Famous hedge fund managers have released their quarterly holdings. But if you sense a lack of excitement among copycat investors looking for stock tips, here's the likely reason: The smart money spent the second quarter licking its wounds.
David Einhorn is a good example here. According to his latest 13F filing to the Securities and Exchange Commission – released on Tuesday evening – the head of Greenlight Capital has ditched his final 1.6 million shares in Research In Motion Ltd. Make no mistake: This was by no means an opportunistic selling opportunity. RIM shares fell 50 per cent during the second quarter, suggesting that the investor has given up hope on any sort of rebound or takeover.
It doesn't come as a huge surprise, of course. At the end of the first quarter, Mr. Einhorn's filing showed that Greenlight had already lost much of its early enthusiasm for the BlackBerry maker, cutting its holdings nearly in half from about 2.9 million shares in the fourth quarter.
Despite some of the disappointments, the quarterly release of 13F filings continues to be a big deal because it gives small investors a chance to see what the well-heeled, sophisticated investors have been up to. Of course, copying the moves of the big investors can be fraught with problems. After all, the copycats are often copying ideas that have already gone stale by the time they hear about them.
But if the recent filings are any indication, even the fresh investing ideas of the big investors aren't necessarily worth copying.
Bill Ackman of Pershing Square Capital Management slashed his Citigroup Inc. holdings to just 1.1 million shares from 25 million shares. The value of those shares slumped 22 per cent during the second quarter.
Does anyone buy low and sell high anymore? Well, at least two high-profile investors are hoping to capitalize on a beaten up stock: George Soros and Steven Cohen have taken small positions in Facebook Inc., whose share price has slumped 46 per cent since its debut in May. But neither investor is jumping in with both feet. Through his SAC Capital Advisors, Mr. Cohen now owns 151,450 Facebook shares. Through Soros Fund Management, Mr. Soros owns 341,000 shares.
If you are thinking about following their lead, caution seems to be their approach.
David Berman