What is the 'SEC Form 13F'

SEC Form 13F is a quarterly report that is filed by institutional investment managers with at least $100 million in equity assets under management, discloses their U.S. equity holdings to the Securities and Exchange Commission (SEC) and provides insights into what the smart money is doing. Firms that are required to file 13Fs include mutual funds, hedge funds, trust companies, pension funds, insurance companies and registered investment advisers.

BREAKING DOWN 'SEC Form 13F'

SEC Form 13F filings provide investors with an inside look at the holdings of Wall Street's top stock pickers and their asset allocation strategies. Individual investors and other institutional investors, who want to replicate the strategies of rock star hedge fund managers like Daniel Loeb, David Tepper, David Einhorn, Carl Icahn or Seth Klarman, scrutinize 13F filings to generate investment ideas. And the financial press often reports on what these fund managers have been buying and selling. By looking at the top holdings of some managers, investors hope to put together a best-ideas portfolio without paying management fees.

However, the risk for both professional and retail investors, is that the tendency of hedge funds to borrow investment ideas from each other, and the bandwagon effect, can lead to crowded trades and overvalued stocks. Hedge fund managers are no more immune to behavioral biases like herd behavior, than anyone else. After all, if you are a fund manager, it is safer to be wrong with the majority than to be right alone.

13Fs Only Tell Half The Story

13F reports only require funds to report their long positions, in addition to their put and call options, American Depositary Receipts (ADRs), and convertible notes. But hedge funds also purchase bonds and foreign equities, and sell stocks short. This can give a misleading picture, as some funds generate most of their returns from their short selling, only using long positions as hedges. Also, 13Fs only track investments made on domestic exchanges.

Unreliable and Backward Looking

13F filings are not necessarily reliable – as the SEC itself admits — because no one at the SEC analyzes the content for accuracy and completeness. So, investors should take them with a pinch of salt. After all, the infamous fraudster Bernard Madoff also filed 13F forms on a quarterly basis.

Another major issue with 13F reports is that they are filed up to 45 days after the end of a quarter. And most managers submit their 13Fs as late as possible, because they do not want to tip off rivals about what they are doing. So, by the time other investors get their hands on them, they are looking at stock purchases that may have been made more than four months prior to the filing. Seeing how professional fund managers have been investing in the previous few months can be insightful, but it is backward looking. If the smart money is already fully invested in a stock, retail investors are likely to be late to the party by the time they learn about it.

RELATED TERMS
  1. SEC POS AM Filing

    An SEC POS AM filing is one that is made by companies that have ...
  2. Hedge Fund Manager

    A hedge fund manager is an individual who oversees and makes ...
  3. SEC Form 497

    SEC Form 497 is a document that investment companies must use ...
  4. Holdings

    Holdings are the securities within the portfolio of a mutual ...
  5. SEC Form N-SAR

    SEC Form N-SAR is a U.S. Securities and Exchange (SEC) filing ...
  6. SEC Form S-8

    SEC Form S-8 is a registration form for securities offered as ...
Related Articles
  1. Investing

    Alphabet and Apple Fell Out of Favor in Q3: 13F Filings

    Some prominent billionaire hedge funders sold off Apple and Alphabet in Q3, according to 13F filings.
  2. Investing

    Big Banks Were Big With Hedge Funds in Q1: 13Fs

    A number of fund managers made additions to their portfolios last quarter involving bank stocks.
  3. Investing

    Hedge Fund Billionaires Bullish on FANG and Retail Stocks: 13F

    Facebook and Apple were popular 4Q purchases for billionaires Warren Buffett and Barry Rosenstein, 13F filings show.
  4. Investing

    Who Bought or Sold PayPal in SEC 13F Filings?

    With 13F reports for Q2 due Aug. 15, preliminary filings reveal that a number of major investors hold PayPal.
  5. Investing

    13F Season Brings Big Changes to AAPL, BABA and More (AAPL, GOOGL)

    13F season has revealed that major investors are making big plays in these stocks.
  6. Investing

    Dan Loeb's Third Point Bolsters Tech Positions (AAPL, BABA)

    The billionaire hedge fund leader bought up stock in Apple, Alibaba and Facebook in Q3.
  7. Managing Wealth

    Soros 13F Points to More Than Just Emerging Markets

    Soros Fund Management's 13F for Q3 indicates new positions in several energy comapnies, call options for Bank of America, and more.
  8. Investing

    Walgreens, Facebook and Apple Were Hot Q4 Stock Picks: 13Fs

    Billionaires investors like Ray Dalio and Larry Robbins were bullish on Walgreens in Q4, 13F filings indicate.
  9. Investing

    David Tepper's Appaloosa Portfolio Jumped Nearly 50%: 13F

    Hedge fund billionaire David Tepper's Appaloosa Management boosted its stakes in Micron, Facebook, and Apple, 13F filings show.
  10. Investing

    Billionaire Dan Loeb Bought 4.5 Million Shares of Alibaba in Q2: 13F filings

    13F filings from Q2 reveal that Dan Loeb's hedge fund Third Point bought a huge stake in the social media and e-commerce giant.
RELATED FAQS
  1. How often do mutual funds report their holdings?

    Learn how mutual funds are required by the Securities and Exchange Commission to disclose their portfolio holdings on a quarterly ... Read Answer >>
  2. Are hedge funds registered with the Securities and Exchange Commission (SEC)?

    Learn the conditions that require hedge fund advisors to register with the U.S. Securities and Exchange Commission. Read Answer >>
  3. Are there publicly traded hedge funds?

    See why a privately arranged hedge fund may decide to take its fund public, and how the investing public at large can gain ... Read Answer >>
Trading Center