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Hedge funds: What have Bill Ackman and Paul Singer been buying this quarter?

Hedge fund managers Bill Ackman, Paul Singer, Dan Loeb and David Tepper have had an active third quarter. In their 13F filings, their hedge funds bought and sold several high profile stocks. But what's the rationale for the moves? And who's looking at the biggest upside?

 

Bill Ackman's Pershing Square Capital Management

Hedge fund manager Bill Ackman’s Pershing Square Capital Management cut its holdings in ADP [ADP]. ADP’s share price is up almost 32% this year and had accounted for 10% of Pershing's portfolio.

Warren Buffett's Berkshire Hathaway was Pershing's one buy. Pershing added 2.6% to take its stake up to 4 million shares. 

 

 

Ackman is betting that there's a large upside for the stock. In June, Ackman said “[Berkshire Hathaway (BRK.B) is] trading at one of the widest discounts to its intrinsic value in many years.”

BRK.B has an average 12-month price target of $247.33. Hitting this would represent a 13% upside.

See what Warren Buffett's Berkshire Hathaway has been buying and selling

 

Paul Singer's Elliott Management

Elliott Management's 13F filing showed that it had taken a new position in AT&T [T]. AT&T's share price is up over 25% this year, with an average $39.02 price target. This would represent a 3% upside on the current share price. Hedge fund manager Paul Singer looks to be betting on AT&T's 5G rollout driving up the share price in 2020.

Elliott Management increased its holdings in Dell Technologies [DELL] by 1%. This takes its position to 13 million shares - the biggest holding in its portfolio. Dell's share price tanked in December. Since then it has been clawing back lost ground thanks to strong customer spending. Dell has a $66.51 12-month average price target. Hitting this would represent a 22% gain.

 

 

Dan Loeb's Third Point Management

Dan Loeb's hedge fund Third Point Management had an active Q3. 

The biggest new buy was Allergan, picking up 3.6 million shares worth $605.8 million. Third Point Management now holds 7.2% in the Dublin-based pharmaceutical company. Other new positions include Fidelity National Information Services Inc. [FIS] and Zendesk Inc. [ZEN]. Third Point liquidated its stake in Netflix [NFLX].

Third Point maintained its stakes in several companies, including United Technologies [UTX] and Sony [SNE]. Activist investor Dan Loeb had been seeking the breakup of United Technologies. Last month, Loeb called on Sony to streamline its sprawling business.

 

 

In a letter to investors, Third Point said: 

“We were looking forward to a thoughtful articulation of a strategy to streamline Sony’s portfolio. Instead, Sony revealed that the review’s conclusion was to maintain the status quo with no concrete proposals to improve the business.”

“We were looking forward to a thoughtful articulation of a strategy to streamline Sony’s portfolio. Instead, Sony revealed that the review’s conclusion was to maintain the status quo with no concrete proposals to improve the business” - Third Point Management

 


David Tepper's Appaloosa Management

Hedge fund manager David Tepper's Appaloosa Management increased its exposure to FAANG stocks. This quarter, it grew its positions in Alphabet [GOOG] 106%, Facebook [FB] 52%, and Amazon [AMZN] 43%. The three stocks are the portfolio’s biggest holdings.

 

 

Alphabet's share price is up 24% this year and analysts have pinned an average price target of $1,487.52 on the stock. Hitting this would represent a 13.5% upside on the current share price.

Facebook's share price is up 47% this year. In recent Q3 results, earnings per share came in at $2.12, topping the forecasted $1.91. Facebook has an average price target of $238.96 - a 19% upside on the current share price.

 

 

Appaloosa opened positions in Alibaba [BABA], picking up 1.3 million shares. It also bought Broadcom [AVGO] with 275,000 shares and Boeing [BA] with 30,000 shares.

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