Hedge Funds Ownership Trends And Individual Fund Portfolios by Novus

Purpose Of The Hedge Funds Ownership Trends Report

For decades, investment professionals have considered hedge fund managers to be the “smart money” on Wall Street. Over the long term, hedge funds have tended to outperform traditional benchmarks on a risk-adjusted basis, so their reputation seems justified. Still, until recently, assessment of hedge fund trading in specific sectors and securities has been limited to a few select managers at a time, and less has been done to gauge the growing industry’s direction as a whole.

Recent advances in data collection and analytics coupled with deeper global public disclosure requirements allow for more robust study and monitoring of hedge fund managers’ positioning.

In this quarterly report, Novus shares developing trends in hedge fund equity holdings. You will find the most popular and highest-concentrated names in hedge funds and relate this to outperformance of the broader market as well as study the biggest drivers of returns for the industry.

One goal of our strategy analysis is to answer the question: “Do hedge funds consistently generate value investing in stocks that outperform the markets?” While multiple studies have concluded that funds generate little to no value over markets after fees, we find that alpha is in fact generated, especially among high conviction securities, but this value may later be lost to factors such as market exposure timing, trading, illiquidity, effects of crowding, and of course fees.

Background On Data

Governments around the globe require institutional and individual investors to file and disclose certain holding information for varying purposes. In the U.S., the SEC requires financial institutions to file Forms 13F, 13G and 13D. The Japanese 5% Shareholders filing requirement is similar to the 13G. Like American 10K, 20F and proxy filings, British Registers requirements reveal ownership positions. U.S. insider filings include Forms 3, 4, 5 and 144, and the U.K.’s Regulatory News Service (RNS) publishes insider holding information. Similar disclosure rules also exist in other major financial markets and provide public holdings information. Novus has aggregated, normalized and analyzed data from all of the aforementioned sources and many more to build the Novus Global Holding Database.

Furthermore, we have selected a highly representative group of hedge funds sourced from the Novus Database and constructed the Hedge Fund Universe (HFU), a non-investable portfolio available to clients for closer analysis via the Novus Platform. This portfolio is the basis for our study. The indices we discuss later in the study are subsets of HFU and are also non-investable.

For the purposes of this study, we limited our analysis to just the public long global equity positions disclosed by managers in HFU as well as those that most drove performance for 2013.

The reasoning for trades that we outline here is conjecture and based exclusively on public information. The Novus Public Ownership Database™ provides investors with comprehensive coverage of domestic and international filings for active investment managers. There are over 10,000 vetted institutions in our database, including over 5,000 hedge funds as well as long only managers. In addition to equities, options, fixed income securities and short positions disclosed in Europe and Asia are included in the database as well.

About Novus

Novus (www.novus.com) is the leading portfolio intelligence provider that’s designed to enable investors to consistently maximize their performance potential. We help our clients discover true investment acumen, learn from proprietary industry insights and manage all of their aggregate portfolio data to help them drive higher returns.

About The Novus Ownership Platform

The Novus Public Ownership Database provides comprehensive coverage of domestic and international filings for active managers. There are over 10,000 vetted institutions in our database, including hedge funds and long only managers, with data spanning over fifteen years. Besides equities, asset classes like options and fixed income securities are included as well as short positions disclosed in Europe and Asia.

The power of the Novus platform is in the analytics engine on top of this data store. We simulate portfolios based on ownership and market data and provide clients with deep insight into critical concepts. These tools help investors understand the manager before they ever meet with them, ultimately improving their odds of successful investment. Clients monitor and analyze existing managers through an analytics lens that helps them detect changes and red flags. Clients understand risks not detected by traditional methods such as crowding, factor exposures and style drift.

Key Features

  • Simulated PnL and attribution
  • Key statistics and portfolio attributes on every manager
  • Simulated risk and multifactor analysis
  • Category exposure breakdown by sector, market cap, position sizing, liquidity and more
  • Category attribution by sector, market-cap, position sizing, liquidity and more
  • Robust attribution frameworks like Brinson and Novus’ own proprietary Novus framework
  • Aggregated metrics and data covering the entire hedge fund industry and more…

Top 50 Securities Owned By Hedge Funds

Hedge funds ownership

Hedge funds ownership