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When Funds Make Waves

Institutional Trade Tracker Shows Ripple

They’re not always profitable, but the buy-sell decisions of mutual fund managers nonetheless affect individual investors’ portfolios. Like giant tankers changing direction at sea, institutional trades create waves that can temporarily knock a stock off its long-term course.

To understand the impact of institutional investors on a stock you’re researching, you might want to check out the Mutual Fund Facts About Individual Stocks website. Start by typing the company’s ticker symbol at the top of the homepage to access such information as the number of mutual funds holding the stock, how many funds have recently bought or sold its shares and the percentage of funds making those changes. Stocks are assigned a score between -2 and +2 that summarizes key trends; the higher the number, the more institutional money that’s flowing into a stock. Below that initial summary, you’ll find an alphabetized listing of all recent institutional activity. For other moves made by those funds, click on a fund’s name. 
You can access rankings of stocks loved and loathed by the pros from the homepage. Some examples: the 10 most dumped stocks, the 10 most newly added stocks and the 10 best and worst moves made recently by any fund. Also, click Top 10 Most Bought Stock to see which companies have been especially popular among institutional investors. As of September this list read like a who’s who of large-cap blue-chip names, including General Electric, Microsoft, Cisco Systems, Johnson & Johnson and Intel. (Companies mentioned are for educational purposes only. No investment recommendation is intended.)
Be careful when using these lists. Stocks can show up on them for reasons unrelated to their performance, and there’s no commentary to provide context. For example, Grant Prideco recently was listed as the most dumped stock, but this was because the company was acquired by National Oilwell Varco.
On the homepage focus only on the first two groups of lists — The Best and Worst for All Countries and The Best and Worst of United States — unless you’re just itching to find out who has been buying and selling which stocks in, say, Botswana.
Fund investors can also get the skinny on what their manager has been up to lately, because the site catalogs every mutual fund’s worst and best moves. It says, for example, that Riversource Large Cap Equity Fund took a big hit with an ill-timed foray into TOTAL, the France-based integrated oil and gas company; however, the site also notes, it recouped some of the losses with a fortuitous purchase of Genentech. On that same webpage — one that’s available for every fund — you’ll also find a recent “good save” (selling shares before a price drop) and a “missed move” (unloading shares before a price rise). 
Every night, operators of the 2-year-old site update information, which is derived from various Securities and Exchange Commission filings (not just 13Fs) by institutional investors. Of course, mutual funds trade regularly and aren’t required to report activities until 45 days after the end of a calendar quarter. Mutual Fund Facts provides dates for all information, however, and much of it is surprisingly recent.
Investors who want to understand short-term stock fluctuations or get a relatively timely second opinion on a company from a fund manager they respect will find this data interesting, provocative and useful.

Thomas D. Saler is a free-lance financial journalist based in Madison, Wis.

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