Tutorial: read a 13F and track the smart money
A 13F is a photograph taken up to 45 days ago of only half the portfolio. Use it for ideas, never for instructions.
Mine institutional filings for ideas without copying someone into a position you do not understand.
How read a 13F and track the smart money works, in one picture
The same argument as the text, as a chain. Each step is what makes the next one possible.
One investment is the fund
Most go to zero and that is not a failure of selection, it is the shape of the asset class. It is why a venture investor has no use for a company that will merely do quite well.
- 1
Know what you are looking at
Smart MoneyAny institution managing over $100m in US equities must file a 13F within 45 days of quarter end, listing its holdings. SteadyShares reads these straight from the SEC. It is one of the great free gifts of public markets.
- 2
Know what it hides
It shows long US equity positions only. Shorts, bonds, options, cash and foreign holdings are invisible. A manager who looks wildly bullish on a stock may be hedged into neutrality by something the filing does not show.
And it is up to 45 days stale. The manager may already have sold.
Copying a position without knowing the thesis means you have no idea when to sell, which is most of the job.
- 3
Read the changes, not the holdings
A large existing position tells you little. A new position, or a doubling, tells you a manager formed a fresh conviction recently and had to put real money behind it. That is the signal worth chasing down.
- 4
Use it as a reading list
The correct use of a 13F is to generate names, then do your own work on them. If three managers you respect all opened the same position, that is an excellent reason to spend an evening on the company, and a terrible reason to buy it.
You have three names from filings, and for each one you can state your own reason to be interested, not theirs.
Read next
A 13F is a photograph taken up to 45 days ago of only half the portfolio. Use it for ideas, never for instructions.
Institutional holdings read straight from SEC 13F filings, with the changes, which is the part that matters.