Health Care Stocks Continue to Dominate Hedge Fund Buys for Second Straight Quarter in S&P Capital IQ® Quarterly Hedge Fund Tracker
Activist Target Baxter International Becomes Top Buy in Q2
New York, NY – August 19, 2015 -- S&P Capital IQ®, a leading provider of multi-asset class research data and insights, today released its review of Q2 2015 13F filings by pure play hedge funds. The quarterly S&P Capital IQ Hedge Fund Tracker is an aggregate analysis of hedge fund stock ownership that spotlights hedge fund investments in specific stocks and sectors. As a complement to the quarterly report, S&P Capital IQ also produced a Trends & Ideas research note which calls out ETFs that give investors exposure to hedge fund buying and selling trends.
The Q2 Hedge Fund Tracker analysis finds that the health care sector has continued to drive bulk of buying among the largest pure play hedge fund managers for the second straight quarter, with net buys of $7.2 billion in the quarter, up from $4.8 billion in Q1. The largest single stock purchase during the quarter was Baxter International, Inc., which saw $1.9 billion in overall buying in Q2. All of this came from a single fund, Third Point, which disclosed its activist stance on Baxter this August. The single stock now accounts for 18% of Third Point’s total stock portfolio.
“Between their growing use of activist investing strategies and the sheer volume of routine buying and selling activity they execute daily, the world’s largest hedge funds have become a significant factor in the equity markets,” said Pavle Sabic, Financial Risk Manager, S&P Capital IQ. “By regularly analyzing SEC filings in this manner, we are not only providing clues into investor sentiment, we are giving the marketplace an important reading on where market momentum may be headed.”
Based on these trends among hedge fund managers, S&P Capital IQ also produced a Trends & Ideas research note which names specific ETFs that are weighted toward the stocks named in the 2015 Q2 Hedge Fund Tracker. The research points out that a number of ETFs, including the Global X Guru ETF (GURU), the Global X Guru Activist ETF (ACTX) and the AlphaClone Alternative Alpha (ALFA), are accessible investment vehicles through which individual investors can participate in the hedge fund trends identified in the S&P Capital IQ 2015 Q2 Hedge Fund Tracker.
“For investors looking to tap into some of the same trends the world’s largest hedge funds are helping to drive, many ETFs provide an accessible, liquid outlet,” said Todd Rosenbluth, S&P Capital IQ Director of ETF Research. “While it is not realistic that an individual investor would be able to mimic the strategy of a hedge fund, a number of ETFs do model themselves on hedge fund buying and selling patterns, giving investors a unique opportunity to follow the so-called ‘smart money’.”
Following is a summary of findings in the Q2 2015 Hedge Fund Tracker and the Trends & Ideas ETF research note:
- Health Care Drives Hedge Fund Buying for 2nd Straight Quarter: The health care sector accounted for $7.2 billion in aggregate buying among the top 10 hedge funds this quarter, up from $4.8 billion in Q1.
- Activist Interest in Baxter Playing a Role in Results: Baxter International, Inc. was the most purchased stock among hedge funds with a total of $1.9 billion initiated by a single fund, Third Point, which announced plans this month to seek two seats on the pharmaceutical company’s board.
- Infotech Sell-Off: The information technology sector saw the highest amount of selling among hedge funds with a total sell-off of $3.1 billion in Q2. This was the second consecutive quarter that information technology led hedge fund selling, with Baidu earning the distinction of most-sold single stock. A total of $1.3 billion in Baidu stock was sold in Q2.
- Notable New Positions and Sell-Offs: Amazon and Rolls Royce saw notable new positions taken by large funds, with Viking and Tiger Global collectively taking a $1.3 billion stake in Amazon and ValueAct taking a $1.2 billion new position in Rolls Royce. Significant exits were made in Baidu, Apple, Micron Technology, Inc. during Q2.
- ETFs that Mirror Top Hedge Fund Trends: A number of ETFs, such as those from Global X, AlphaClone and IndexIQ provide exposure to many of the trends noted in the Q2 Hedge Fund Tracker report.
S&P Capital IQ analyzes the latest quarterly 13F filings to determine the top ten largest hedge funds based on reported equity assets. Further analysis isolates the universe to pure-play hedge funds that focus on stock picks and hones that universe further to isolate the hedge funds that overweight their biggest bets by capping the number of stocks held at 100. S&P Capital IQ performs this research quarterly in order to understand what the most prominent hedge funds are buying, holding and selling. The firm develops the analysis through an examination of both industry filings as well as Excel-based holding models, allowing clients to quickly spot global trends in asset category and understand what some of the largest investors buying, selling and holding.
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Form 13F Reports are required to be filed within 45 days of the end of a calendar quarter by institutional investment managers with the U.S. Securities and Exchange Commission (SEC). An institutional investment manager is an entity that invests in, buys or sells securities for its own account, or a natural person or entity that exercises investment discretion over the account of any other natural person or entity. Only securities on the 13F list provided quarterly by the SEC (13F Securities) are required to be included in Form 13F Reports. Therefore, Form 13F Reports may not reflect the most current holdings of institutional investment managers because it is required that the 13F Report include only 13F Securities, is filed on a lag, and some funds may not meet the filing thresholds or other requirements. In addition, because the 13F Reports are as of the last date of the quarter, the 13F Report may not describe intra-quarter activity.
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