The 13f report is a quarterly report of the holdings for all institutional money managers who hold more than 100 million dollars. This report will show the top positions for all of the top funds in the United States. Funds are required by the SEC to submit their portfolio holdings 45 days after the last day in the quarter.
In an echo chamber, the 13f report can show you the intricacies of a fund’s positions and how money has flowed between positions, whether it be moving out of a blue chip and into a micro cap, or vise versa. As I have mentioned before, the vast majority of hedge funds massively underperform the market. So if you are thinking you will take this information and try to replicate your favorite fund, be warned, this is most likely a losing game.
However, analyzing the data pulling all funds together to see the most popular top 10 holdings for all hedge funds uncovers an interesting pattern. The largest amount of filers matches almost exactly with the top holdings by position size for the S&P Index. This leads to two very important points;
- The top positions in the S&P will continue to have large scale investment inflows for the foreseeable future.
- Replicating a hedge fund portfolio using an aggregation of data can help you massively outperform the market.
As I have previously noted, the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) make up a large concentration in the S&P index. Form 13f data analysis shows us the same exact distribution (aside from Netflix). There are negligible differences here and there but some quick portfolio analysis of the 13f vs the top 10 S&P positions will serve to yield closely similar results.
The takeaway here is to invest in leadership, follow the money- and when I say Money, I mean follow the institutions that wield the most- aka Institutional Investors. This is where you will find the most profitable allocations for your own portfolio.