Retail, Tech Get New Life In Burgeoning Economy

Some prominent hedge fund managers are feeling optimistic about the U.S. economy, especially when it comes to retail and technology.

According to Reuters, Third Point added new positions in payment companies PayPal and Visa, which are both up more than 19 percent so far. And Greenlight Capital added new positions to retailers including Dollar Tree, Dollar General, Gap, and TJX Companies, the parent company of TJ Maxx and HomeGoods, while activist fund Jana Partners took new positions in Wells Fargo & Co and food delivery company GrubHub.

There were some cuts though, with large hedge fund managers slashing their positions in Facebook, Apple, Amazon, Netflix, and Google-parent Alphabet.

Third Point sold all of its stake in Alphabet and divested 1 million shares of Facebook, cutting its position in the company by 25 percent. However, it increased its stake in Microsoft by nearly 310 percent, acquiring 1.7 million shares.

And Omega Advisors sold all of its position in Netflix, opting to add new holdings in biotechnology companies including Madrigal Pharmaceuticals and Deciphera Pharmaceuticals.

The new positions came during a quarter that saw the U.S. gross domestic product increase at an annual rate of 4.1 percent — nearly double the 2.2 percent rate of the first quarter of the year.

But while hedge funds are up 1.5 percent on average since the beginning of the year, they’re still well behind the 6.2 percent gain in the benchmark S&P 500 index.

“Everyone is comparing everything to the S&P 500 and that’s a very difficult hurdle for the last few years,” said Sol Waksman, president of research firm BarclayHedge.

One area hedge funds aren’t seeing much luck in is cryptocurrencies. In June it was reported that hedge funds investing in crypto are seeing returns fall, with digital coins down by 35 percent so far this year. In fact, global hedge funds investing in cryptocurrency and its technology have posted negative performance in four out of five months this year.