InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

$1,230 in Instant Income?

$1,230 in Instant Income?Our top income expert recently pulled the wraps off his breakthrough moneymaking technique. And he proved beyond a shadow of a doubt how you can use it to generate instant cash payouts of up to $1,230 (or more). Over and over again. But then he took things a big step further and guaranteed you can make $1 million by following his program. And the second he did, our phones went nuts! Space is limited — get the details here.

 

 

Follow the (Smart) Money to Bigger Gains

By Jim Pearce on March 15, 2018

Sometimes, it helps to know what the “smart money” is doing. No matter how much analysis you do, if the mutual fund managers don’t like your stock then it’s difficult to make much headway. But when they like the same stock you do, it’s pretty much money in the bank.

Take French oil producer TOTAL S.A. (NYSE: TOT), for example. During the fourth quarter of 2017 its share price appreciated 4.6%, about a third less than the 6.7% increase in the SPDR S&P 500 ETF (SPY). At first glance that may seem like an unimpressive result, but a closer examination reveals that it was entirely consistent with how the fund managers were trading the stock compared to individual investors.

It works like this; every SEC registered investment advisor must file a form 13F after each quarter that identifies all of its stock holdings and any changes to those positions. This information is publicly available, but there is a massive amount of data to sift through so you have to know what you are looking for.

Drilling Down on the Data

Of the 591 13F filers that hold Total, 227 of them bought more stock during the previous quarter while 165 of them reduced the size of their position. Cumulatively, their combined ownership in TOT increased from 134.8 million shares to 141.9 million, a gain of 5.3%. That number falls about halfway between the gain in TOT and the SPY.

One interpretation of that result is that fund managers are loading up on Total ahead of the public, possibly in anticipation of higher oil prices this year. Or they may be anticipating increased economic activity in Europe (where Total is headquartered), recognizing that higher energy prices and a growing economy go hand-in-hand.

Either way, their actions can sometimes be viewed as a harbinger of things to come. If so, then the fact these sophisticated investors are loading up on Total faster than the general public may be telling.

Information Pipeline

To take this analysis one step farther, it would help to know precisely which fund managers have been adding to their positions in a stock, and which have not. Not all fund managers share the same investment objective, so their reasons for buying and selling a stock are not the same.

Fortunately, the 13F filings can tell us that, too. Ideally, you’d like to zero in a set of fund managers who have an investment objective and risk tolerance the same as yours.

It helps to know if fund managers must sell a stock for no reason other than it no longer meets the investment criteria for that portfolios, even if in all other respects they still like the company. Also, index funds are compelled to buy and sell shares of every stock in their index to maintain proper weighting, and must add and remove stocks that grow too large or too small to remain in that index.

Reason for Believing

That’s why simply looking at the overall numbers can be misleading, but knowing exactly which numbers to look at can be extremely helpful (and profitable). In Total’s case, we can quickly see that Amundi Pioneer Asset Management was the single biggest fund buyer of TOT during the previous quarter, adding more than 3 million shares to its portfolio.

The good news is Amundi is the largest asset management company in Europe, so it is presumably well acquainted with Total which is based in Paris, France. The second largest buyer of Total, Miller/Howard Investments, runs an energy portfolio out of Luxembourg, so that is also encouraging.

As for the biggest sellers of TOT, Baltimore-based index fund manager T. Rowe Price is at the top of that list. But that’s okay since most if not all of those shares were presumably sold to mirror the weighting of an index, and does not reflect a subjective opinion about Total’s future prospects.

P.S. If you don’t have the time to read through hundreds of pages of 13F filings to figure which stocks are likely to outperform the market this year, click HERE for an explanation of how our team can do it for you.


You might also enjoy…

 

R.I.P Bull Market—Here’s How To Protect Your Wealth

I hope you’ve enjoyed the phenomenal bull market of the past eight years…

Because it’s about to come to a screeching halt.

The Federal Reserve’s nearly decade-long spending spree has finally come to an end.

With no other options left at their disposal, the Fed has no other choice than to raise interest rates to keep inflation in check.

And that leaves you with two options…

Do nothing and suffer the agony of watching the profits you’ve accumulated over the years evaporate right before your eyes…

Or reposition your portfolio and invest in companies which prosper as inflation rises and interest rates soar.

I think the choice is clear. And I’ll show you the best new positions you can take if you click here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.