Why 13F Day Is A Major Trading Opportunity

By: Wayne Duggan

With the quarterly flood of earnings reports mostly receding, it’s time for traders and investors to turn their attention to another quarterly filing that will make waves on Wall Street: 13Fs.

Every quarter, the SEC mandates that institutional investors disclose their current holdings. These filings, known as 13Fs, must be made public no later than 45 days after the quarter ends. Because most of these funds wait until the last moment to file with the SEC, most 13Fs tend to come out at the same time.

That deadline is Tuesday after the closing bell. Here’s what you need to know.

What Are 13Fs?

This rule applies to all institutional investors—hedge funds, pension funds, mutual funds, etc.—with at least $100 million in assets under management, some of whom are among the most widely followed names on Wall Street.

It’s not unusual for a 13F filing to serve as the catalyst for a stock to move higher or lower. For example, one of the most eagerly anticipated 13F filings comes from Warren Buffett’s Berkshire Hathaway. When he first disclosed he had bought Apple in a 13F filing back in May 2016, Apple shares soared 9 percent in the next 10 days. When he disclosed a brand new stake in Teva Pharmaceuticals in his February filing, the stock jumped 8.5 percent the following morning. These moves aren’t always sustained, but they can create the kind of short-lived volatility that traders feast on.

Buffett is the most influential, but other high-profile investors who will be releasing filings include Carl Icahn’s Icahn Capital, David Einhorn’s Greenlight Capital, Bill Ackman’s Pershing Square Capital, Jim Chanos’ Kynikos, George Soros’ Soros Fund Management and Seth Klarman’s Baupost Group.

The filings will be posted directly to the SEC EDGAR site, but most financial media outlets typically report the major filings as they come out.

What To Pay Attention To

There are four things to look for when reading a 13F:

  • What investments the fund added to their portfolio
  • What investments the company removed from their portfolio
  • What the fund increased their position in
  • What the fund decreased their position in

Last quarter’s filing showed no new investments in Buffett’s portfolio, but he did increase his stakes in Apple, Teva, U.S. Bancorp, Bank of New York Mellon, Monsanto and Delta Air Lines. He liquidated his positions in IBM and Graham Holdings, and lowered his stakes in Wells Fargo, Phillips 66, Charter Communications, United Continental, Liberty Global, Sanofi and Verisk Analytics.

It is important to note that these funds are disclosing their investments made in the previous quarter. We may only be finding out about Warren Buffett’s latest investments this week, but he could have made them three months ago.

The other thing it’s important to note is that these funds may be in the midst of accumulating of decreasing positions over several quarters. Just because Buffett lowered his stake in Wells Fargo last quarter, doesn’t mean he’s done selling.

Either way, we’ll find out what some of Wall Street’s most powerful investors were up to last quarter on Tuesday after the close.

Disclosure: the author has no position in the stocks mentioned.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

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