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Scrutinize the 13F filings, but don't treat them as a valuable tool that will enable you to invest -- or perform -- like the smart money set
Investors and journalists like to scrutinize -- and, for investors, mimic -- the quarterly filings of hedge fund stock holdings when they are disclosed to regulators, even though they are generally filed 45 days after the quarter's end. After all, for most observers, this is as much information and insight they will ever get into a hedge fund's portfolio.
In some cases it is a pretty good snapshot of the manager's stock holdings, even given the delay. In fact, we recently reported that in the third quarter, hedge fund turnover was just 29 percent, according to a Goldman Sachs report. Looked at another way, 71 percent of securities reported in the September 30, 2012, 13F filings also appeared in the June 30 filings.
As tempting as it seems to emulate the smartest money's top holdings, a few recent developments offer cautionary lessons.
For one thing, the hedge fund set...