S&P Global Intelligence: Hedge Funds Sold Energy, Consumer Discretionary and Healthcare in Q4/16

Feb 17 2017 | 6:31pm ET

Hedge funds sold energy, consumer discretionary and healthcare stocks in 2016’s fourth quarter, while favoring financials and technology companies, according to the latest edition of the S&P Global Market Intelligence Hedge Fund Tracker.

The quarterly report is an analysis of Q4 13F filings made by pure-play hedge funds, and is designed to provide insights into hedge fund investments in specific stocks and sectors as well as the changes managers are making. 

The analysis shows the top funds managed, in aggregate, approximately $153 billion in equity holdings, a gain from the $145 billion in AUM logged in Q3/16. However, the total number of positions dropped from 424 to 420 over the same time span, suggesting the gain in AUM is more due to the year-end equity market rally. 

Summarizing the findings from S&P Market Intelligence’s Q4 report: 

  • Sell-Off in Energy, Consumer Discretionary, and Healthcare: Top funds dropped their holdings of energy (-$2.695 billion), consumer discretionary (-$2.333 billion), and healthcare (-$1.218 billion). Materials (-$568 million), utilities (-$361 million), and telecom services (-$119 million) were also sold off.
  • Amazon Was the Most-Sold Stock: Amazon (-$1.022 billion), The Williams Companies, Inc. (-$910 million), AB InBev (-$902 million), Teva Pharmaceuticals (-$875 million), and Allergan (-$786 million) were the most sold off among the top funds, reflecting decreases and exited positions
  • Financials, Info Tech Saw Buying Activity: Top funds increased their holdings of financials (+$1.221 billion), info tech (+$1.213 billion), and industrials (+$1.126 billion). Real estate (+$546 million) and consumer staples (+$499 million) were also bought
  • Dow, Deere, and Visa Among Most Bought Stocks: Dow Chemical (+1.239 billion), Deere & Company ($874 million), Visa (+$834 million), Bank of America ($752 million), and Walgreens Boots Alliance ($+705 million) were the most bought stocks for the top funds, reflecting increases and new positions
  • Viking Global Amasses Largest Equity Holdings Among Hedge Funds: The top hedge fund, as measured by equity assets, was Viking Global with about $24,149.6 billion, and it held 63 stocks. Meanwhile, Gardener Russo & Gardener held 93 positions and had $11,681.7 billion in assets under management.

S&P’s 13F analysis determines the top ten largest hedge funds based on reported equity assets, further isolates the universe to pure-play hedge funds that focus on stock picks, and then hones the group further to isolate which hedge funds that overweight their biggest investments by capping the number of stocks held at 100.  

“For the biggest hedge funds, Q4 was a little less volatile than previous quarters,” said Pavle Sabic, head of market development, S&P Global Market Intelligence. “There was another sell off in healthcare stocks, reflecting the overall uncertainty in that sector, and buys into financials, info tech, and industrials. But the overall amount of assets these funds manage didn’t change all that much. Perhaps they are in a ‘wait and see’ period as they attempt to gain a greater sense of where the markets are headed.”

S&P Global Market Intelligence was formed in February 2016 through the merger and rebranding of S&P’s Capital IQ and SNL divisions. The company is a unit of S&P Global and is a well-known provider of financial and industry data, research, news and analytics to investment professionals, government agencies, corporations, and universities worldwide.

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