"The significant sell-off in healthcare stocks this quarter may suggest that hedge funds were expecting former Secretary of State Hillary Clinton – who campaigned heavily on limiting drug prices and reinforcing healthcare reforms – to win the U.S. presidential election," said Pavle Sabic, Head of Market Development, S&P Global Market Intelligence. "More broadly, the trend in healthcare is illustrative of a much more concerted move by hedge funds out of equity holdings throughout 2016; it will be instructive to see how that approach evolves in the coming months."
Following is a summary of findings in the Q3 2016 Hedge Fund Tracker:
- Hedge Funds Exit Healthcare: The largest net sector sell-off among the top 10 largest hedge funds was healthcare, with $2.4 billion sold in Q3. The largest single stock sell-off among hedge funds this quarter was Allergan, with $1.5 billion sold by Icahn Capital, Viking Global and Third Point.
- Equity Holdings Down $50 Billion from Last Year: Eight of the 11 sectors of the S&P 500 were net sells among hedge funds in Q3, with total equity holdings among the largest funds having fallen roughly $50 billion from last year to $145 billion through Q3 2016.
- eBay Inc. Emerges as Top Buy: Although information technology was one of the third quarter's most sold-off sectors, eBay emerged as the largest single stock buy among hedge fund investors. A single fund, Lone Pine Capital, purchased $998 million in eBay stock over the course of the quarter.
- Five Biggest Buys: Besides eBay, the top funds bought Expedia ($807 million), LyondellBasell Industries ($732 million), Alibaba ($717 million), and Hilton ($620 million).
- Five Biggest Sells: The five biggest single stock sells among the top 10 hedge funds were Allergan ($1.5 billion), Microsoft Corp ($1.3 billion), Monsanto ($1.1 billion), Broadcom Ltd ($1 billion), The Priceline Group ($760 million)
- Changing of the Guard in Top 10 Funds: Paulson & Co. and Elliot Management have fallen off the list of top 10 largest pure play hedge funds by equity assets under management. They were replaced on this quarter's list by Soroban Capital and Gardner, Russo & Gardner.
S&P Global Market Intelligence analyzes 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. S&P Global Market Intelligence also provides rankings on approximately 1,100 equity and fixed income ETFs based on performance, risk and cost factors, including holdings-level analysis and expenses.
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Form 13F Reports are required to be filed within 45 days of the end of a calendar quarter by institutional investment managers with the U.S. Securities and Exchange Commission (SEC). An institutional investment manager is an entity that invests in, buys or sells securities for its own account, or a natural person or entity that exercises investment discretion over the account of any other natural person or entity. Only securities on the 13F list provided quarterly by the SEC (13F Securities) are required to be included in Form 13F Reports. Therefore, Form 13F Reports may not reflect the most current holdings of institutional investment managers because it is required that the 13F Report include only 13F Securities, is filed on a lag, and some funds may not meet the filing thresholds or other requirements. In addition, because the 13F Reports are as of the last date of the quarter, the 13F Report may not describe intra-quarter activity.
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SOURCE S&P Global Market Intelligence