Why do certain stocks, such as Facebook and Apple, remain at the top of the list of the most actively traded stocks almost daily? Part of the answer is that many of the heavy hitters at the largest investment funds appear to be attracted to them as viable long-term holdings -- and they dip into their deep pockets to add such stocks to their portfolios whenever they can.
That's been true with at least two of the largest U.S. money managers, Fidelity Research & Management, which has more than $2.13 trillion under management, and Capital Research & Management, the company behind the ever-popular American Funds, with assets of more than $1.37 trillion. What they've been buying and selling so far this year offers some interesting – and even provocative — insight for investors.
Evidently, technology stocks have been their most widely held sector in the first quarter of 2017, followed by the consumer discretionary group, according to regulatory filings and the Capital IQ database, said Todd Rosenbluth, director of ETF and mutual fund research at CFRA Research. This trading pattern appears to be holding up in the second quarter, judging by current market trends.
Among Fidelity's 50 biggest holdings across its portfolios, Pay Pal Holdings (PYPL), trading at around $51 a share last week, and Qualcomm (QCOM), at about $57, were the two technology stocks that were purchased most during the first quarter. Fidelity's stake in Pay Pal increased by 13%, to 43 million shares, while its Qualcomm position climbed 7.9%, to 56 million shares.
In the consumer discretionary sector, Fidelity's stake in Charter Communications (CHTR), trading at about $337 a share last week, increased 9.8%, to 8.7 million shares, and holdings in Walt Disney (DIS), at around $108 last week, rose 6.3%, to 28 million shares.
Rosenbluth noted that Fidelity's management team didn't necessarily favor all the stocks in these two sectors. In technology, Fidelity reduced its stake in Nividia (NVDA), trading at around $141 a share last week, by 13%, to 49 million shares, and cut back its holdings in Starbucks (SBUX), at $63, by 6.1%, to 58 million shares.
Interestingly, Fidelity also trimmed by 1% to 2% its massive stakes in four of its largest positions: Apple (AAPL), trading at about $153 a share last week; Facebook (FB), at around $152; Amazon.com (AMZN), nearing the milestone share price of $1,000 last Friday before closing at about $993 a share; and Alphabet (GOOGL) also approaching the $1,000 mark last Friday before closing at around $992.
Outside the tech and consumer discretionary sectors, Fidelity's managers increased their stakes in biotech pioneer Amgen (AMGN), currently at around $155 a share; Citigroup (C), around $62; and ConocoPhillips (COP), around $45.
At Capital Research & Management, the investment managers for American Funds increased their stakes in Broadcom (AVGO) by 8.8% (trading at around $240 a sgare last week), and raised the funds' collective position in Apple by 6.2%. American Funds also raised its holdings in Facebook as well as Intel (INTC), trading at about $36 a share last week; Netflix (NFLX), about $162; and United Health Group (UNH), around $177.
Among the consumer discretionary stocks, American Funds increased by 14% its stake in tobacco company Altria (MO), around $74 a share last week, but reduced by 5.5% its total holdings in rival Phillip Morris International (PM), about $120. Other large positions that were cut back in the first quarter included Boeing (BA), around $187 a share last week, and JPMorgan Chase (JPM), about $85.
Rosenbluth said Main Street investors can benefit from a regular review of what some of the largest asset managers are buying and selling since in many cases their actions can be a big part of what's moving a particular stock up or down. Indeed, there's everything to be gained from accessing more information from what the large institutional pros are doing.