S&P Global Intelligence: Hedge Funds Exit Consumer Discretionary Stocks

Aug 16 2017 | 11:19pm ET

Hedge funds broadly exited the consumer discretionary sector during the second quarter of 2017, according to the latest edition of S&P Global Market Intelligence’s Hedge Fund Tracker report, and also sold off healthcare and information technology stocks.

The report, which is based on information disclosed in the quarterly 13F regulatory filings of pure play hedge funds, provides an aggregate analysis of hedge fund equity ownership and highlights hedge fund investments in specific stocks and sectors.

The latest Tracker shows that AUM among pure-play funds dipped slightly by $3 billion to $154 billion, well above the $145 billion of Q3 2016. Meanwhile, the total number of equity positions fell to 423 in Q2 2017 from 427 in Q1 2017 as hedge funds made a significant exit from the consumer discretionary sector. 

S&P’s analysis found the funds sold some $3 billion in consumer discretionary equities in Q2, followed by $1.4 billion in healthcare and $1.1 billion in information technology. 

“Though overall equity holdings held relatively steady from Q1 to Q2, the investment mix shifted considerably among top hedge funds who were net sellers in 6 out of the 11 sectors of the S&P 500,” said Pavle Sabic, head of market development for S&P Global Market Intelligence, in a statement. “We also see a great deal of divergence in strategy among top funds, evidenced by the fact that Microsoft is both the most bought single stock among top funds and the third-most sold single stock among top funds.”

Top findings in S&P’s Q2 2017 Hedge Fund Tracker:

  • Top Funds Exit Consumer Discretionary: Hedge funds sold $3 billion in consumer discretionary stock in Q2, led by $1 billion in sales of Nike stock. The healthcare sector saw $1.4 billion in sales among top hedge funds and the information technology sector saw $1.1 billion in sales by large funds.
  • Microsoft Sparks Divergence: Within the technology sector, Facebook was the most-sold single stock with $1.5 billion in sales during Q2, followed by Microsoft ($1.5 billion), Apple ($1.2 billion), and Alphabet ($1.1 billion). However, Microsoft was also the top buy among large hedge funds, with $1.3 in new investment during the quarter.
  • Biggest Buys: Hedge funds bought 18.1 million shares of Microsoft stock in Q2, for a total investment of $1.3 billion. Other stocks receiving attention from hedge fund buyers were NXP Semiconductors ($1.2 billion), Baker Hughes ($1.1 billion), O’Reilly Automotive ($697 million), and Wells Fargo & Company ($659 million).
  • Biggest Sells: Hedge funds sold 9.8 million shares of Facebook stock in Q2, totaling $1.5 billion. Other stocks seeing the largest sell-off among hedge funds were Humana ($1.3 billion), Microsoft ($1.2 billion), Alphabet ($1.1 billion), and PayPal ($1.1 billion)

S&P Capital IQ meshed with S&P’s SNL division and rebranded as S&P Global Market Intelligence in February 2016. The firm is a provider of financial and industry data, research, news and analytics to investment professionals, government agencies, corporations, and universities worldwide. 

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