I love peeking over the shoulder of successful investors. It’s not so much a matter of seeing what they are buying and selling as much as it’s seeing what they are thinking. You’re always at an information disadvantage when you watch the trades of hedge fund guru; you’ll never know exactly why they placed the trades they did or what their expected returns or time horizon are. But you can get a pretty good idea of what their overriding investment themes are.
You can follow these trades by reading the publically-available 13F filings they are required to report to the SEC. Or, you can use one of many services that compile and crunch this data for you.
Today, I want to draw your attention to a “guru heat map” produced by Guru Focus: See Guru Buys and Guru Sells. These heat maps aggregate all insider buying and selling of S&P 500 stocks and rank them accordingly.
A few things jump right off the page. Microsoft (MSFT) has become a battleground stock among gurus; it is the most aggressively sold by gurus, but is also in the top 20 of top buys.
Apple (AAPL), Google (GOOG), Qualcomm (QCOM), Cisco Systems (CSCO), Berkshire Hathaway (BRK.B), Wells Fargo (WFC) and CitiGroup (C) also feature prominently in both lists. It’s hard to draw conclusions when rock star investors are simultaneously buying and dumping the shares.
Not all stocks had ambiguous guru activity, howver. Oracle (ORCL) was the most heavily bought stock by gurus, with 16 individual gurus identified by Guru focus, and it was not in the top 50 of those sold.
A less common name being accumulated by gurus is Cabot Oil and Gas (COG), which had 7 recent guru buyers and no major selling.
While I don’t recommend you run out and buy or sell a stock based on its guru buying patterns, I recommend you periodically visit the guru heat maps. Tools like this can be a useful starting point in your investment process. When entering a trade, it’s nice to know whose in it with you…or who might be taking the other side.
Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he had no position in any security mentioned. Click here to learn about his top 5 global investing trends and get your copy of “The Top 5 Million Dollar Trends of 2013.”