedge funds were also selling Google (NASDAQ:GOOG) and 128 of them owned the search engine (and now, tablet and smartphone company) at the beginning of this year. This was compared to 143 at the end of September; Google would have been the new top tech pick if it hadn't declined in popularity as well. Lone Pine Capital, managed by billionaire and Tiger Cub Stephen Mandel, reported owning almost 1.6 million shares.
Microsoft (NASDAQ:MSFT) also lost some of its luster among hedge funds during Q4, possibly as doubt over the success of Windows 8 and the Surface line of tablets rolled in. Our database had 95 hedge funds owning Microsoft, down from 108 three months earlier. Billionaire Ken Fisher's Fisher Asset Management had almost 18 million shares in its portfolio.
Eighty-nine filers that we track in our database reported a position in Qualcomm (NASDAQ:QCOM) at the end of December, about even with three months earlier. Viking Global, which is managed by Tiger Cub Andreas Halvorsen, added shares during the quarter and closed December with over 14 million shares.
Hedge funds were buying - of all things - Facebook (NASDAQ:FB), as the number of funds owning shares in the social networking company increased from 48 to 67. Billionaire Steve Cohen and his investment team at SAC Capital Advisors had a small position at the beginning of October and built it up to a total of 8.5 million shares.
Our database showed that 65 funds and other notable investors owned shares of Oracle (NYSE:ORCL). While the Baupost Group, managed by value investor Seth Klarman, did sell shares of Oracle between October and December the software company remained one of its top picks.
Yahoo (NASDAQ:YHOO) was another decently popular tech stock; we tracked 60 hedge funds reporting ownership of Yahoo shares. Billionaire Dan Loeb's Third Point owned over 73 million shares of Yahoo; Loeb was a key player in ousting the company's former CEO and replacing him with Marissa Mayer.
Hedge funds were also selling Cisco (NASDAQ:CSCO) during Q4 and we found 58 of them owning shares going into 2013. Citadel Investment Group, which is managed by billionaire Ken Griffin, owned about 10 million shares of Cisco - up significantly from three months earlier.
The same number of 13F filers in our database - 58 - were long EMC, the $51 billion market cap data storage company. Bain Capital's Brookside Capital owned 8.1 million shares of EMC, making it one of the fund's top picks.
A few hedge funds moved into Dell (NASDAQ:DELL) during the fourth quarter of 2012, bringing the total breadth of ownership to 50 filers. One fund that held a position in Dell was Donald Yacktman's Yacktman Asset Management.