Hedge funds moved into health care stocks and shifted out of info tech stocks in Q2, according to S&P Capital IQ’s latest quarterly hedge fund tracker.
Health care drove the bulk of hedge fund buying for the second straight quarter, with net buys of USD7.2 billion, up from USD4.8 billion in Q1. The sector now constitutes 26 per cent of the holdings for ten largest hedge funds.
In a sign that activist investing is alive and well, activist target Baxter International was a top buy in Q2. This stock now constitutes about 18 per cent of Dan Loeb’s Third Point portfolio.
“Between their growing use of activist investing strategies and the sheer volume of routine buying and selling activity they execute daily, the world’s largest hedge funds have become a significant factor in the equity markets,” says Pavle Sabic, Financial Risk Manager, S&P Capital IQ. “By regularly analyzing SEC filings in this manner, we are not only providing clues into investor sentiment, we are giving the marketplace an important reading on where market momentum may be headed.”
Valeant Pharmaceuticals saw USD1.7 billion of buys in the quarter, with USD1.5 billion coming from Paulson & Co and USD124 million coming from Viking Global Investors
AbbVie (USD1 billion), Allergan (USD805 million) and Humana (USD628 million) also saw significant buys, while Perrigo (USD651.1 million), Laboratory Corp (USD483 million), Cigna (USD402 million) and Aetna (USD353 million) were some of the top new positions.
Info tech was the most sold off sector, up to USD3.1 billion from the USD942 million in Q2, when it was also the most sold off. Baidu meanwhile, was most sold at USD1.3 billion, with Lone Pine selling out completely.
Apple (USD875 million), Micron (USD831 million), Alibaba (USD644 million), eBay (USD434 million) and Adobe (USD354 million) also saw their stock sold off.
Up overall, but still heavily sold off: consumer discretionary was second to health care in total buys overall at USD2.4 billion, yet several stocks in the sector were also some of the most sold off.
JD.com (USD1.8 billion), Netflix (USD1.4 billion), Amazon (USD1.3 billion) and Starwood (USD1.2 billion), were all bought, while Netflix (USD823 million), Time Warner Cable (USD751 million), 21st Century Fox (USD690 million), Houghton Mifflin (USD463 million), Ctrip.com (USD389 million), Michael Kors (USD635 million) and Liberty Global (USD475 million), were all sold.
