Consumer discretionary as a whole didn't do too much last year, although the 4.4% rise beat the broader market. With global recession fears easing and the European Central Bank making free cash available to banks to buy sovereign debt, investors have been willing to take on more risk. That explains why discretionary names surged 12% in the fourth quarter of 2011 and are up another 8.6% in 2012 through Feb. 15, according to S&P Capital IQ.
The outlook for consumer discretionary stocks seems to be bright. After earnings grew a 3.5% during the fourth quarter from a year ago, the sector is second overall with an expected earnings growth rate of 12.7% in 2012. For the most part, hedge fund managers are placing bigger bets in the sector, with some of the largest funds boosting exposure to discretionary names.
John Griffin's Blue Ridge Capital was one buyer of discretionary stocks during the fourth quarter, picking up shares of Priceline.com (PCLN), Lowe's (LOW), Netflix (NFLX) and Sirius XM (SIRI), among others. Bill Ackman, on the other hand, dumped more than 21 million shares of Lowe's during the quarter, while Paul Tudor Jones was also a buyer of Sirius XM.John Paulson also made several best on discretionary names during the quarter, most notably taking a 15% stake in Delphi Automotive (DLPH) after the company's IPO in November. Paulson also bought shares of AMC Networks (AMCX), the cable network channel that produces hit shows like Mad Men and The Walking Dead. Meanwhile, Eton Park was one fund that cut its exposure to consumer discretionary in the fourth quarter. The fund trimmed its stake in stocks like Viacom (VIA.B), Comcast (CMCSA) and Dollar Tree (DLTR). Tom Steyer's Farallon Capital was also a seller of Viacom shares. His fund also completely sold out of stakes in Home Depot (HD), Expedia (EXPE) and CarMax (KMX). Similarly, Lee Ainslie's Maverick Capital took a hatchet to its discretionary holdings, selling completely out of Time Warner Cable (TWC), Viacom, Macy's (M), Kohl's (KSS) and DirecTV (DTV), among others. Eddie Lampert's RBS Partners cut stakes in AutoNation (AN), AutoZone (AZO) and even Sears Holdings (SHLD). George Soros was another big seller of discretionary stocks, slashing entire stakes in Amazon.com (AMZN), Ralph Lauren (RL), Comcast (CMCSA) and Priceline.com, among many others. Viking Global was also a seller of Amazon.com and Ralph Lauren. >>To see these stocks in action, visit the Consumer Discretionary Stocks Bought and Sold by Hedge Funds portfolio on Stockpickr.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV