By Jonathan Rodriguez, Senior Analyst
Have you ever wished you could see inside the mind of a billionaire investor?
Well, four times a year, you can.
At the end of each quarter, hedge fund managers are required to report their portfolios to the public in a Securities and Exchange Commission (SEC) filing called a 13F.
These 13F filings offer investors a golden opportunity to see how the “smart money” trades.
Free Reports:
Today, I’m going to show you how to read a 13F and invest alongside some of Wall Street’s brightest minds.
Every institutional manager who oversees $100 million or more in assets is required to file a 13F. And all of these 13Fs are available for free on EDGAR, the SEC’s web search portal. Provided in both HTML and XML form, the filing lists all of the fund’s long equity and option positions.
First, enter the name of a hedge fund in the “Company Name” search box. Once you’ve located the fund, filter out the 13Fs by specifying the filing type.
With filing in hand, you can determine a fund’s positions and their dollar value. From the value of each position, you can calculate how a fund’s portfolio is allocated by sector. As you know, portfolio diversification is the key to success in today’s unpredictable market.
Finally, you can compare a previous quarter’s 13F to a recent filing and discover the firm’s newest buys and sells.
For example, Warren Buffett’s Berkshire Hathaway fund held $1.3 billion in equities as of last quarter. Buffett’s top three holdings were Wells Fargo & Co. (WFC), The Kraft Heinz Co. (KHC), and The Coca-Cola Co. (KO). At present, Buffett’s portfolio is overweight financials and consumer staples.
Kraft was Buffett’s biggest new buy last quarter, and it now represents 18% of his total portfolio. Buffett also sold off his entire Viacom Inc. (VIAB) and DirecTV Inc. (DTV) positions, which were worth about 2.7% of his portfolio.
All of this information was obtained from just two 13Fs!
If you’re not into performing these calculations by hand, you’re in luck, as there are several websites that take care of all the legwork for you.
For instance, Whale Wisdom tracks hundreds of hedge funds and provides analysis on several years of 13Fs. It also provides 13F back testing and even scores funds based on performance.
Direxion Investment’s iBillionaire Index also follows some of the most successful billionaire hedge fund managers in the world.
Rebalanced every quarter, this equal-weighted long-only index holds 30 of the most compelling investments. For retail investors, it even offers a low expense exchange-traded fund, Direxion iBillionaire ETF (IBLN), which mirrors the index.
However, there’s one glaring caveat to using 13Fs. That is, filers aren’t required to disclose their short positions. If a fund has hedged its portfolio with any short sales, you won’t be able to see them.
Luckily, the majority of hedge fund profits come from their long positions.
Now that you know how to use a 13F, I’m going to go one step further. Next week, I’ll show you which billionaires to follow heading into the New Year. Until then…
Good investing,
Jonathan Rodriguez
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