The Securities and Exchange Commission requires hedge funds to submit quarterly disclosures of their holdings, and it can be interesting to see what stocks ultra-rich investors have been buying or selling.
WalletHub recently issued a report analyzing the filings from more than 400 of the largest hedge funds, and determined which stocks hedge funds bought most during the second quarter of 2017.
Here’s what stocks hedge funds are buying in 2017
In descending order, the 10 stocks that hedge funds bought the most of during the second quarter are:
DATA SOURCE: WALLETHUB.
You’ll notice that the list is very tech-heavy, which shouldn’t as too much of a surprise. After all, tech stocks such as Oracle, Netflix, Alphabet, and Microsoft have lots of momentum right now and have been handily beating expectations.
“The surge in the popularity of tech stocks among investors is mainly attributable to the fact that the world’s population is becoming increasingly reliant on technological advances,” WalletHub analyst Jill Gonzalez says.
“Investors also realize that a longer-term boom in the market may come from new developments in science and technology.”
As for the most bought stock on the list, many industry experts (and billionaires) have come out and said that Amazon.com may still have lots of room to grow, so it makes sense that other rich investors would be loading up on the company’s stock.
What stocks are hedge funds selling?
On the other hand, there are some stocks that hedge funds are unloading. Here are the five most-sold stocks by hedge funds during the second quarter, listed from most-sold to least.
DATA SOURCE: WALLETHUB.
Of the most-sold stocks, Apple is the one that stands out the most to me. This could represent some profit-taking, as Apple is up 45% over the past year. Plus, Apple is the single largest stock holding among hedge funds, as a group, so there was more of it to sell than other names.
However many experts still consider Apple to be cheap and say there is major potential as the company’s upcoming product cycle is released in the next few months, so I was somewhat surprised by the high level of selling, especially in the months before the iPhone 8 is revealed.
How to use this information
To be clear, I don’t advise that you buy or sell any stock just because billionaires are doing it. For one thing, from the information in SEC filings, we have no idea why these stocks were heavily bought or sold.
Instead, this information can be used as a starting point when doing your own investment research. For example, hedge funds are loading up on Amazon.com, so it may be worth taking a closer look to see if you think the stock looks attractive right now, or if it fits into your investment strategy.
— Matthew Frankel
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Source: Motley Fool