Hedge fund managers have been selling companies that might be considered core holdings. Hedge Fund activity Filings available in August showed Warren Buffett’s Berkshire Hathaway and John Paulson’s funds have been selling.
If hedge funds were selling as markets continue their ascent, should you be, too?
Consider Peter Lynch’s principles. As summarized on Marketfolly, Lynch follows these principles:
- Never invest in any idea you can’t illustrate with a crayon
- You can’t see the future through a rear-view mirror
- “When yields on long-term government bonds exceed the dividend yield of the S&P 500 by 6 percent or more, sell your stocks and buy bonds
- The best stock to buy may be the one you already own
Lynch advised investing in companies by first understanding its finances, because losses come from companies with poor balance sheets. Investors ought to wonder why hedge fund managers are selling renowned company brands. It is impossible to get a full picture on hedge fund activity: managers only need to reveal some of their trading activity. Unreported buys and sells means there reported positions are hedges.
Warren Buffett
Buffett sold all of his Intel (INTC) shares. He added to his Wells Fargo (WFC) and Bank of New York (BK) position, and sold some of his U.S. Bancorp (USB) position. He reduced his position in Johnson & Johnson (JNJ), Kraft Foods (KFT), and Procter & Gamble Co. (PG).
Click on the icons to get a detailed view on these companies:
1. Intel Corporation (INTC, Earnings, Analysts, Financials): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap at $114.07B, most recent closing price at $22.80.
2. Wells Fargo & Company (WFC, Earnings, Analysts, Financials): Provides retail, commercial, and corporate banking services primarily in the United States. Market cap at $185.4B, most recent closing price at $35.10.
3. The Bank of New York Mellon Corporation (BK, Earnings, Analysts, Financials): Provides various products and services worldwide. Market cap at $27.41B, most recent closing price at $23.20.
4. U.S. Bancorp (USB, Earnings, Analysts, Financials): Provides various banking and financial services in the United States. Market cap at $64.78B, most recent closing price at $34.18.
5. Johnson & Johnson (JNJ, Earnings, Analysts, Financials): Engages in the research and development, manufacture, and sale of various products in the health care field worldwide. Market cap at $190.24B, most recent closing price at $69.0.
6. Kraft Foods Inc. (KFT, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and markets packaged food products worldwide. Market cap at $73.88B, most recent closing price at $41.63. Kraft is spinning off its business. The old “KFT” ticker will be replaced with “MDLZ.”.
7. Procter & Gamble Co. (PG, Earnings, Analysts, Financials): Provides consumer packaged goods in the United States and internationally. Market cap at $192.35B, most recent closing price at $69.76.
John Paulson
Famous for making billions betting against the subprime mortgage market, Paulson sold 14 million shares of JPMorgan Chase (JPM). He closed his position in Family Dollar Stores (FDO) and Sara Lee. Sara Lee is now known as Hillshire Brands (HSH).
Click on the icons to get a detailed view on these companies:
8. JPMorgan Chase & Co. (JPM, Earnings, Analysts, Financials): Provides various financial services worldwide. Market cap at $156.62B, most recent closing price at $41.23.
9. Family Dollar Stores Inc. (FDO, Earnings, Analysts, Financials): Operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. Market cap at $7.55B, most recent closing price at $64.57.
10. Hillshire Brands Co. (HSH, Earnings, Analysts, Financials): Formerly Sara Lee Corporation, the company is a meat-centric food solutions company. Market cap at $3.3B, most recent closing price at $27.0.
George Soros
Soros made sales in JPMorgan Chase (JPM), Citigroup (C), and Goldman Sachs (GS).
Click on the icons to get a detailed view on these companies
11. Citigroup, Inc. (C, Earnings, Analysts, Financials): Provides consumers, corporations, governments, and institutions with a range of financial products and services. Market cap at $98.21B, most recent closing price at $33.49.
12. The Goldman Sachs Group, Inc. (GS, Earnings, Analysts, Financials): Provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Market cap at $55.9B, most recent closing price at $116.60.
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Analyze These Ideas: Getting Started
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Intel Corporation (INTC, Chart, Download SEC Filings)
- Wells Fargo & Company (WFC, Chart, Download SEC Filings)
- The Bank of New York Mellon Corporation (BK, Chart, Download SEC Filings)
- U.S. Bancorp (USB, Chart, Download SEC Filings)
- Johnson & Johnson (JNJ, Chart, Download SEC Filings)
- Kraft Foods Inc. (KFT, Chart, Download SEC Filings)
- Procter & Gamble Co. (PG, Chart, Download SEC Filings)
- JPMorgan Chase & Co. (JPM, Chart, Download SEC Filings)
- Family Dollar Stores Inc. (FDO, Chart, Download SEC Filings)
- Citigroup, Inc. (C, Chart, Download SEC Filings)
- The Goldman Sachs Group, Inc. (GS, Chart, Download SEC Filings)
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