- Hedge funds scooped up more shares of General Electric in the second quarter than any other company in the industrial sector.
- The funds were most likely trying to buy the dip as the stock has shed more than 60% of its market value over the last two years.
- It's possible some of these funds sold shares before GE's sell-off on Thursday sparked by Harry Markopolos's fraud accusations, but many likely still held the stock and took a hit.
- Here are nine hedge funds that may have gotten clobbered when GE plunged on Thursday.
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General Electric was the favorite industrial-sector pick for hedge funds in the second quarter.
According to regulatory filings, hedge funds added more shares of GE to their portfolios than any other company in the industry during the second quarter. Holdings of GE within hedge fund portfolios rose by 25% during the period, according data compiled by Bloomberg.
The funds most likely saw GE as a bargain at its current price. Through a series of executive shakeups, layoffs, and a major overhaul of its core businesses, GE has lost more than 60% of its market value over the last two years.
Hedge funds are required to disclose investments in public companies four times a year, following the end of each quarter. The recent filings reflect hedge fund's holdings as of June 30, so its possible some firms might have sold shares before GE's stock price tanked on Thursday.
The sell-off — which saw GE shares tumble as much as 14%— came after the famous Madoff whistleblower Harry Markopolos accused the industrial conglomerate of accounting fraud. He did so in the form of a 175-page report that claimed fraud mostly coming from GE's long-term-care insurance business.
Its likely that many of the hedge funds that stocked up on GE in the second quarter still held their shares when Markopolos's report was published.
The company's stock price recovered on Friday, climbing 6.5% after Larry Culp, GE's chief executive officer, purchased $2 million worth of stock and publicly rebuked Markopolos's claims.
Here's which hedge funds likely took a beating during GE's sell-off on August 15. They're listed in increasing order of how many shares they added to positions:
9. Hotchkis and Wiley Capital Management
Shares purchased in Q2: 3,376,390
Total position: 92,562,627
Total ownership percentage: 1.06%
Market value:$791 million
Source: Bloomberg
8. Geode Capital Management
Shares purchased in Q2: 4,595,928
Total position: 113,366,953
Total ownership percentage: 1.30%
Market value: $969 million
Source: Bloomberg
7. SG Americas Securities
Shares purchased in Q2: 4,614,125
Total position: 5,364,009
Total ownership percentage: 0.06%
Market value: $45 million
Source: Bloomberg
6. DE Shaw
Shares purchased in Q2: 5,298,374
Total position: 8,976,685
Total ownership percentage: 0.10%
Market value: $76 million
Source: Bloomberg
5. DZ Bank
Shares purchased in Q2: 5,910,982
Total position: 14,174,710
Total ownership percentage: 0.16%
Market value: $121 million
Source: Bloomberg
4. Causeway Capital Management
Shares purchased in Q2: 6,980,327
Total position: 6,980,327
Total ownership percentage: 0.08%
Market value: $59 million
Source: Bloomberg
3. Citadel Advisors
Shares purchased in Q2: 7,772,741
Total position: 11,317,046
Total ownership percentage: 0.13%
Market value: $96 million
Source: Bloomberg
2. Eagle Capital Management
Shares purchased in Q2: 24,684,128
Total position: 81,522,014
Total ownership percentage: 0.93%
Market value: $697 million
Source: Bloomberg
1. Renaissance Technologies
Shares purchased in Q2: 38,260,700
Total position: 53,270,354
Total ownership percentage: 0.61%
Market value: $455 million
Source: Bloomberg