Latest Interpretation of the Top Ten Institutions’ 13F Report in Q3 2021

December 16, 2021 | Author:Bullseye Financial |Tagged:

Recently, major investment institutions have successively filed their 13F reports for the third quarter of 2021 to SEC and disclosed their own position changes. 13F report refers to a report that, according to the requirements of SEC, must be submitted by investment institutions with more than USD 100 million in assets under management within 45 days of the end of each quarter, to disclose their own positions of equities and bonds and to provide SEC with information on where the funds are going to. Today, let’s have a look at the information given from the 13F reports of the 10 most concerned institutions.

 

As customary, let’s start with the highly anticipated Berkshire Hathaway led by Warren Buffett:

Top 5 buy orders Top 5 sell orders 13F positions
Position Change (%) Position Change (%) Position Proportion (%)
Berkshire Hathaway Chevron 0.17% Abbvie (pharmacy) -0.26% Apple 42.73%
Royalty Pharma (biopharmacy) 0.16% Merck Sharp & Dohme (pharmacy) -0.24% BAC 14.60%
Floor & Decor (building materials) 0.03% Charter Communications -0.24% American Express 8.65%
Bristol Myers Squibb (health care) -0.16% Coca Cola 7.14%
Visa -0.07% Kraft Heinz (consumer necessities) 4.08%

 

In the past quarter, the largest increase in Berkshire’s holdings was Chevron, a giant in energy industry, perhaps indicating Berkshire’s view that inflation will continue and that oil price will continue to rise due to the supply and demand relationship and the obstruction of global logistics. In terms of selling, we also noted that Berkshire significantly reduced its holdings of pharmaceutical stocks, including Merck Sharp & Dohme, which was cleared in the third quarter. Does this mean that Buffett believes that there are no more dividends in pharmaceutical stocks as the epidemic is further controlled?

The top 5 positions accounted for nearly 80% of the total positions, and Berkshire, known for its industry dispersion, was flat with the big board in 2021, up by 23% in the year as of November 15.

 

Then, let’s take a look at investment banks:

Top 5 buy orders Top 5 sell orders 13F positions
Position Change (%) Position Change (%) Position Proportion (%)
Goldman Sachs S&P 500 ETF (put option) 1.02% United States 20+ Year Bond ETF -0.21% S&P 500 ETF 3.52%
SterIing Check Corp (ID check) 0.33% Nasdaq index ETF (call option) -0.16% S&P 500 ETF (put option) 2.44%
Boss Zhipin 0.32% High-yield corporate bond ETF (put option) -0.16% Microsoft 2.12%
High-yield corporate bond ETF 0.24% Gold trust ETF (call option) -0.15% Apple 2.09%
Tesla 0.20% Nasdaq index ETF -0.14% Russell 2000 index ETF 1.69%
Morgan Stanley Bill.com (cloud software solution) 0.23% Alibaba -0.30% Microsoft 2.57%
Snowflake (cloud data) 0.21% Spotify (online music) -0.29% Apple 2.45%
Apple 0.17% Google -0.23% Amazon 2.15%
Coupang (e-commerce platform) 0.17% TAL (education) -0.21% S&P 500 ETF 1.47%
Roblox Corp (game) 0.17% Uber (car-hailing app) -0.20% Visa 1.27%

 

Goldman Sachs bought Tesla substantially in the previous quarter, up 27% from the previous quarter. At present, Tesla ranks the 15th place in Goldman’s investment portfolio. Besides, the investment of Goldman Sachs in put options of Tesla also rose by 21% compared with the previous quarter. The purpose of this portfolio should be to conduct appropriate risk management with put options on the premise of being bullish on Tesla. Using put options to manage the price downside risk or lock the profits while going long on individual stocks (or ETF), is a routine operation for institutional investors like Goldman, which can also be seen from Goldman’s top two positions – S&P 500 ETF and put options.

It is worth noting that, unlike other institutions which sharply reduced their positions in China concept stocks in the previous quarter, Goldman insisted on going long on China concept stocks, and continued to buy them.

We clearly see a divergence of views between Morgan Stanley and Goldman Sachs on Chinese concept stocks: they reduced their positions in Alibaba and TAL in the previous quarter, and bought “Metaverse” concept stock Roblox and some other stocks related to cloud computing and big data.

 

Next, let’s look at the operation of BlackRock, the world’s largest asset management group known as the “FED trader”:

Top 5 buy orders Top 5 sell orders 13F positions
Position Change (%) Position Change (%) Position Proportion (%)
BlackRock Tesla 0.19% Alexion Pharmaceuticals (a subsidiary of AstraZeneca) -0.09% Apple 4.06%
Microsoft 0.19% PayPal -0.08% Microsoft 4.00%
Modema (medicine) 0.16% Maxim (semiconductor) -0.07% Amazon 2.59%
Google 0.15% Alibaba -0.05% Google 1.52%
S&P 500 ETF (call option) 0.10% FedEx -0.04% Facebook 1.48%

 

After reducing 88% of positions in Alibaba in the second quarter, BlackRock continued to sell the shares it held in the third quarter. In terms of adding its positions, BlackRock bought substaintially 2.37 million shares of Tesla, making it its 7th largest position. In addition, BlackRock also increased other FAAMG stocks – Microsoft, Amazon, Google and Facebook, except Apple.

