Hedgies look to tech stocks but nurse losses on banks

US hedge fund giants looked to technology stocks in the second quarter but some big names have been left nursing heavy losses after moving back into US financials ahead of the market crash.

Steve Cohen’s SAC Capital was among the most active in the technology sector, doubling his holding in Apple to almost 600,000 shares and initiating a 20,000 share position in LinkedIn.

David Einhorn of Greenlight Capital was another who continued to add to Apple over the quarter, buying 240,000 shares to bring his total holding to 1.1m. The tech firm became US hedge funds’ stock of choice in the first quarter of 2011, according to the Goldman Sachs Hedge Fund Trend Monitor.

The focus on tech stocks comes at an opportune time for hedge funds as a number of large acquisitions filter through the M&A pipeline.

Hewlett Packard is the latest mover, announcing a bid for FTSE 100 company Autonomy for $10.3bn, valuing shares at a 79% premium to their closing price on 18 August.

The biggest tech deal of the year brought mixed fortunes for the big names. Google’s $12.5bn offer to buy Motorola Mobility, which led to a 58% jump in the latter’s share price, will have benefitted activist investor Carl Icahn, who holds an 11% stake.

But George Soros sold down his position in the takeover target previously as part of a raft of changes that also saw him cut stakes in Citigroup and Wells Fargo.

Opinion remains split on US financials, as John Paulson’s second quarter moves illustrate. He took the opposite view to Soros, increasing his stake in Wells Fargo.

Paulson also added to Wells but sold down his positions in other leading financials.
Paulson halved his stake in Bank of America in the second quarter, and also reduced his holding in Citigroup, but other big names took the opportunity to buy back in prior to the August sell-off.

Bill Ackman’s Pershing Square Capital Management bought 8.9m shares to take his total position to 23.5m shares as at the end of June.