Legendary fund managers such as Warren Buffet, George Soros, Carl Icahn, Steven Cohen and Mario Gabelli, are neutral on the computer hardware and software group, cutting a net $124 million during the June quarter from their $22.56 billion prior quarter position in the group. Furthermore, overall they are under-weight in the group by a factor of 0.70; that is, taken together, the 60+ high alpha generating legendary or guru fund managers have invested 5.2% of their assets in the group, significantly less than the 7.4% weighting of the group in the overall market.
The hedge fund and mutual fund managers included in this group include only high profile names who by virtue of their long-term market-beating returns have earned their standing in the investment community and are worthy of our attention. They include well-known names such as those mentioned above, as well as perhaps relatively lesser-known names that also have a stellar long-term history of beating the markets, such as Seth Klarman,John Griffin,Prem Watsa, Robert Karr and Lee Ainslie. The following are the computer hardware and software stocks that these guru funds are most bullish and bearish about (see Table):
Gurus Bullish on Apple Inc. (AAPL): Twenty-eight guru funds together hold $4.47 billion, adding a net $759 million during the June quarter, including buying $1.06 billion and selling $305 million during the quarter. Furthermore, together guru funds are severely under-weight AAPL as together they hold only $4.47 billion worth or just over 1.3% of the outstanding stock. Major buyers include Eton Park Capital Management LP ($190 million), Glenview Capital Management LLC ($183 million), Lone Pine Capital LLC ($161 million) and SAC Capital Advisors LP ($131 million); and the largest guru holders of AAPL include Lone Pine Capital LLC ($752 million) and Tiger Global Management LLC ($569 million).
Gurus Bullish on Microsoft Corp. (MSFT): Twenty-eight guru funds together hold $3.57 billion, adding a net $443 million during the June quarter, including buying $769 million and selling $326 million during the quarter. Furthermore, together guru funds are severely under-weight MSFT as together they hold only $3.57 billion worth or just over 1.7% of the outstanding stock. Major holders of MSFT include Yacktman Fund ($653 million), First Eagle Investment Management LLC ($472 million), Fisher Asset Management LLC ($453 million) and Greenlight Capital Inc. ($376 million); and the largest buyer during the June quarter was Baupost Group LLC ($304 million).
Gurus Neutral on Oracle Corp. (ORCL): Thirteen guru funds together hold $1.36 billion, adding a net $191 million during the June quarter, including buying $473 million and selling $281 million during the quarter. Major holders of ORCL included Fisher Asset Management LLC ($564 million) and Oakmark Funds/ Harris Associates LP ($315 million).
Gurus Bearish on EMC Corp. (EMC): EMC develops, delivers and supports information and virtual infrastructure technologies and solutions, and offers enterprise storage systems and software which are deployed in storage area networks (SAN) and network attached storage (NAS). Ten guru funds cut a net $386 million during the quarter, including buying $18 million and selling $404 million worth of EMC stock. The guru funds that were top sellers of EMC stock during the June quarter included Viking Global Investors LP ($343 million) and Legg Mason Capital Management ($53 million).
Gurus Bullish on Seagate Technology (STX): STX manufactures hard disk drives for the enterprise, desktop, mobile computing, and consumer electronics markets. Eleven guru funds held $581 million in STX stock at the end of the June quarter, which accounts for 11.9% of the outstanding stock. Further during the June quarter, guru funds added a net $387 million of STX stock, including buying $397 million and selling $10 million worth during the quarter. Guru funds that were major buyers of STX during the June quarter included Viking Global Investors ($244 million) and Greenlight Capital Inc. ($100 million).
Guru Funds Bearish on Hewlett-Packard Co. (HPQ): Sixteen guru funds cut a net $216 million from their $887 million prior quarter position, and together guru funds hold $671 million worth of HPQ stock or just under 1.3% of the outstanding shares. Major sellers included Appaloosa Management LP ($113 million), Glenview Capital Management LLC ($60 million) and Brave Warrior Capital LLC ($54 million).
Guru Funds Bullish on Dell Inc. (DELL): Twelve guru funds together hold $3.26 billion or just under 12% of the outstanding shares. Major holders of DELL include Southeastern Asset Management Inc. ($2.37 billion), Fairfax Financial Holdings ($359 million) and Oakmark Funds/ Harris Associates LP ($240 million).
Guru funds Bearish on Netapp Inc. (NTAP): NTAP manufactures integrated network storage and data management hardware for corporations and government agencies. Guru funds together hold $743 million or over 5.3% of the outstanding shares, and they cut a net $58 million during the June quarter. Major sellers included Lone Pine Capital LLC ($53 million) and Maverick Capital ($16 million).
Furthermore, as illustrated in the following table, gurus are bearish by virtue of having limited holdings in major companies, including Nuance Communications (NUAN), a developer of embedded speech and digital imaging software for customer service intensive industries, currently trading at $5.2 billion market-cap; Open Text Corp. (OTEX), a developer of content management software that captures, manages, stores and delivers organizational content through networks, currently trading at $3.3 billion market-cap; Ariba Inc. (ARBA), a developer of purchasing management software applications for the procurement of non-payroll goods and services, currently trading at $2.3 billion market-cap; and Logitech Intl (LOGI), a Swiss manufacturer of personal peripherals for computers and other digital platforms, currently trading at $1.8 billion market-cap.
General Methodology and Background Information: The latest available institutional 13-F filings of over 60+ legendary or guru hedge fund and mutual fund managers were analyzed to determine their capital allocation from among 50+ different industry groupings, and to determine their favorite picks and pans in each group. Each guru has been carefully selected based on their long-term performance and standing in the investment community. Furthermore, the credentials of most of the 60-odd guru funds that justify their inclusion in this elite group were detailed in our previous articles, many of which can be accessed by clicking on the hyperlinks referencing them in the above Table and in article.
These legendary or guru fund managers number less than one percent of all funds and yet they control almost ten percent of the U.S. equity discretionary fund assets. The argument is that institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When high alpha generating or guru Institutional Investors by virtue of their fund performance, low volatility and elite reputation in the investment community, invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence or even go as far as constructing a model diversified portfolio based on the guru funds best picks.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.