Goldman Sachs released a very valuable report setting out hedge funds’ favorite stocks right now. This is based on just-released SEC forms filed by the funds setting out their second quarter trades. “From an implementation standpoint, the hedge fund VIP list represents a tool for investors seeking to ‘follow the smart money’ based on 13F filings,” strategist Ben Snider told clients. Plus these stocks have proved to be more resilient then the S&P 500 in recent months.
Facebook (Nasdaq:FB)
Even after the second quarter filings, Facebook remains the most popular pick for hedge fund managers. In fact, 98 hedge fund managers count the social media giant as a top 10 portfolio holding. We can also see that in Q2, 47 hedge funds initiated new FB positions. This is versus 33 funds closing out positions.
Luckily for these funds, the outlook for FB remains notably bullish. Five-star RBC Capital analyst Mark Mahaney (Profile & Recommendations) has just selected Facebook as his number 1 Top Large Cap Long. He is confident that the stock is primed for many years of growth. Even if users decline for the core FB site, the stock still boasts money-makers like Instagram, WhatsApp and FB Messenger to take up the slack.
Mahaney writes: “Over 35% Ad Revenue growth… on a ~$55B revenue run rate. We still think FB is among the Best Growth Stories in Tech despite the H2 outlook (which we view as overly conservative).” Indeed, he estimates that Messenger monetization could contribute an incremental $6-8B in Revenue and $1 in EPS to the company by 2020, based on the platform’s recent growth.
As a result, he has a very bullish $225 price target on the stock (35% upside potential). This falls notably above the average analyst price target of $205.31- which still suggests appealing upside potential of 23%. Note that in the last three months, this stock has earned a ‘Strong Buy’ consensus from the Street with 30 buy ratings, 5 hold ratings and just 2 sell ratings.
