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Stellar Strategies: What Large investment funds bought while the market was


Large investment funds were preparing for the market fall, when it was actively growing, for the next wave of covid-19 even before the spread of the new Delta strain, and dumped the securities of Chinese companies before the Chinese stock market fell.

This is evidenced by their reports for the second quarter. 

Reports of US institutional investors appear with a delay: investment funds are required to disclose their positions in stocks over $ 100 million within 45 days after the end of the reporting quarter.

This rule is set to prevent smaller investors from copying the strategies of Wall Street tycoons and thus not affecting the value of stocks.

So now analysts are studying and commenting on transactions that were made by eminent investment funds in April-June.

It turned out that many already then showed an active interest in the shares of companies in “protective” market sectors. They will be the beneficiaries of the next wave of lockdowns when the epidemiological situation worsens.

These purchases were made when the market showed impressive growth, moreover, it is still growing. The S&P 500 rose for the seventh straight month in August and posted its best January-August result since 1997.

The last noticeable correction of shares was observed already in September-October last year – then from the local peak SPY fell by almost 11%.

According to Truist, since 1950, when the index had such an increase, the following year it grew 80% of the time, and the average growth was 10%. However, large investors are not deterred by such data.

For example, investment giant Tiger Global Management, with $ 79 billion in assets under management, and Coatue Management, which manages roughly $ 25 billion, have increased their positions in DoorDash. The company is engaged in the delivery of food products.

Its shares fell below $ 115 in mid-May, and are now trading at $ 193.

In addition, Coatue Management bought additional shares in Moderna, and Lone Pine Capital increased its position in these securities to more than $ 900 million. Lone Pine Capital is an American hedge fund that manages approximately $ 36 billion.

Its president and portfolio manager is Steve Mandel, formerly of Tiger Management. This is why Lone Pine is called one of the 30 “Tiger Cubs” (funds founded by managers who started their careers in Tiger Management).

A number of investment funds have increased their positions in the shares of Zoom and Peloton, as well as securities of other companies providing the opportunity to exercise at home.

True, not everyone adhered to this strategy.

For example, Duquesne Family Office (portfolio – $ 3 billion) Stanley Druckenmiller, a former associate of Soros, increased the share of companies that, on the contrary, would benefit from the economic recovery. (Also Read: Russia is not ready to recognize Bitcoin (BTC) as an official means of payment, price prediction and forecast)

The fund bought shares of Airbnb for $ 86 million (estimated at the end of June), the Marriott hotel chain ($ 35 million), and also increased its stakes in Expedia and Starbucks.

Now let’s see how the funds lived under the control of the legends of the investment business.

Buffett believes there is nothing to buy and invests in a food vendor

Warren Buffett is the CEO, Chairman of the Board and Major Shareholder of Berkshire Hathaway Inc.

Since 1965, Berkshire Hathaway has generated an average annual return of 20%, nearly double the S&P 500 over the same time period.

For the third quarter in a row, Berkshire Hathaway has been selling more than it buys. Since the beginning of the year, cumulative net sales amounted to approximately $ 5 billion, which, however, is not so much compared to the total value of shares in the fund’s portfolio – $ 293 billion.

Investor magazine Barron’s says Buffett simply doesn’t see any attractive companies.

Berkshire spends free money on buying back its own shares from the market: in the second quarter it took $ 6 billion. And the fund has accumulated almost half of the amount invested in shares in the cash: as of June 30, the money in accounts amounted to $ 144.1 billion ( a quarter earlier – $ 145.4 billion).

True, the fund had few significant sales. In the second quarter, Berkshire completely liquidated its $ 180 million position in Biogen, whose Alzheimer’s drug Aduhelm was recently approved by the US regulator.

And positions in the shares of three large biotech companies were reduced: in AbbVie – by 10%, Bristol Myers Squibb – by 15%, in Merck – by 50% (which was the largest fund sale in the reporting period).

But the shares of these companies occupied a negligible share in the fund’s portfolio – in total, by the beginning of the second quarter, they accounted for less than 3%.

Berkshire bought shares…



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