The latest Hedge Fund Tracker analysis from S&P Global Market Intelligence shows the top funds managed approximately USD150 billion in equity holdings, up from the USD141 billion under management in the first quarter.
These funds also decreased the number of positions to 399 in the second quarter from 408 in the second quarter, breaking last quarter’s record as the fewest stock positions held since S&P Global Market Intelligence began tracking this data in 2014. Information technology and healthcare sectors were the biggest net sells for the top ten hedge funds.
“Like other market participants, hedge funds were at the whim of the broader market and economy these last few months,” says Pavle Sabic, Head of Market Development, S&P Global Market Intelligence. “In the first quarter, we saw substantial net selling of nine out of ten S&P 500 sectors. Confidence improved somewhat in the second quarter, but only up to a point. We understand what the ‘smart money’ is buying and selling, but there’s no sense of direction.”
The 2016 Hedge Fund Tracker also found that top hedge funds now manage USD150 billion, up from USD141 billion in Q1, but still down from the USD159 billion seen in Q4 2015. The firm writes that part of this might be due to a market correction, but the number of positions decreased to 399 in Q2 from 408 in Q1, on top of a decline from Q4 2015’s 427 positions.
S&P also notes slightly more confidence compared to Q1’s selling of 9/10 sectors, things are a little better as 6/10 sectors are net buys in Q2. Consumer discretionary (+USD1.5 billion) and energy (+USD1.2 billion) lead the way. The firm writes that with consumer discretionary being the most bought sector in Q2, one stock stands out: Charter Communications with (USD1.2 billion) in buys. Four out of the top ten hedge funds bought shares of this consumer discretionary cables services company, in which three of the four hedge funds established new positions.
The five biggest buys besides Charter Communications from the top funds were Morgan Stanley (USD993 million), Adidas (USD921 million), Allergan (USD841 million), and Shire (USD821 million) while of the five biggest sells, as in Q1 2016, S&P comments, Apple stock was the most sold off amongst the biggest hedge funds with USD5.3 billion of its stock shed. Next came Netflix (USD1.9 billion), Allergan (USD1.5 billion), Microsoft (USD1.4 billion), and Alphabet (USD761 billion).
“To put hedge funds shedding USD5.3 billion of Apple in perspective, info tech as a whole saw net sell offs of USD6.3 billion. That’s about 84 per cent. This could be due to hedge funds trying to lock in gains for their investors as Apple had a rally in the last few months,” the firm writes.