Top Funds' Activity in Q3 2018

Leo Kolivakis  |

Arie Shapiro reports, Which Hedge Funds Got ‘Whale Rocked’ in October?:

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For example, while the great money manager Stanley Druckenmiller (see interview at end of comment) was surprised big pharmaceutical shares took off in Q2 and have done well, I wasn't because it's all part of my macro thesis which I laid out at the beginning of year, namely, return to stability. And since the summer, I told my readers to get defensive and stay defensive.

What else did I notice? The ferocity of the moves lately is unbelievable which makes it very tough for large funds to trade in this environment. Large cap stocks are swinging like small cap stocks, it's crazy out there and I know, I'm on markets every single day looking at these wild gyrations.

Let's begin analyzing what top funds bought and sold in Q3 with some more articles. Svea Herbst-Bayliss and David Randall of Reuters report, Prominent managers loaded up on Apple before recent tumble:


The focus is always on FANG stocks. Reading this article, I can tell you Jana Partners and Third Point did a wise move shedding Facebook (FB) last quarter (click on image):

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On Apple, I said as long as it holds above its 50-week moving average, I'd be long despite the October selloff and negative weekly MACD (click on image):

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Still, I expect a slowing global economy next year with high possibility of a recession, so it's hard for me to be all excited about Apple from a fundamental point but if you notice, the company is moving aggressively into entertainment and other financial ventures which is positive.

All this to say, if I had a choice between owning Apple or Facebook here, I'd follow the Oracle of Omaha into Apple, no doubt about it (I never liked Facebook, I personally think it's a waste of time and it's definitely not a well-run company).

But the point of these quarterly comments on top funds' activity is to show my readers there's so much more to this market than FANG stocks or high-flying tech stocks like NVDIA (NVDA) which got killed on Friday (click on image):

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In general, I don't like semiconductor shares (SMH) here given my macro views that the US and global economy are slowing (click on image):



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Earlier this week, I told my followers on StockTwits to pay attention to biotech shares (XBI) which got clobbered as rates rose and were at an important support level (click on image):

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Still, on Friday, biotech shares (XBI) rallied 2.5% that's all it took to ignite many of the smaller biotech shares I track.

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Perceptive Advisors also added big to shares of Arena Pharmaceuticals (ARNA) in Q3 and the company's stock had a spectacular week.

Perceptive also made big money buying the dip in Solid Biosciences (SLDB) this year and added to its position in La Jolla Pharmaceuticals (LJPC) as shares declined in Q3. You can view Perceptive's top holdings here but be warned, biotech isn't for the faint of heart.

Anyway, I can literally ramble on for days about what top funds bought and sold but I will spare you the details. Zero Hedge did a good job going over 13-F summary here.

As always, take this stuff with a grain of salt and remember, even the "gurus" get it wrong, just ask Seth Klarman and others who got scorched this week on their PG&E (PCG) positions. Shares of that utility rallied 37% Friday but the damage is done (click on image):


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