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Hedge funds show appetite for Burger King/Tim Hortons merger

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The financial and industrials sectors saw the largest amount of hedge fund buying activity in Q4 2014, with Industrials always being a net buy throughout the calendar year. 

That’s according to S&P Capital IQ's latest Quarterly Hedge Fund Tracker, a review of 3F filings by pure play hedge funds during the fourth quarter of 2014, and the only aggregate analysis of hedge fund stock ownership of its kind to spotlight hedge fund trend-investments in specific stocks and sectors.  
“Our 2014 full year results offer some groundbreaking perspective on the trends hedge fund managers see unfolding in financials, industrials, healthcare and consumer discretionary stocks,” says Pavle Sabic, Financial Risk Manager, S&P Capital IQ. “By poring over SEC filings in this manner, we believe it is possible to offer valuable insights to the marketplace on where the world’s largest stock picking Hedge Funds are placing their own bets.”

Citadel and Millennium were the top two hedge funds in terms of total equity holdings, followed by Renaissance Technologies.

ast quarter’s top two buys – AbbVie and Actavis – were the top two sells in Q4, with a total of USD3.1 billion and USD1.3 billion sold off, respectively.  Overall, the Healthcare sector saw a USD2.3 billion sell-off in Q4.  Despite the sharp sell-off, some funds remained buyers of Actavis, with USD746 million of buys logged this quarter

Restaurant Brands International, the newly formed parent company of Burger King Worldwide and Tim Hortons was the top buy of the quarter with USD1.5 billion in buying volume among top funds.  The large majority of that was bought by Pershing Square Capital.

 The Financial sector saw the most buying activity among hedge funds throughout calendar year 2014; a total of USD4.2 billion in aggregate buys were made by top hedge funds in the sector throughout 2014. 
The Industrials sector has remained a net buy for the Hedge Fund Tracker’s top ten hedge funds throughout 2014. In Q4, specifically, Industrials were the 2nd top net buy with a value of USD3.1 billion.

In Q4, three hedge funds pulled out of Twentieth Century Fox completely with a total of USD888 million sold-off during the quarter; this is the second quarter in a row where significant sell-offs of the stock have been initiated by hedge funds.

Six of the top 10 pure play hedge funds in the Q4 Hedge Fund Tracker had fewer than 100 equity holdings in their portfolios through Q4. Pershing Square Capital had the fewest, placing all of its equity holdings into just 9 different stocks. 
S&P Capital IQ 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 are targeting.

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