Hedge funds exit energy, consumer discretionary, and healthcare in Q4
This quarter’s Hedge Fund Tracker shows that the top funds managed approximately $153 billion in equity holdings, up from the $145 billion under management in Q3 and $150 billion in Q2. This is likely due to the equity market rally seen after Trump won the presidential election, as the change in positions has been negligible at 420 this quarter versus 424 in Q3.
However, this is the first quarter since Q3 2015 that we’ve seen three sectors with net buys over $1 billion. Financials led with $1.22 billion, followed by info tech at $1.21 billion, and industrials at $1.1 billion. It’s possible to deduce that these sectors are seeing more buying activity due to President Trump’s proposed plans for deregulation, repatriation tax, and infrastructure investment. Overall, five of the 11 S&P 500 sectors were net buys, up from three sectors in the previous quarter.
Topping the list of net sells was the energy sector at $2.7 billion, followed by the consumer discretionary sector at $2.3 billion. This quarter last year, energy was the top buy at $1.5 billion, which could suggest that Trump’s proposed environmental plans could be causing hedge funds to move away from the sector entirely.
Following is a summary of findings in the Q4 2016 Hedge Fund Tracker:
- Sell-off in energy, consumer discretionary, and healthcare: Top funds dropped their holdings of energy (-$2.695 billion), consumer discretionary (-$2.333 billion), and healthcare (-$1.218 billion). Materials (-$568 million), utilities (-$361 million), and telecom services (-$119 million) were also sold off.
- Amazon is most sold stock: Amazon (-$1.022 billion), The Williams Companies, Inc. (-$910 million), AB InBev (-$902 million), Teva Pharmaceuticals (-$875 million), and Allergan (-$786 million) were the most sold off among the top funds, reflecting decreases and exited positions.
- Financials, info tech see buying activity: Top funds increased their holdings of financials (+$1.221 billion), info tech (+$1.213 billion), and industrials (+$1.126 billion). Real estate (+$546 million) and consumer staples (+$499 million) were also bought.
- Dow, Deere, and Visa among most bought stocks: Dow Chemical (+1.239 billion), Deere & Company ($874 million), Visa (+$834 million), Bank of America ($752 million), and Walgreens Boots Alliance ($+705 million) were the most bought stocks for the top funds, reflecting increases and new positions.
- Increase in AUM: Top funds managed about $153 billion, up about $8 billion from Q3, but this is most likely due to an equity rally.
- Viking Global amasses largest equity holdings among hedge funds: The top hedge fund, as measured by equity assets, was Viking Global with about $24,149.6 billion, and it held 63 stocks. Meanwhile, Gardener Russo & Gardener held 93 positions and had $11,681.7 billion in assets under management.
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.