There is always a big to-do whenever the latest SEC Form 13F filings become available. Hedge fund journalists, in particular, enjoy digging in to see what securities the big names have bought or sold over the preceding quarter. Tracking the changes in a manager’s portfolio holdings can give an indication of what those managers think about the companies whose shares they own, or other holdings like gold, which a fund might own through exchange-traded fund shares.
However as a true hedge fund sentiment indicator, the 13F makes for an imperfect proxy, at best. It includes no information about short positions, nor does it allow for tracking of portfolio moves over the course of a quarter. There’s only an aggregate numberâ€”the total market value of the individual equity securitiesâ€”for each of the securities at quarter-end.
That’s a pretty big caveat, which isn’t meant to take anything away from the analysis done by Street of Walls. They blasted out their Q4 2011 analysis of hedge fund holdings based on 13F filings. The entire report is embedded below, but for highlight purposes, here’s what they found:
- The most crowded new ideas during the quarter were DLPH, LMCA, and GLD. Other new positions shared among hedge funds but with less overlap were ORCL, VRUS, QCOM, YHOO, URI, TXN, WFC, and GOOG.
- Fund managers are adding exposure back into Financials and Healthcare after huge declines the last several quarters. Government reimbursement risks associated with the Healthcare sector and low rates and mortgage related put-back problems in Financials may have led managers to trim and exit positions within the space over 2Q11 and 3Q11 and re-enter under attractive valuations in 4Q11.
- We found a majority of hedge funds largest positions were shared amongst the hedge funds in our universe. AAPL was by far the most crowded position in the top 8 holdings for hedge funds: Greenlight, Lone Pine, Blue Ridge, Coatue, and Tiger all have AAPL as the largest position in their holdings. Other large crowded positions include GOOG, QCOM, LMCA, and AMT.
- On average the funds listed below bought companies with a 2011 forward price to earnings ratio of 18.6x. Appaloosa and Baupost bought into the higher valuation stocks at 47.4x and 28.6x respectively while Glenview and Greenlight bought into much lower valuations at 13.4x and 14.1x respectively.