Follow the Money? Here Are the Stocks Hedge Funds Bought and Sold in the First Quarter

Investors are always looking for an edge. Whether it's a stock tip, AI or following the advice of a guru, the hope is to maximize returns. In that vein, a relatively obscure regulatory filing could give you insights into what big money movers like hedge funds are doing with their dollars. But can it help you make better investment decisions?

Buried in the heaps of data collected by the Securities and Exchange Commission (SEC) are the inauspiciously-named 13F filings. The regulator requires institutional investors (like hedge funds) that manage $100 million or more in assets to file reports every three months — most recently, May 15 — with details about what stocks they own.

So, what can you learn about how these pros are investing their clients' money? And as an average investor, what can you do with that information?

According to pros who study this data, the most recent crop of 13F filings broadly show that Wall Street is trying to find its footing during a period of considerable volatility, with high-flying tech stocks bearing the brunt of this skittishness.

"It's confirming what we already know: Tech had a rough first quarter," says Adam Turnquist, chief technical strategist at LPL Financial.

Investors pared back their holdings of the "Magnificent Seven" (that’s Apple, Microsoft, Nvidia, Amazon, Meta, Tesla and Google's parent company Alphabet) in particular and the technology sector more broadly, dropping their allocations by 2.7% — a big move in such a short time.

For example, in its first-quarter 13F filing, Knoxville-based Ridgepath Capital Management reported that it reduced positions in the tech-heavy Invesco QQQ Trust (QQQ) as well as two leveraged ETFs that track the QQQ: the ProShares Ultra QQQ (QLD) and the ProShares UltraPro QQQ (TQQQ), which seek to provide double and triple the return of the QQQ, respectively.

Turnquist partially attributes the shift to the emergence of China's DeepSeek, a ChatGPT competitor purportedly created much more cheaply than other large language model AI tools. Those claims have since drawn skepticism, but the emergence of DeepSeek was enough to upend the tech sector earlier this year.

Turnquist also highlighted companies selling positions in consumer discretionary and communications stocks. Overall, he says of the repositioning, "It had a more defensive tilt." It also skewed more domestic, with funds increasing their holdings in sectors like financials and energy — a response, in part, to widespread uncertainty and concern that came to a head in April with the Trump administration's announcement of sweeping tariffs on nearly all types of imports.

"We had a lot of policy uncertainty. The market back in April priced in the worst-case scenario," Turnquist says. In the ensuing months, Wall Street's fear has retreated and the market has rebounded. "Tech was more or less shunned, but then you look at the performance and you look at what's outperforming coming off the April lows: It's tech, by a long shot," he says.

Adam Patti, CEO of VistaShares, says hedge funds also probably took the opportunity caused by April's market rout to scoop up stocks on the cheap. "Most, but not all, looked at it as a buying opportunity," he says.

Virginia-based Westbourne Investments, for instance, increased its position in two beaten-down Big Pharma stocks: Bristol-Myers Squibb (BMY) and Pfizer (PFE), which are down 42% and 60%, respectively, from their five-year highs.

What does this mean for average investors?

In a nutshell, not too much. Patti cautions that data contained in 13F doesn't have a lot of usefulness for the average retail investor. "The bottom line is it's hard to look at 13Fs unless you understand the strategy of the manager" making the trades, he says.

"Some hedge funds move in and out of positions quickly, and they might have hedges against these picks," he points out. In other words, even if a hedge fund loads up on any particular stock, its manager might also have undertaken behind-the-scenes moves to mitigate the risk of that position — a move that wouldn't be reflected in the regulatory filing.

The SEC has recently taken some steps to address these opacity concerns. Starting this year, the regulator began requiring companies to report significant short positions as well as their long holdings.

Patti's biggest bone to pick with the reliability of 13F data, though, is the time lag. Hedge funds buy and sell quickly in an effort to beat the market. This near-constant turnover means that any single snapshot of activity might not capture subsequent changes. It also doesn't reflect the current, real-time portfolio makeup of any particular stockholder.

The government gives asset managers until 45 days after the end of a quarter to file their 13Fs — an eternity in the fast-moving hedge fund universe. A fund might have exited any or all of the positions it held by the time it records that data and files it with regulators.

Harvard Law School's Forum on Corporate Governance — in conjunction with the National Investor Relations Institute and NYSE Group — pointed this out in a petition published last year. The petition called for shortening the timeline for institutional investors to disclose their holdings from what it called the "archaic" 45-day deadline to one week (five business days).

Turnquist also makes this point, noting that the rotation out of the technology sector in particular could be reversed, with the next round of 13F filings (due in August) likely to reflect that renewed optimism. "My guess is they start buying tech again," he says. "It's not just technicals. The fundamental story has held up much better than expected."

That notion has been evidenced by current market data. Over the past three months, technology has been the best performer of the S&P 500's 11 sectors. Since its year-to-date low on April 8, it is up more than 34%.

Despite their limitations, investing experts say 13F filings can serve as a useful window into the strategies hedge funds use, as well as an insightful barometer of their optimism (or lack thereof) about specific market sectors and the economy more broadly.

"It's always an interesting spot to look for what institutional money managers are doing," Turnquist says. Just don't treat it as a crystal ball.

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