Hedge Funds Have Never Been More Bullish About Amazon

We have been tracking hedge funds for the last 10 years in real-time and we have never seen a company that is as popular as Amazon.com Inc. (AMZN). We finally finished processing 13F filings from 821 hedge funds and prominent investors. We believe one of the best tools for ordinary investors who are on the hunt for new ideas is 13F filings. Once every quarter hedge funds with at least $100 million in total positions in publicly traded US stocks, options, and convertible debt are required to disclose the number of shares and the total value of its positions in each of the stocks and options in its portfolio. We now know which stocks hedge funds were piling into during the coronavirus crash.

One of those stocks was Amazon (we identified a second stock that hedge funds piled into in this article). The number of bullish hedge fund positions in Amazon.com Inc. increased to 251 from 202 at the end of December. More than 30 percent of all equity hedge funds are now bullish about Amazon. Amazon was the #1 stock among hedge funds at the end of December and Amazon was the #1 stock among hedge funds at the end of March (see the list of 30 most popular stocks among hedge funds).

Why do we care about top hedge fund stocks? The reason is very simple. 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

Video Length 00:03:50

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind, let’s take a look at why hedge funds invest in Amazon.com Inc.

Light Street said the following about Amazon in its Q1 investor letter:

During this crisis, the Internet has become the core operating system of our partially shuttered economy. eCommerce and logistics businesses like Amazon, UPS, FedEx, Uber Eats, DoorDash, Grubhub, and Instacart are now the backbone of the U.S. economy. Light Street’s largest position is in Amazon. Demand for food and home goods is exploding. People are nesting at home, adjusting to the new realities of working from home, and purchasing furniture and apparel to make the best of it. In-home entertainment services are flourishing, including streaming video and gaming, where Light Street is long Netflix and Activision respectively.

Soma Equity Partners agrees with Light Street:

Amazon is poised to take the reigns as the world’s largest company and may never look back. The COVID-19 crisis is accelerating the adoption of online shopping around the world. Online grocery is hitting a notable inflection, with surveys indicating as high as 55% of consumers now buying online. Amazon Grocery is poised to more than triple from a $20billion segment in 2019 to $80 billion by 2023. Amazon’s central role in our lives is perhaps best demonstrated by the adoption of Amazon Prime. Almost three in every four households in the U.S. are now members, approaching 90 million in total.

We acquired our first ever AMZN stake in March near $1,800 per share, representing the only sizable new long we entered during the sell-off. While we typically look for more contrarian positions, we felt particularly motivated by a 20% discount on the company with the biggest stack of chips in the market. The optionality that comes with Amazon’s scale, including deeper forays into media, logistics, and overseas markets, should provide tailwinds to the stock for years to come.

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