U.S. Hedge Funds Favor IT and Healthcare, Eschew Financials and Media

Both institutional and retail investors share an enormous interest in where the largest hedge funds put their money. Hedge funds themselves also complete such assessments for competitor analysis. Therefore by analyzing recent 13f SEC filings as well as the S&P Capital IQ’s Holding Aggregator and Investor Profile Reports, we are able to get a unique level of visibility into the opaque world of hedge fund investment strategy. Our clients believe that making this type of information more widely available not only improves market transparency, it provides valuable information for investors who are looking to glean insight from some of the world’s most sophisticated investors.

Following is a summary of the findings from the Quarterly Hedge Fund Tracker report:

  • Information Technology & Healthcare Top Sector Buys; Financials Biggest Sell: Info Tech stayed at the top of the sector buys for the second quarter in a row with $1.45 billion, with Healthcare at second most popular sector for the top 10 hedge funds with $1.4 billion. Financials down $2.25 billion, with a decrease in American International Group $686 and Crown Castle International $272
  • Ackman Sparked Allergan Interest: Allergan Inc. was the top new buy among the largest 10 hedge funds with $1.43 billion in new positions, 6 funds holding it; 2 brand new funds bought the company, 2 increasing existing positions and 2 held their stake.  The company is being aggressively pursued by Valeant Pharmaceuticals Intl Inc. (VRX) and Pershing Square Capital Management LP for a takeover.
  • Apple Hotter Than Last Quarter:  Apple saw the second-highest level of new buying activity among hedge funds with $855 million in new buys in Q2. Last quarter it was the second top buy with $1.95 billion bought, but, also the second top sell with $871 million sold. This quarter, we see no such ambivalence. Also listing the top 100 positions for out top 10 hedge funds, Apple is at 2nd spot with a $7.2 billion overall holding. They also plan to open up the first store in UAE
  • Netflix 3rd Top Buy: consumer discretionary company Netflix had $752 worth of buys with 2 hedge funds making brand new positions in the company since last quarter. 6 hedge funds now hold the stock with a total value of $1.89 billion. Netflix places 21st in the top 100 positions. Its reported that 1 in 10 UK households now have a subscription to Netflix
  • Two Thumbs Down for Media Stocks: Twenty First Century Fox was most sold position among the Top 10 hedge funds with $1.26 billion sell off. This came from 5 of the top 10 hedge funds reducing their existing positions. Verizon and Time Warner are second and third biggest sell off with $1.06 billion and $992 respectively.
  • Top Funds: Citadel and Renaissance were the top two hedge funds in terms of total equity holdings, followed by Millennium Management which beat Icahn to 3rd spot.
  • Details of the Report: the quarterly S&P Capital IQ Hedge Fund Tracker is the only aggregate analysis of hedge fund stock ownership of its kind to spotlight trends of hedge fund investment in specific stocks and sectors.  The report uniquely looks at the top 10 pure play hedge funds that are making stock picks and aggregates the information to easier pick out the trends

Watch Pavle's interview on CNBC Europe and read more in the Wall Street Journal.

Source: S&P Capital IQ platform, August 26th 2014 

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