David Tepper, Andreas Halvorsen Hit By Facebook Plunge
Facebook’s historic plunge has erased a reported $16 billion from CEO Mark Zuckerberg’s fortune this week, but it has not been kind to several hedge fund managers either.
Appaloosa’s David Tepper and Viking Global’s Andreas Halvorsen each has a substantial stake in the social network company that reported disappointing second-quarter earnings Thursday. Facebook occupied 10.3% of Tepper’s equity portfolio at the end of March, making it his second-largest position. Halvorsen made Facebook his largest position in the first quarter at 8.99% of the portfolio.
Fortunately for the fund managers, though they are watching their returns shrink, they have likely not taken a loss on the investments. Tepper’s quarterly average purchase prices were mostly around or below Thursday’s closing price of $176.26, with an average buy price of $156.
Similarly, Halvorsen bought most of his shares below Thursday’s level, with an average buy price of $146.
Facebook is down 1.07% to $174.33 in Friday afternoon trading. It plunged 20% Thursday, its biggest drop ever after posting revenues of $13.23 billion, just shy of Wall Street’s expectation of $13.34 billion. Earnings per share were $1.74, versus a $1.71 analyst estimate, while Facebook’s daily active users fell short of analyst forecasts.
Further concerning investors was Facebook’s warning that revenue growth would decline sequentially in the next quarter.
“While the knee-jerk reaction will be negative on these mixed results especially given the meteoric rise in shares from the March lows, we ultimately believe the advertising revenues and underlying MAU/DAU metrics were ‘good enough’ and show the worries of a massive fundamental and user deterioration at Facebook post-Cambridge was more bark than bite at this point,” said Daniel Ives, chief strategy officer and head of technology research at GBH Investments.
“This is a clear inflection point for Zuckerberg & Co. as the company’s advertising fortress and MAU metrics still look ‘well intact’ despite the massive potential headwinds caused by Cambridge and the overall privacy worries (GDPR) in Europe although challenges remain,” he said.
Facebook was a magnet to large firms. In addition to Tepper and Halvorsen, other prominent investors have smaller positions, including Zeke Ashton, Lee Ainslie and Steve Mandel.
Facebook pain may affect a number of advisers, however. GuruFocus data shows the 138 tracked investors purchased Facebook more than any other stock in the S&P 500 during the first quarter, placing them at a loss on those shares. It was also the seventh most-purchased stock of all funds managing more than $100 million, data suggests.
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