 

The changes in the positions in world-renowned assets management companies Sequoia Capital, Vanguard Group, Bridgewater and Baillie Gifford are shown below:

  Top 5 buy orders Top 5 sell orders 13F positions
Position Change (%) Position Change (%) Position Proportion (%)
Sequoia Capital Freeport-McMoRan Copper & Gold Inc. 0.14% Vanguard Total US Bond Market ETF -1.08% MSCI Stock Market ETF 14.95%
SJM (food & beverage) 0.11% MSCI Global ETF -0.50% All international shares of iShares MSCI 9.05%
Clorox (consumer goods) 0.04% iShares U.S. Government Bond ETF -0.42% Vanguard Russell 1000 Growth Index Fund 5.91%
B&G Foods 0.03% S&P 500 Growth ETF -0.41% Vanguard Total US Bond Market ETF 3.82%
Emerging Markets ETF EMXC 0.02% iShares S&P U.S. Stock Market ETF -0.40% Charles Schwab Fundamentals International Large Companies Index 2.91%
Vanguard Group Tesla 0.20% Alexion Pharmaceuticals (a subsidiary of AstraZeneca) -0.09% Apple 4.45%
Microsoft 0.18% Maxim (semiconductor) -0.08% Microsoft 4.30%
Modena (medicine) 0.14% Slack TechnoIogies (telecommuting) -0.05% Amazon 2.71%
Google 0.14% Merck Sharp & Dohme (pharmacy) -0.04% Facebook 1.54%
Apple 0.14% JD.COM -0.04% Google 1.52%
Bridgewater Emerging Markets ETF EEM 4.78% Wal-Mart -0.89% Emerging Markets ETF VWO 6.42%
Emerging Markets Core ETF IEMG 2.83% S&P 500 ETF -0.80% Emerging Markets ETF EEM 5.56%
Emerging Markets ETF VWO 2.28% Johnson & Johnson -0.55% Emerging Markets Core ETF IEMG 4.65%
Alibaba 0.60% P&G -0.53% S&P 500 ETF 4.62%
Gold ETF 0.43% Danaher (medical) -0.30% Wal-Mart 3.84%
Baillie Gifford MercadoLibre Inc (South American e-commerce) 0.64% Alibaba -2.07% Modena (medicine) 8.50%
Ginkgo Bioworks (biotechnology) 0.55% NIO -0.67% Tesla 5.62%
Decans 0.45% Illumina (biotechnology) -0.51% Illumina (biotechnology) 4.38%
DoorDash (take-out delivery) 0.35% Netease -0.46% MercadoLibre Inc (South American e-commerce) 4.13%
ServiceCorp (funeral services) 0.26% Zoom Video (telecommuting) -0.43% Shopify (e-commerce) 3.90%

 

We observed that another institution – Vanguard Group significantly increased its position in Tesla in the previous quarter. Besides, strikingly similar to BlackRock, Vanguard Group slashed its positions in Alexion Pharmaceuticals – a subsidiary of AstraZeneca and the semiconductor company Maxim, and increased its positions in the vaccine stock Modena.

The top 10 positions of Baillie Gifford, known as “Tesla’s largest external shareholder,” accounted for nearly 40% of total positions. The institution can accurately grasp the market trends and will be very confident in buying the bullish stocks substantially. Two quarters ago, Baillie Gifford made a big bet on the vaccine stock Modema which rose by 160% in this period.

Bridgewater‘s strong bullish view of emerging markets can be seen from their increase and positions in the previous quarter. In the past two quarters, Bridgewater has consistently increased its position in the emerging markets ETF EEM. The ETF contains 32% of the Chinese mainland stocks, and over 10% of stocks of South Korea, India and Taiwan, properly spreading risks. Bridgewater slightly reduced its position in S&P 500 ETF, but it was still its fourth largest position. It thus can be seen that, the strategy of Bridgewater is a “two-side bet” on the U.S. and emerging markets represented by China.

Sequoia Capital increased its positions in the stocks of bulk commodity and consumer necessities in the third quarter of 2021 and significantly reduced its position in U.S. government bonds.

 

Finally, let’s look at Asian investment organizations:

  Top 5 buy orders Top 5 sell orders 13F positions
Position Change (%) Position Change (%) Position Proportion (%)
Temasek E2open (holding company) 1.16% Alibaba -2.65% BlackRock 14.94%
BeiGene (biotechnology) 0.95% Didi Dache -0.56% PayPal 8.65%
Investment-grade USD Corporate Bonds ETF 0.85% Grace (W.R.) (chemical material) -0.44% Bill.com (cloud software solution) 5.19%
iShares U.S. Government Bond ETF 0.80% IHS Markit (data platform) -0.32% Alibaba 5.04%
1Life Healthcare (health care) 0.59% Airbnb -0.28% Visa 4.63%
Hillhouse Capital Legend Biotech (biotechnology) 7.04% Pinduoduo -5.69% BeiGene (biotechnology) 25.98%
On HoIding (sports product development and distribution) 6.29% ESGR (insurance and re-insurance) -4.30% Legend Biotech (biotechnology) 7.31%
Cytek Biosciences (biotechnology) 2.45% Zoom Video (telecommuting) -4.09% I-Mab (biotechnology) 6.81%
Salesforce (customer relationship management) 1.59% Airbnb -3.00% On Holding (sports product development and distribution) 6.29%
JD.COM 1.48% Uber -2.14% JD.COM 4.50%

 

Two quarters ago, both Temasek and Hillhouse Capital bought in more shares of Airbnb. In the previous quarter, they together sold the shares of Airbnb. Airbnb performed excellently in the past two quarters, so the two institutions “pocketed” their profits. Except the consistent operation for Airbnb, the two institutions also operated consistently in terms of reducing the shares of China concept stocks: Temasek slashed it positions in Alibaba and Didi Dache in the previous quarter, while Hillhouse Capital slashed its positions in Pinduoduo.

 

In the aspect of assets allocation, Hillhouse Capital continued to buy heavily in the biomedical industry, and Temasek started to actively step in the biotechnology industry while continuously bought heavily in the financial field.

 

Author: Dr.Wei Shi (CIO of Bullseye Financial Ltd, CFA)