Investors Take A Bite Out of FANG

July 29, 2018 James Heinsman Hedge Fund News

Acronym lovers will most likely be searching for another letter to replace the “F” in “FANG” since Facebook’s 19% plunge in value last week. FANG is an abbreviation created by Jim Cramer of “The Street” several years ago as a quick way to refer to Wall Street’s best and brightest: Facebook, Amazon, Netflix and Google. These four giants have been among the best performing and best loved companies in recent memory, but now Facebook is shaking the boat.

According to analysts, Facebook was the most loved of the FANG Four. Of 848 hedge funds with $1.6 billion worth of bets, Facebook was in the top 10 holdings of 97 of them, says Goldman Sachs’ “Hedge Fund Trend Monitor.” Together the hedge-fund stake made up 5% of Facebook’s equity shares outstanding. The 19% drop in stock value translates to a total loss of close to $6 billion from the stock. The market cap loss totaled $119 billion.

Among the hedge funds most affected are:

  • Viking Global: $390 million loss
  • Lone Pine Capital: $330 million loss
  • Appaloosa Management: $259 million loss
  • Tiger Global: $207 million loss

The epic downturn was triggered by data leaks and fake news scandals going back to the news that Cambridge Analytica had access to and used information about Facebook users without their, or Facebook’s, knowledge, back in March 2018. Facebook announced that as many as 87 million users may have been wrongly shared with Cambridge Analytica, a British political consulting firm, which helped President Trump’s presidential campaign in 2016.

That news led to worry about Facebook’s broader oversight of its platform, and an FTC investigation into whether the company broke a 2012 settlement under which it’s required to give the social network’s users notice and obtain consent before sharing their information. Mark Zuckerberg, the company’s CEO and founder was called to testify to Congress in April.

In 2017 Facebook’s stock climbed 53%, easily outpacing the S&P 500’s 19.4% growth. After the crash Facebook is now unchanged for 2018 compared to 6.2% growth of the S&P. Nevertheless, even though hedge funds may have sold their position in Facebook during the months after the scandal, it is still likely to be a top holding, as it was going into the earnings report as the shared hit an historic high last Wednesday.

Appaloosa Management, Facebook, FANG, Lone Pine Capital, Tiger Global,

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