The quarterly Super Investor Insight publication tracks the activity of an elite group of value-oriented hedge-fund managers, based on their holdings as filed in Forms 13F with the SEC.
Super Investor Insight, which is the sister publication of the highly informative Value Investor Insight, tracks the top holdings and buy/sell activity of value hedge fund managers such as Bill Ackman, Lee Cooperman, David Einhorn, Glenn Greenberg, John Griffin, Carl Icahn, Seth Klarman, Daniel Loeb, Stephen Mandel, John Paulson, David Tepper, Jeffrey Ubben and many more.
And while it’s never a good idea to blindly follow these investors into positions, it is always interesting to note the stocks these Superinvestors are buying as a starting point for further research.
The following is based on data published in the June 6 issue of Super Investor Insight, which aggregates forms 13F filed with the Securities and Exchange Commission for holdings as of March 31, 2016.
What are value hedge funds buying
The sector that saw the most prominent buying by Superinvestors during the first quarter was Tech.
A trend seems to have developed over the past few years where, if markets suddenly become rocky, hedge funds charge into high-profile Tech names as a default safe haven.
This was exemplified in the first quarter as ten hedge funds initiated or added to positions in Google’s parent Alphabet making it the most popular buy of the quarter. Facebook follow closely with seven funds initiating or adding to positions. Allegan, Liberty Global, and Pfizer followed with six funds all initiating or adding to positions in these companies.
Lowe’s and Gaming & Leisure Properties were the only stocks in the list of top buys for the quarter where all the portfolio movements were new positions. Southwestern Energy saw the largest increase in the number of funds holding a position in the company with a 218% change in shares owned by all funds.
The most significant brand-new positions established by individual Superinvestors during the first quarter supported the wider swing towards Tech. Viking, Berkshire Hathaway and Third Point built the largest new positions of the quarter in Facebook, Apple and Alphabet respectively, as shown in the table below.
As Superinvestors added to Tech holdings during the first quarter, they were selling off stakes in pharmaceutical companies Valeant and Allegan in an attempt to limit losses as the shares plunged.
Of the nine Superinvestors owning shares in Valeant at the beginning of the first quarter, six were sellers, five of whom exited their positions entirely. Pershing Square Capital, added to its stake, while two brave souls, Appaloosa Management and Corvex Management, established modest new positions. 16 investors sold down all got divested positions in Allegan during the quarter. Priceline and Walgreens Boots were sold at the fastest clips.