Look, but do not copy
Many appointments mark the rhythm of the financial markets: central bank meetings, company quarterly reports, inflation data, employment data, and more. But there is an appointment that is still relatively little known in Italy but which all international investors are watching carefully: it is the publication of the 13f documents. This is a document that all American investors with more than $100 million of investments must present every quarter and which they are obliged to make public within 45 days.
Thanks to this public document, which can be viewed on the Securities and Exchange Commission (SEC) website, even small investors can see what large investors and funds have bought and sold. While it is a snapshot of the past, peering into these investment portfolios is also interesting for savers that don’t have millions of dollars to invest. Most investors who are required to fill out the 13f document buy shares to hold them for an extended time.
Large investors and hedge funds invest only after in-depth analysis and only after selecting stocks they believe will stand the test of time. The information in the 13f document is invaluable for anyone making investments with a time horizon of more than a few months. However, analyzing the over 5,000 published 13fs is difficult, even if some companies, such as WhaleWisdom, collect and summarize the most relevant data from this large number of portfolios.
What emerges from this document is that:
- Not even large investors are exempt from market crashes,
- Overall sector allocation of all portfolios found that information technology and financials, followed by health care and the non-essential consumer goods sector, and
- Large-cap companies — Apple, Microsoft, Amazon and Alphabet, Inc. — dominate unchallenged.
Investing in individual shares with high potential can be intriguing, and the most interesting information that the 13f can give is which securities have been bought and downloaded by large investors. Knowing the securities of companies that have aroused the greatest interest in large investors and hedge funds can be fascinating.
However, be careful not to copy the portfolio of a large investor or a hedge fund, for various reasons, including lack of experience, lack of obsession and influence. The main reason, however, is the gap in risk capacity that distinguishes a small investor from a large investor: large investors and hedge funds manage billions of dollars. If a billionaire makes a mistake and ends up closing an investment with a large loss, they remain an extremely wealthy person. If a small saver makes a mistake and closes an investment with a large loss, he risks jeopardizing his financial survival.
It is essential to dedicate yourself to long-term investment planning to achieve life goals and then invest in individual shares with the capital you can afford to see fluctuate even a lot.
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