The top 50 hedge funds continue to increase their equity exposure in the fourth quarter of 2014
Research firm FactSet published a report focusing on fourth quarter hedge fund ownership data on Thursday, February 26th. FactSet vice president and senior earnings analyst John Butters highlights that Apple and Allergan were the top hedge fund holdings for the last three months of 2014.
Hedge Funds Increased Equity Exposure in Q4
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Butters notes that the 50 largest hedge funds increased their equity exposure by 1.0% in the fourth quarter of 2014. Of interest, the 50 largest hedge funds had the largest group holdings in the Information Technology (18.2%) and Consumer Discretionary (16.5%) sectors at the end of the fourth quarter. The largest funds added to positions in eight of the ten sectors, especially in the Health Care, Consumer Staples, and Industrials sectors. The only two sectors in which the hedge funds decreased exposure were the Consumer Discretionary and Telecom Services sectors.
The 50 largest funds had their largest holdings in the U.S. (85.4%) at the end of the fourth quarter. These largest funds increased their positions in 30 countries, particularly Canada, the U.S., and the UK. This quarter was the first time since the third quarter of 2013 that the U.S was not the leading nation in the largest increase in aggregate hedge fund exposure.
Top hedge fund holdings
The FactSet report also points out that Apple was still the largest holding of the aggregate hedge fund portfolio, representing over 1.7% of all equity holdings. Apple had the third highest number of hedge funds with a position in the company (24) at the end of the quarter, behind only Actavis (26) and Allergan (25). In fact, Apple was the largest position in seven of the 50 hedge funds at the end of the fourth quarter.
Allergan moved up from the third to the second largest holding of the aggregate portfolio, representing 1.4% of all equity holdings. Allergan represented the largest position in two of the 50 hedge funds as of the end of the year.
With a position in 26 of the 50 largest hedge funds, Actavis was the 7th largest holding in the aggregate portfolio, representing 0.9% of total equity holdings. Actavis was the largest position in just one of the 50 largest hedge funds at year-end 2014.
Of note, UK pharma firm Shire was the top purchase of the hedge funds in the fourth quarter. The market value of shares of Shire bought by hedge funds in 4Q was almost $1 billion more than the second place firm Zoetis.