StreetofWalls.com (SOW) recently released its 3Q 2011 "Hedge Fund Intelligence" report on the individual portfolio holdings of the top 23 Hedge Funds. The current report, whose basic inputs were drawn from SEC form 13-F filings, focuses on hedge fund positions at the start of 4Q 2011 and looks at meaningful changes from the previous quarter. As I previously said about SOWS's maiden 2Q 2011 study, this FREE 60-page Hedge Fund report allows you to know what stocks the top hedge funds are buying (and selling) and, thereby, allows you to invest like a pro.
Here's SOW's Quick Takeaways from the current report:
• As we saw last quarter Hedge Funds piled into Technology again as valuations exploded in the wake of high profile IPOs such as Pandora, Groupon, and LinkedIn. Berkshire made a very surprising entry into the technology sector buying new positions in IBM (57mn shares) and Intel (9mn shares). Other technology participants in the quarter included Third Point doubling their stake in Sandisk and Farallon Capital buying new positions in VSEA, NETL, and adding to MSFT.If you want more details, you can read and/or download the FULL REPORT as well as sign-up for the NEXT REPORT here.
• Energy was another sector that saw a lot of out performance and M&A activity during the quarter. On average our hedge fund universe increased allocation to this sector by 2.1% during 3Q. Funds most active in energy during the quarter included Appaloosa, Passport, Perry, Hayman, and Icahn.
• Hedge fund continued to pour out of Financials during the quarter, funds on average allocated 3.6% less to financials in 3Q. Financial stocks have massively underperformed the market due to pressure on Net Interest Margins due to low interest rates, large overhang on mortgage put-backs, capital issues regarding new Basel III rules, and continued litigation. We saw double digit declines in allocation from Appaloosa, Pershing Square, and Passport Capital. It is interesting to note that only 6 funds out of 23 we tracking increased allocation to Financials.
• 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, and Tiger all have AAPL as the largest position in their holdings. Other large crowded positions include AMZN, GOOG, NWSA, MSFT, and WFC.
• On average the funds listed below bought companies with a 2011 forward price to earnings ratio of 15.0x. Hayman and Pershing bought into the higher valuation stocks at 22.0x and 19.7x respectively while Maverick and Glenview bought into much lower valuations at 12.2x and 11.6x respectively. Short interest as a percentage of publicly traded floating shares was an average of 5.5% across the 23 funds. Coatue and Soros had the highest short interest with 11.2% and 9.4% while Berkshire and Tiger had the lowest with 3.1% and 3.1%. Owning stocks with high short interest is a sign of contrarian investing.