May 15, 2020 / 9:35 PM / 14 days ago

U.S. funds rush to tech companies and battered energy stocks in first-quarter

BOSTON/NEW YORK (Reuters) - Prominent U.S. fund managers piled into big-name technology stocks and bottom-fished in the beaten-down energy sector as markets reeled from the coronavirus-fueled selloff in the first quarter, regulatory filings released on Friday showed.

They also cut exposure in restaurants, retail and airlines as the mounting number of deaths from the coronavirus — which have now topped 86,000 in the United States — forced shutdowns of virtually all nonessential businesses in most U.S. states.

The first quarter was marked by a 20% plunge in the Standard & Poor’s 500 index and a swelling of the jobless ranks by the millions. While the filings are backward-looking, they give a glimpse of what investors did during a historic stock market selloff and the start of an economic crisis that is being likened to the Great Depression of the 1930s.

Technology giants including Microsoft Corp, Amazon.com Inc, Apple Inc, Google owner Alphabet Inc and Facebook Inc saw fresh buying from fund managers as their earnings were expected to stay comparatively steady this year. Hedge funds Viking Global Investors, Maverick Capital, Moore Capital Management and Arrowstreet Capital all increased their positions in Microsoft, which reported sharp demand for its Microsoft Teams product as offices and schools transitioned online as stay-in-place orders forced Americans to work and study from home.

Stanley Druckenmiller’s Duquesne Family Office increased its holding in Amazon by 713%. Amazon shares hit an all-time high on April 30 thanks in part to rising demand for consumer products at a time when many small retailers have closed. Druckenmiller also raised his investment in Facebook by 75%, the filing shows.

CONTRARIAN BETS

Several prominent fund managers took contrarian bets on the energy sector as a supply glut caused the price of oil to tumble to 20-year lows and briefly turned oil futures negative in April for the first time in history.

Dmitry Balyasny’s Balyasny Asset Management bought an additional 2.9 million shares in oil and natural gas exploration company Noble Energy, raising its stake by 565%. Cinctive Capital Management, a new hedge fund that employs teams of traders like Balyasny, increased its position in Noble by 300%. Noble’s stock has surged 89% since March 23. Cinctive also bought into Valero Energy, whose stock price has jumped 85% since March 23.

As segments of the U.S. economy were shuttered by the lockdowns, fund managers hustled out of stocks that would suffer as business ground to a halt. Viking cut its stake in ride-hailing company Uber Technologies by 31% while Coatue Management reduced its Uber ownership by 58%, the filings show.

Coatue also liquidated its position in retailer J.C. Penney, which is expected to file for bankruptcy soon, by selling 3.4 million shares.

With travel stalled, casinos and resorts struggled. Mutual fund company T. Rowe Price cut its stake in MGM Resorts International, which owns the Bellagio in Las Vegas, 30% by selling 16 million shares.

But some hedge funds saw opportunity in the hospitality industry. Viking added a new position in Las Vegas Sands Corp, while hedge fund Long Pond Capital added new positions in MGM Resorts and Marriott Vacations, and more than tripled its existing position in Wyndham Hotel and Resorts, bringing it to more than 8% of its portfolio.

Bridgewater Associates, the largest hedge fund manager in the world, sold its entire stake in several large financial companies, including Bank of America, Wells Fargo and Goldman Sachs.

The firm added positions in consumer staples such as General Mills and bulk retailer Costco. Bridgewater also added a position in General Electric, whose shares have fallen by more than 50% since January to a three-decade low amid concerns about cratering demand in the airline industry.

Reporting by Svea Herbst-Bayliss and David Randall; additional reporting by Tim McLaughlin; editing by Ira Iosebashvili and Leslie Adler

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