What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks in investing we just passed november 15th, a few days ago to most people november 15th is a relatively normal day, but in the world of finance november 15th is One of four particular days every year on which the sec gives the markets a gift. It's the day that u.s hedge funds release their public disclosures about stocks that they hold. That's because each calendar quarter, every institutional investment manager that does business in the us and manages more than 100 million dollars must file, what's called a form. 13F form.

13F is a report that discloses exactly what stocks and options an investment manager is currently invested. In these reports are completely public and available for free on the sec's website, they're also available in a condensed easy to view format on our new website. Wallstreetmillennial.Com in this video we'll talk about what happened in the most recent wave of 13f filings. What all is and is not contained in 13fs, and how investors can use them to make better investment decisions before we move forward.

Keep in mind that we are not investment. Professionals and this video is for entertainment purposes, only make sure to always do your own research and consult with the professional before making any investment decision in the morning of november 16th. The first morning after many 13 nets were released. Many media outlets reported on big moves by hedge funds revealed on the 15th every time 13 apps are released.

One of the most closely followed investment managers is always warren. Buffett's firm, berkshire hathaway, because warren buffett is such a legendary investor with a remarkable track record. Many investors care about what he himself is invested in this quarter. Some of the biggest changes in his portfolio were the elimination of merck, as well as big sales in abv and bristol myers.

There was one completely new investment that appeared on the report. Royalty pharma royalty pharma is a mid-cap company that specializes in buying royalty contracts for pharmaceutical products. They also invest in biopharmaceutical projects. They have built up an impressive portfolio of royalties, which provides it with a steady net income in remarkably consistent revenue immediately after the public release that warren buffett had bought nearly half a billion dollars of their stock royalty.

Pharma stocks spiked about four percent such a meaningful jump in stock price, is not trivial for a 25 billion dollar market cap company and that's even only one stock in the portfolio of just one investment manager. This just goes to show how closely watched their tnfs are and how important the markets think they are in making stock picks. So what are 13 filings, and what exactly do they contain? 13F reports are filed by any institutional money manager in the us that manages at least 100 million dollars of investor capital for reference. Almost any hedge fund that you would know about would meet this criteria for these money managers, which also include banks, insurance companies, pension funds, etc.

13 f filings must be made every calendar quarter. However, the sec allows a grace period of 45 days for these institutions to submit their filings, after which they're considered late. The reason for this delay is to allow for actively trading funds to fully finish, putting on or closing out their positions before they have to disclose these positions. Otherwise, if they're in the middle of trying to buy or dump, let's save billions of dollars worth of a single stock, other market participants might be able to front run them on the trade.

In practice, almost all major hedge funds submit their 13 apps exactly 45 days. After the end of the calendar quarter, other institutions such as insurance companies and banks, frequently submit their filing significantly earlier. The 13f filings themselves contain a lot of useful information about the money managers. They contain the list of all long stock and options, positions of the fund with the company name, the share class number of shares or options held, and the aggregate market value of the position.

Information about voting rights and manager. Discretion is also provided by adding up the value column. The total aum of stocks and options can be calculated along with the portfolio weights of each stock. From this, a detailed portfolio of the hedge funds can be reconstructed with no more than a 45 day.

Delay. 13. F filings are closely followed by investors across the country. That's because superstar fund managers such as bill ackman, george soros, ray dalio and steve cohen, are all subject to 13f rules.

These hedge funds charge billions of dollars a year collectively for the fees that they charge their investors on top of high fees, they're also mostly closed, meaning that they aren't accepting new capital to invest. For these reasons, hedge fund returns are not accessible to normal investors, but with their positions all available publicly for some hedge fund strategies, much of the value of investing with these managers can be extracted for free, for example, bill ackman's hedge fund pershing square follows an investing Style that holds a small, concentrated portfolio of usually less than 10 different stocks. Changes in their holdings are infrequent because of this a portfolio replicated with the 45 day. Delay would be pretty close to the real thing and thus returns would likely be similar with bill.

Ackman's managerial track record over the past 10 to 20 years. That's something that would be desirable to many investors. There are several websites online that help investors track the top hedge fund managers through 13f filings. We maintain one such online tool at our website, wallstreetmillennial.com.

As an example, here you can see the results for warren buffett's, firm, berkshire hathaway. You can see that their total stock and options assets under management has grown pretty much every quarter since 2013 and now sits at just shy of 300 billion dollars. Their biggest position is apple, which makes up a very large 42.8 percent of their portfolio. Warren buffett has long been an apple proponent and the fact that he actually added to his position even more by more than four billion dollars since last quarter, suggests that he still thinks the stock is undervalued.

Another example of a closely followed fund manager is david tepper, who runs avalosa management. He slashes holdings of amazon by almost half trimming. Big tech seems to be a wide trend among the top hedge funds. This quarter, viking global another huge hedge fund, reduced its exposure to amazon by about 60 percent or nearly a billion dollars, melvin capital, the same hedge fund that lost its shirt short in gamestop also reduced their amazon holding substantially, along with several other major hedge funds.

Third point is one of the only closely watched hedge funds that actually added to their amazon holdings. Overall, this might signal to investors that for some reason in the last quarter, the so-called smart money has become meaningfully less bullish on amazon stock. There are several caveats that investors need to keep in mind when it comes to interpreting 13f filings. Obviously, there's the 45-day delay between the actual date of the holdings and the date they get released to the public, but also realize that the changes compared to the previous quarter could have happened more than 45 days prior any time during that quarter.

That means that david tepper, reducing his amazon holdings could have been the result of sales that happened as long ago as july of this year. That's more than four months ago. The next caveat is that 13 f filings actually don't reflect all possible positions in a hedge fund, for example, short positions and stocks are not reported, not knowing about significant short positions can severely hamper the available investing information about a hedge fund, for instance a long short Hedge fund might think that one particular stock in an industry - let's say tesla, for example - is overvalued compared to other stocks in the same industry. They might then short the stock that they believe is overvalued and long all the other stocks to hedge against any systemic industry-wide exposure.

That would be a very different reality than might be suggested from just looking at the longs reported in the 13f. Also, cash is not disclosed on 13 fs. The cash position is often times one of the most important aspects of a portfolio without knowing exactly how much cash a fund is holding from quarter to quarter. Not only do 13 net followers not know the true total assets under management of the firm, but also whether the fund is directionally going more overweight or underweight cash.

Also, keep in mind that for some types of hedge funds, 13 f stock holdings are pretty much worthless. Quantitative hedge funds and hedge funds that have very short holding periods such as citadel have large positions that either change very quickly or do not reflect their belief of where a stock is going to move. You can see here that citadel's largest position is in spy puts, which might seem like citadel, is bearish on the u.s large cap market, but they also hold an immense amount of calls. This is the case for all of their top holdings.

That's because citadel is a quantitative trading firm in addition to a traditional hedge fund and the 13f doesn't provide much meaningful insight into quantitative strategies when used correctly, 13 f filings can give valuable insight into what the top hedge fund managers are thinking. They have been used for decades by investors and now can be more easily pulled than ever. But if you do decide to try to analyze 13f reports as part of your investing process, be careful and make sure not to make any invalid assumptions. Alright guys that wraps it up for this video, if you enjoyed this content, make sure to smash the like button and subscribe.

So you don't miss future videos. Also leave a comment saying what insights you would take out of 13 f filings for your favorite hedge funds. In the meantime, thank you so much for watching and we'll see you in the next one wall, street millennial, signing out.