Hedge fund titan Louis Moore Bacon of leading New York City-based hedge fund, Moore Capital Management LP, has demonstrated a bullish outlook towards three stock giants. According to latest 13F forms filed with the SEC for Q3, he has upped the stakes of the $5.17 billion fund’s holdings of Microsoft Corp (NASDAQ: MSFT), Alibaba Group (NYSE: BABA), and Amazon (NASDAQ: AMZN).
A native of North Carolina, Mr. Bacon holds a Bachelor of Arts degree in American Literature from Middlebury College. He earned an M.B.A. in finance from the prestigious Columbia Business School and then quickly shot up the trading ranks of Shearman Lehman Brothers to become senior vice president. Following his success at Lehman, he launched his own fund, Moore Capital, in 1989, which returned an incredible 85% in its first trading year. TipRanks shows that the fund has yielded a tidy 22.30% average return in the past 12 months. The firm mainly invests in the global financial markets and private equity markets. Moore has three key investment strategies, Global Macro Strategy, Macro Managers Strategy, and Emerging Markets Strategy.
Bacon has been the subject of some less-than-stellar press attention like the bitter dispute on the island with retail tycoon Peter Nygard. He even brought a defamation case against Nygard for spreading ‘malicious’ rumors of a close association with the Ku Klux Klan, and attempts to falsely link him to arson, bribery, drug smuggling, and murder. Bacon has emphatically denied all these claims.
A conservation philanthropist, Louis Bacon has spent more than two decades supporting efforts to protect natural resources in the United States and abroad. He is the Founder and Chairman of The Moore Charitable Foundation founded in 1992- a conservation nonprofit that protects threatened landscapes, habitats and water bodies.
Let’s now take a closer look at Louis Moore Bacon’s three most interesting trades of the quarter.
Microsoft Corp (NASDAQ: MSFT)
After shedding shares of the tech giant during Q2, Louis Moore Bacon has reversed his stance and added to holdings of Microsoft Corp. by 81.82% during the last quarter. The fund now holds $74.49 million of MSFT shares, which have already gained just over 11% since the last filing date.
The tech giant had an outstanding quarter and delivered on its highly ambitious goal of reaching $20 billion ARR from Azure. Microsoft had been growing its cloud business at approximately 90% year over year for several quarters.
One of the biggest upcoming catalysts for Microsoft is expected to be explosive growth of “ultramobiles,” or high-end compact laptops and “two-in-one” devices as per the forecast from renowned research firm Gartner. Microsoft definitely has the edge here and is expected to be reflected further in the MSFT stock price.
Unlike Apple, Microsoft has a seamless compatibility and interconnectedness, be it with Adobe Systems, LinkedIn, or even the regular excel spreadsheets. Microsoft is also well positioned to capture its fair share of the Artificial Intelligence (AI) market and has teamed up with bigwigs like Amazon.com, Inc. Dell and HP Inc. to make it happen.
Out of all the 17 analysts who have rated Microsoft in the past 3 months, 88% have a Buy rating, 6% have a Sell rating, and 6% remain on the sidelines. The average 12-month price target for the company is $90.38, marking a 9.68% upside from current levels. You can click on the screenshot below for further insights into the stock’s latest ratings.
Alibaba Group (NYSE: BABA)
Since the past few quarters, Louis Moore Bacon has been alternatively selling and buying stakes in his biggest portfolio holding, BABA. For Q3, he has increased his overall stake in Alibaba by 16.69%. With a total value reported at $256.95 million, the wildly successful e-commerce giant accounts for nearly 1/20 of the entire portfolio.
Alibaba is up more than 90% in 2017, and it’s been winning over some high-profile hedge fund managers. Hedge Funds increased holdings in the company by 371.8K shares last quarter as per TipRanks data. BABA has a positive hedge fund signal based on the activity of 45 Hedge Funds in the recent quarter.
Alibaba turned in an earnings report that beat across the board, with unstoppable-looking profit and sales expansion. The revenue from its cloud computing business grew by a whopping 96% year-over-year. The Chinese giant seems to be uniquely positioned, with large exposure to both e-commerce and advertising. Overall, analysts have a positive outlook for Alibaba due to the expectations of a strong revenue growth, sustainability of core margins, and strong strategic positioning.
According to TipRanks’ statistics, out of all the 18 analysts who have rated Alibaba Group in the last 3 months, 100% of them remain bullish, which is a rare consensus. The average 12-month price target for the stock is $209.50, marking a 13.16% upside from current levels.
Amazon (NASDAQ: AMZN)
One of the biggest additions by the hedge fund guru was the e-commerce leader, Amazon. Louis Moore Bacon increased his holdings by a whopping 218.69% this quarter, translating to a total value of $163.91 million. The timing couldn’t have been better, as AMZN has already made double-digit gains of 17.53% since the last filing.
With holiday shopping increasingly shifting to online purchases, Amazon is perfectly positioned to benefit. Initiatives like adding cash to load an Amazon.com balance at 7-Eleven stores are anticipated to help Amazon gain market share among consumers with challenged credit, low income, and underage consumers during the holiday shopping season. Other tailwinds like offering monthly Prime memberships and the acceleration in store closings is also expected to aid Amazon. AMZN’s new lines of business — cloud computing, subscriptions, and advertising are showing promising results as well.
The record-breaking Prime Day in 2Q, earnings smasher of 3Q, and the continued momentum is expected to steer the market cap behemoth to reach new highs. Many experts like Morgan Stanley analyst Brian Nowak believe that the company is headed toward a $1 trillion valuation in the next 5 years.
AMZN continues to demonstrate a ‘Strong Buy’ rating on TipRanks analytics as well, with 31 buy ratings and 1 hold rating in the last three months. The average price target of Amazon is $1250.31, which translates to more than 10% upside potential from the current share price.