For Patient Investors, It’s Time to Follow the Smart Money

Every quarter, hedge funds, investment firms, and other notable individuals have to update their stock holdings with the SEC, via a 13F filing. The data can show what moves investors have made in the past few months.

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  • With the market still coming off a correction, looking at the data as a whole, investors can see where the broadest number of major investors were the most bullish. Following this smart money can tend to outperform the market over time.

    While 13F data may be incomplete, or even out of date for some funds by the time they’re published, a number of companies saw interest from institutional investors this quarter.

    The most recent quarter saw a particularly large interest in buying shares of beaten-down Salesforce (CRM). The consumer management app company is still down 26 percent compared to a year ago, even with revenue up 24 percent in the same time. And the stock’s valuation has slid from nearly 130 times earnings to under 40 times today.

    Action to take: This is still a growth play in a fearful market, and shares have been beaten down heavily. Yet the company will likely thrive as the economy recovers. Investors may want to pick up shares now, with an eye towards a higher valuation in the future.

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  • For traders, the January 2023 $200 call, last going for about $13.00, could deliver mid-double-digit returns on a move higher in shares. As with any options trade right now, look for a large down day in shares before buying.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.