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Gurus – Look to the World’s Best Investors

You’re a mouse up against elephants.

Got a few million dollars to invest?… You’re still a mouse.

As you scurry through your maze, the elephants stomp all over you.

It’s a tough environment to survive and thrive. But luckily today, increased regulation can help you jump on an elephant’s back. It’s a free ride.

In this case, the elephants are multi-billion dollar funds. They push their weight around and have a better view of the markets. They hire some of the world’s best analysts and have access to better information. They spend millions of dollars finding top investment opportunities.

You can now peek into these top funds. The Securities and Exchange Commission (SEC) requires them to file 13F filings. These forms require investment managers with at least $100 million to show their long-term holdings. Each quarter you can see their stock, mutual fund, and ETF positions. To find this data search the investment funds on the SEC.gov.

Following 13F filings is useful but take them with a grain of salt. Compare it to seeing a card from each hand of the best poker players at the table. It gives insight but their strategies remain hidden. Hedge funds for example often take long/short positions. This means they buy shares in one company while betting against another. But on a 13F only the long (buy) position would show.

To get the most out of 13F filings, follow funds that focus on long-term investments. Warren Buffett’s fund Berkshire Hathaway is a perfect example. Buffett’s favorite holding period for a company is forever. When Buffett buys, he almost always holds for decades. Smart investors track his buys each quarter and tag along.

It’s crazy not to look over the shoulders of the world’s top investors. Do you think you can value companies better than Warren Buffett? He has a proven track record and access to information we don’t. That’s why I watch his recent large purchases. If the share prices drop, I can buy in at a discount to what Buffett got.

Now there are two more filings that give insight to top investors and insiders.

  • 13D filings must be submitted within 10 days by anyone who obtains at least 5% of a public company.
  • Form 4 must be filed by shareholders that own 10% or more that make a material change to their position.

These government required forms help to level the playing field. The filings help you see where the elephants are moving. And if you don’t already, I suggest using these forms to improve your investment process.

 

Published in Training Center

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