When companies report earnings, big institutional owners such as mutual funds look for an opportunity to either add to or pare positions.
Post-earnings price movements driven by funds are most evident in smaller or younger stocks, which tend to be more volatile.
However, even when a widely held S&P component like Hewlett-Packard Company HPQ reports, an astute chart reader can spot institutional buying or selling.
For example, when Hewlett-Packard reported quarterly results in August, the stock vaulted 5.35 percent in the next session, with enormous trading volume.
Hewlett-Packard is owned by more than 2,000 domestic mutual funds and hedge funds, and that number has been growing. It's a mainstay of large-cap and index funds, including the Dodge & Cox Stock Fund DODGX, the Vanguard Total Stock Market Index Fund Investor Shares VTSMX, the Vanguard 500 Index Fund Investor Class VFINX, the DFA U.S. Large Cap Value Portfolio Institutional Class DFLVX and many others.
Dodge & Cox Stock Fund
The Dodge & Cox Stock Fund is the largest owner of Hewlett-Packard, holding 3.69 percent of shares. That accounts for 4.19 percent of total fund assets, making Hewlett-Packard its top holding. The fund's objective is long-term growth of income and principal. Fund assets total more than $58 billion, with the core holdings being U.S. and European large-cap names.
Top sectors are financial services, technology and health care. After Hewlett-Packard, other heavily weighted stocks in the fund are:
- Microsoft Corporation
- Capital One Financial Corp.
- Wells Fargo & Co
- Novartis AG (ADR)
The fund's one-year return is 15.6 percent.
Dodge & Cox International Stock Fund
The second-largest institutional owner is another Dodge & Cox fund, the Dodge & Cox International Stock Fund DODFX. This actively managed fund mainly invests in non-U.S. stocks, and investments may include emerging markets. The fund tends to concentrate on countries with stable economic and political systems.
Assets total more than $64 billion. The largest holdings are:
- Roche Holding AG
- Sanofi
- Naspers Limited
- Novartis AG (ADR)
- Credit Suisse Group
The fund's one-year total return is 6.4 percent.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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