Hedge Funds Flee Equities in First Quarter, S&P Global Market Intelligence Quarterly Hedge Fund Tracker Finds

Apple, PepsiCo, Amazon, Priceline and Walgreen Boots Alliance Are Most Sold-Off Stocks Among Large Hedge Funds

May 18, 2016 / 10:00 AM
New York

S&P Global Market Intelligence, a leading provider of multi-asset class research data and insights, today released its review of  Q1 2016 13F filings by pure play hedge funds.  The quarterly S&P Global Market Intelligence Hedge Fund Tracker is an aggregate analysis of hedge fund equity ownership that highlights hedge fund investments in specific stocks and sectors.  As a complement to the quarterly report, S&P Global Market Intelligence also produced a Trends & Ideas research note, which lists ETFs that may offer investors exposure to hedge fund buying and selling trends.

The Q1 Hedge Fund Tracker analysis finds that the top 10 hedge funds were severely impacted by U.S. stock market performance in Q1.  In total, the top funds managed approximately $141 billion in equity holdings in Q1, down over $18 billion from Q4 2015.  The funds also decreased the total number of stock positions held from 427 to 408, the fewest stock positions held since S&P Global Market Intelligence began tracking this data in 2014.  Consumer discretionary and information technology stocks led the sell-off, with Apple ranking as the most sold-off individual stocks of the quarter.  The highest volume of buying occurred in in Facebook stock, with a total of $2.3 billion in buys among top funds in the first quarter.

“Many of the trends unfolding in the broad economy are magnified when viewed through the lens of the hedge fund microcosm,” said Pavle Sabic, Head of Market Development, S&P Global Market Intelligence. “Research has shown that buying and selling patterns among hedge funds are closely correlated to subsequent stock market performance, making this quarterly snapshot of hedge fund activity an incredibly useful benchmark for further investment analysis.”

Based on these trends among hedge fund managers, S&P Global Market Intelligence also produced a Trends & Ideas research note, which names specific ETFs that are weighted toward the stocks named in the 2016 Q1 Hedge Fund Tracker. 

“While some investors may want to use this analysis to spot securities that are in and out favor by hedge fund managers, others may want the diversification benefits and liquidity that ETFs provide,” said Todd Rosenbluth, S&P Global Market Intelligence Director of ETF Research.  “There are a number of ETFs that emulate a hedge fund strategy.”

Rosenbluth’s research highlights ETFs such as Global X Guru (GURU) and IQ Hedge Alternative (QAI).

Following is a summary of findings in the Q1 2016 Hedge Fund Tracker:

  • Hedge Funds Sell Off Equity Stakes: Hedge funds have sold off significant portions of their total equity holdings, shedding over $18 billion in total equity positions from Q4 2015 to Q1 2016.  This is the second consecutive quarterly equity sell off among large funds, with the total number of equity positions held falling to just 408 stocks, the lowest level seen in two years.
  • Apple Leads Most-Sold Stocks: The top 5 sells among hedge funds were Apple ($5.4 billion), PepsiCo ($1.8 billion), Amazon ($1.4 billion), Priceline ($1 billion), and Walgreen Boots Alliance ($1 billion).  On a sector basis, the largest concentration of selling occurred in the consumer discretionary and technology sectors.
  • Five Most-Bought Stocks: The top 5 buys among hedge funds were Facebook ($2.3 billion), Broadcom ($1.5 billion), Alphabet ($945 billion), Eli Lilly ($892 million), and Willis Towers Watson ($884 million).

S&P Global Market Intelligence 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 investments by capping the number of stocks held at 100.  S&P Global Market Intelligence 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.

S&P Global Market Intelligence also provides rankings on approximately 1,100 equity and fixed income ETFs based on performance, risk and cost factors, including holdings-level analysis and expenses.

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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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