Investing
You’re Not Going to Believe How Much Jamie Sterne’s Skye Global Management Has in Amazon (AMZN), Microsoft (MSFT) and General Electric (GE)
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DIY investors love to ask this question: How many stocks should I hold in my portfolio? Google the question, and you’ll find hundreds of answers. Focused. Diversified. It’s hard to know what the best move is.
Consider billionaire hedge fund investors like Chris Hohn of TCI Fund Management and Dan Loeb’s Third Point LLC.
The former has $42.41 billion invested in just 10 stocks, while the latter has $7.44 billion invested in 43 stocks, considerably less per stock. Both have delivered for their investors in the past.
In 2016, Jamie Sterne, a former Third Point LLC analyst, raised $75 million from investors, establishing Skye Global Management at the age of 28. Nine years later, Skye has invested $4.8 billion across 47 holdings.
But here’s the thing.
While the average is $102 million per stock, Skye’s largest three positions account for nearly 63% of its assets. And you won’t believe what the hedge fund’s largest position is and how much it owns of the company.
Key Points About This Article:
- Skye Global Management founder Jamie Sterne has ridden Amazon (NASDAQ:AMZN) to significant returns.
- Although the e-commerce giant accounts for over half its portfolio, others such as Microsoft (NASDAQ:MSFT) and GE (NYSE:GE) also have contributed to its success.
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The Second Largest Holding Is a No Brainer
As of Dec. 31, Skye Global owned 672,000 shares of Microsoft (NASDAQ:MSFT), accounting for 5.90% of the hedge fund’s portfolio. Sterne first acquired MSFT stock in Q4 2017.
WhaleWisdom.com estimates that the hedge fund manager paid an average of $242.24 a share, so despite the tech giant losing 8% of its value over the past year, Skye Global’s still sitting on a comfortable gain.
I don’t think it’s a stretch to understand why Microsoft is a major part of Sterne’s portfolio. When he started the hedge fund in 2016, the software company co-founded by Bill Gates had $33.33 billion in operating cash flow. In the 12 months ended Dec. 31, it was $125.58 billion, nearly four times greater than it had been in less than a decade.
Virtually every portfolio manager with significant assets invested, especially those focused on large-cap stocks, owns Microsoft. It’s an inevitability.
However, just because Sterne’s owned MSFT for 8+ years, doesn’t mean he hasn’t bought in and out of the stock. In Q1 2024, Skye Global sold 420,000 shares of its stock, reducing its weight in the portfolio by 520 basis points to 8.76%.
The hedge fund sold MSFT stock in the first three quarters of 2024. However, in the final quarter of 2024, it bought 78,000 shares, which would suggest Sterne felt the shares were good value at some point between September and December.
Good Old General Electric
Skye Global has owned GE Aerospace (NYSE:GE) shares since Q3 2023. WhaleWisdom.com says the average time held for the hedge fund’s top 10 holdings is 7.6 quarters, so GE is approaching Skye Global’s average.
The average price paid for GE shares is estimated to be $102.59. However, the aerospace company’s shares have appreciated by nearly double that amount in less than two years, which I consider a win.
GE CEO Larry Culp’s work generating shareholder value for the legacy industrial conglomerate is well documented, so I won’t get into that. Rarely has an American chief executive been so successful at turning a situation from very bad to very good in less than seven years, but that’s what he’s done.
And for that, he’s been richly compensated. In 2024, including vested stock awards, he received a total compensation of $285 million. Rarely does a CEO earn a pass for this type of pay package. I’m sure Sterne would agree it was worth it in this scenario.
Skye Global Sells Nearly 600,000 Shares
Despite selling 594,169 shares of Amazon (NASDAQ:AMZN) in the fourth quarter, Skye Global finished the year with 11.32 million shares in Seattle’s finest, valuing its holdings at $2.48 billion, or 51.79% of the hedge fund’s assets.
Sterne’s hedge fund first acquired Amazon stock in Q4 2017, paying an estimated average price of $149.90 per share. However, as mentioned, hedge funds tend to move in and out of long-held positions, so Skye Global’s gains are likely higher than they might appear to be based on its current share price.
When you’re talking about a company that’s grown its operating cash flow by 30.1% annually on a compounded basis, it’s hard to argue with the level of concentration Sterne’s applied to its largest holding.
Even as far back as Q4 2017, when the hedge fund first bought Amazon shares, the company was Skye Global’s third-largest holding at $27.2 million.
Boy, have things changed for the better if you’re a long-time investor in Skye Global’s hedge fund.
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