Several large hedge funds entered the first quarter with concentrated bets on the Magnificent Seven — and are now facing an early test as the group’s sharp decline ripples through portfolios.
The S&P 500 is down more than 6 percent in the first quarter, and these market-leading tech companies have dropped even farther, most by double-digit percentages.
Through Monday, all the Magnificent Seven had fallen: Microsoft more than 24 percent, Tesla 19 percent-plus, Meta Platforms about 18 percent, Amazon more than 12 percent, Alphabet nearly 12 percent, Nvidia more than 10 percent, and Apple approximately 9 percent.
An analysis of year-end 13F filings shows several prominent hedge funds were heavily positioned in the group heading into the downturn.
Adage Capital Management had perhaps the most exposure. Eight of its top-nine longs — including both classes of Alphabet — were Magnificent Seven stocks, effectively making it resemble a concentrated bet on the group. Together, they represented about 28 percent of U.S. long assets. The exception among the nine was chip giant Broadcom.
Chase Coleman’s Tiger Global Management also had significant exposure. Its top-four holdings were all Magnificent Seven stocks: Alphabet, Microsoft, Amazon, and Nvidia, which combined made up 34 percent of U.S. long assets. And Meta was the firm’s sixth-largest long.
Philippe Laffont’s Coatue Management counted five of the group among its nine largest U.S.-listed longs at year-end, led by Microsoft, Meta, and Amazon — Nos. 2, 3, and 4, respectively. Those five positions accounted for nearly 28 percent of U.S. long assets.
David Tepper’s Appaloosa Management had five Magnificent Seven stocks among its nine biggest U.S.-listed holdings. They were led by Alphabet and Amazon, the second- and third-largest holdings, respectively. The five stocks combined represented roughly 30 percent of Appaloosa’s assets at year-end.
For Alex Sacerdote’s Whale Rock Capital Management, Alphabet was its largest long position, making up more than 8 percent of assets after the firm boosted its stake by nearly 80 percent in the fourth quarter. Amazon was the fourth-largest long and Meta the ninth-largest at year-end.
Then there is Skye Global, which had a highly concentrated position in Amazon, responsible for more than 38 percent of U.S. assets. The hedge fund headed by Jamie Sterne also had a large position in Amazon call options. In addition, Microsoft was the third-largest long, making up more than 5 percent of assets.
At Cat Rock Capital Management, Meta and Microsoft together accounted for nearly 35 percent of U.S. assets at year-end. This was down from nearly 39 percent the previous quarter.
And Eric Mandelblatt’s Soroban Capital Partners had four of its six largest longs in this group, including its two largest holdings — Microsoft and Amazon — which combined made up 23 percent of assets. The two other Magnificent Seven stocks among its largest holdings were Alphabet and Meta, representing 12 percent of assets.
