Where Hedge Funds Are Allocating Their Investments

 |  Includes: AAPL, BP, C, CCI, CSCO, FB, PG
by: David I. Templeton, CFA

Broadly, hedge funds have mostly trailed their market benchmarks; however, investors may find interest in tracking changes in positions and sectors for the hedge fund group. Investors should keep in mind that hedge fund positions are reported once a quarter and the report can be as late as 45 days following a quarter. Consequently, a fund's report may not be reflective of the fund's current allocations.

A recent Factset report notes changes in hedge fund positions and sector allocations in the second quarter. Highlights from the report:

  • The fifty largest hedge funds increased their equity exposure by 3% and forty five of the fifty managers showed an increase in equity assets in Q2 2012.
  • Apple (NASDAQ:AAPL) was present in the majority of fund portfolios and was the top holding of 24% of the 50 hedge fund companies.
  • Hedge fund companies were most active in increasing their allocations to Procter & Gamble (NYSE:PG) and BP PLC (NYSE:BP) in Q2 2012.
  • Citigroup (NYSE:C) experienced the largest equity outflows, but, relative to starting portfolio values, Cisco (NASDAQ:CSCO) and Crown Castle International (NYSE:CCI) experienced larger declines (-29.5% and -24.3%, respectively).

  • Facebook (NASDAQ:FB) marked the largest new position over the quarter, but its ending weight in the aggregate portfolio amounted to less than 0.1%.

From a country and sector perspective, the U.S. market attracted the most interest. Energy, technology and staples were the favored sectors.

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From The Blog of HORAN Capital Advisors
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Hedge Fund Ownership: Quarterly Highlights, Q2 2012
By: Michael Amenta, Research Analyst
August 22, 2012

Disclosure: Our firm is long PG