S&P Global Market Intelligence’s latest Hedge Fund Tracker analysis shows hedge funds bought USD2.2 billion in financials sector stocks, USD1.8 billion in energy sector stocks, and USD1.7 billion in healthcare sector stocks in Q3.
In all, seven of the 11 sectors of the S&P 500 saw net buying among large hedge funds.
In total, the top funds managed approximately USD167 billion in equity holdings at the end of the quarter, up USD13 billion from Q2 2017.
The total number of equity positions held also increased to 463 in Q3, up from 423 in Q2, as hedge funds made significant buys in the financials, energy, and healthcare sectors.
The two most-sold stocks of the quarter were Microsoft (USD1.2 billion) and Symantec Corp. (USD944 million).
Hedge funds continue to be underweight in the utilities and telecoms sectors with stocks from those sectors accounting for less than 1 per cent of total portfolio weighting through Q3 2017. The consumer discretionary sector has the highest weighting in hedge fund equity portfolio with 20 per cent.
“While the macroeconomic and geopolitical tea leaves have been incredibly challenging to read this year, pure play hedge funds seem to agree that there is some upside to be had in the equity markets,” says Pavle Sabic (pictured), Head of Market Development, S&P Global Market Intelligence. “Total equity positions and total equity assets under management have increased in the third quarter at a pace we haven’t seen since 2015, suggesting a healthy appetite for stocks in the financials, energy, and healthcare sectors.”
S&P Global Market Intelligence analyses the latest quarterly 13F filings to determine the top ten largest hedge funds based on reported equity assets. Further analysis isolates the universe to pure-play hedge funds that focus on stock picks and hones that universe further to isolate the hedge funds that overweight their biggest investments by capping the number of stocks held at 100. S&P Global Market Intelligence performs this research quarterly in order to understand what the most prominent hedge funds are buying, holding and selling. The firm develops the analysis through an examination of both industry filings as well as Excel-based holding models, allowing clients to quickly spot global trends in asset category and understand what some of the largest investors buying, selling and holding.