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.”
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 selloff 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).
See Pavle Sabic speak about Q1 2016 hedge fund activity on CNBC.
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.”
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.