Aussie funds exposed to the Meta rout: Charts of the Week
Strategies run by Magellan, Hyperion and Lakehouse are among those caught up in the Meta selloff.
Mentioned: Lakehouse Global Growth Fund (42097), Hyperion Global Growth Companies B (42173), Global X FANG+ ETF (FANG), Montaka Global Extension ETF (MKAX), Orca Global Disruption (44015), Magellan High Conviction - A (19878), DSM Global Growth Equity Fd Retail (40761), Munro Global Growth (41439), Antipodes Global Fund - Class P (5667), Platinum International Brands Fund (6643), Platinum International Technology (6644), Loftus Peak Global Disruption (8425), Amazon.com Inc (AMZN), BetaShares Global Sstnbty Ldrs ETF (ETHI), Meta Platforms Inc (META), iShares S&P 500 ETF (IVV), BetaShares NASDAQ 100 ETF (NDQ)
Overweight stakes in Facebook owner Meta Platforms have hit a string of Australian managed funds and popular index-tracking exchange traded funds (ETFs) after the social media company suffered the biggest one-day loss of market capitalisation in US company history, adding to the new year woes faced by growth investors.
Meta, the parent company of Facebook, dropped 26% last Thursday after reporting mixed fourth-quarter earnings. That shaved more than US$200 billion off Meta’s (FB) market value—an amount greater than the entire market valuation for McDonald's.
Local funds wrongfooted include Magellan’s High Conviction Fund and growth funds from Hyperion, Lakehouse and DSM Capital. Index investors were not spared. The ETFS FANG+ ETF (ASX: FANG) and the BetaShares Nasdaq 100 ETF (ASX: NDQ), popular among investors looking for exposure to US technology, were also among the top ten Australian equity funds with stakes in Meta according to Morningstar data.
Magellan’s High Conviction Fund ranked second with a 12% weighting to Meta Platforms as of 30 June. Hyperion’s bronze-rated Global Growth Companies exposure sat at 5.76% as of 31 December, with Lakehouse and DSM at 6.4% and 6.8%, respectively.
A spokesperson for Magellan said the High Conviction fund had reduced its position since data was last disclosed in June. As of December, the company ranks among the top five of the fund’s 8-12 stocks. Netflix, down 31.3% this year, is also a top five holding.
Active managers on the list have bet big on Meta, building stakes in the company several times larger than in the broad-market S&P 500 index. Between January and December 2021, Meta's position in Hyperion Global Growth Companies grew from 3.75% of the portfolio to 5.76%.
The iShares S&P 500 ETF (ASX: IVV) had a 1.9% weighting in Meta as of 31 December, for comparison.
Other large global equity managers caught up in the selloff include Platinum and Antipodes. The $3 billion Antipodes Global Fund had a 3% stake in Meta, making it a top five holding. Platinum’s International Technology and International Brands funds, with combined assets of over $800 million, similarly reported Meta as a top five holding.
Meta’s slump follows a torrid January for technology and growth stocks. Investors pivoted from the interest-rate sensitive stocks amid forecasts the US Federal Reserve could hike rates as many as seven times this year.
The Nasdaq Composite is down 10% year-to-date and the Morningstar Growth Index, which tracks US growth stocks, fell 11.3% in January.
Outsized bets on technology and growth names soured January performance for funds on the list. All ten funds are in the red for January, down between 3% and 10%.
Many sustainable funds dodged the fall at Meta. Some ESG-conscious funds have excluded Meta due to its history of privacy violations. The BetaShares Global Sustainability Leaders ETF (ASX: ETHI), Australia’s largest global equity ethical fund, dumped Facebook in 2017 over data breaches.
Meta Platforms is trading in a range Morningstar considers to be fairly valued, last closing at US$237. This represents a 41% discount to Morningstar's fair value of US$400.
Amazon rides (some of the way) to the rescue
For several funds on the list, losses from Meta were mitigated by positions in Amazon.com, which notched its best one-day rally since 2015 last Friday.
Amazon (AMZN) shares closed 13.5% higher last week after the company announced it would raise prices for its popular Prime subscription service amid strong earnings boosted by its cloud computing division and its stake in electric vehicle maker Rivian.
But the rally in Amazon stock only partially reverses a longer-running decline in the company’s share price. Amazon is down 3% year to date after Friday’s rally, having fallen steadily since a peak in November.
Hyperion Global Growth Companies, Lakehouse Global Growth, the BetaShares Nasdaq 100 ETF and the ETFS FANG+ ETF numbered among the top ten local funds with stakes in Amazon.com, helping offset losses from poor performance at Meta.
Holdings varied between 6.8% and 9% of the portfolios, compared to 3% for the iShares S&P 500 ETF.
Other funds with large stakes in Amazon along with Meta included Loftus Peak Global Disruption, Montaka Global Extension ETF (ASX: MKAX) and Orca Global Disruption Fund.
The $1 billion plus Munro Global Growth fund was one of a few outfits to hold a sizable position in Amazon.com, but not Meta.
Amazon.com is trading in a range Morningstar considers to be fairly valued, last closing at US$3,152. This represents a 23% discount to Morningstar's fair value of US$4,100.