Large- and mega-cap growth stocks disappointed market participants last year, but it appears that some professional investors used those declines to add to or initiate related positions late in 2022. It’s 13F filing season, and the regulatory documents from the Securities and Exchange Commission (SEC) indicate that some pros gobbled up communication services and technology stocks in the fourth quarter, including marquee components in the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM).
Those exchange traded funds track the same index and, as such, have identical lineups. That makes each of them a relevant play on some growth equities embraced by professional investors, including hedge fund managers, late last year. Those include Baupost’s Seth Klarman, who was a big buyer of several QQQ and QQQM members in the fourth quarter.
“The hedge fund manager more than doubled his holding in Google parent Alphabet, making it his seventh biggest stake at the end of 2022. Klarman hiked his Meta bet by 150% to $208 million, and upped his Amazon stake by 300% to a bet worth more than $83 million,” reported Yun Li for CNBC.
Alphabet (NASDAQ:GOOG) and Facebook parent Meta Platforms (NASDAQ:META) are the largest communication services holdings in QQQ and QQQM, combining for over 10% of the ETFs’ portfolios. Amazon (NASDAQ: AMZN) is the ETFs’ biggest consumer cyclical component at a weight of 6.28%.
Speaking of QQQ and QQQM consumer discretionary components, Tesla (NASDAQ:TSLA) is another stock appearing frequently in 13F filings. The electric vehicle behemoth accounts for 3.8% of the Invesco funds’ rosters. Investors that bought shares of Elon Musk’s company — pro and retail — in the fourth quarter and remain holders today are being rewarded, as the stock is up almost 70% year-to-date.
“We believe that Tesla’s clear lead in both the global EV transition and the emergence of the software defined vehicle, as well as positive trajectory on volume, should lead to outperformance for the stock,” wrote Barclays analyst Dan Levy in a note out on Tuesday.
Among other pros buying tech stocks in the fourth quarter, Stan Druckenmiller’s Duquesne Family Office added shares of semiconductor giant Nvidia (NASDAQ: NVDA), which accounts for 4.3% of QQQ and QQQM. After a rough 2022, Nvidia is higher by 57.18% year-to-date as investors embrace companies with exposure to the artificial intelligence boom. Nvidia checks that box.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.