Learnings from 10 yrs. Wall St. Experience – Understanding Shareholder Behavior, /u/Empty_Performance308, on April 30, 2021 at 12:46 am ,

Hey all!! There’s interest so I’m moving to share the knowledge and tactics I’ve learned 10 years of Wall St. starting with a simple step-by-step book! My plan is to share as much as possible. Here’s a fun one to start. Shareholder ownership as a tool. TLDR: Shareholder lists help you anticipate how stock moves, the quality of the business, and ideas potential “catalysts.” And be valuation flexible! If you are interested, I’d love to hear your feedback here (2 minutes!). Here is the outline of the book. (or leave a comment!). Or get in on the pre-sale! There are three major institutional groups in the markets. 1 – Passive funds. ETFs and funds that invest based on indexes (like $SPY). They are over 50% over equity assets and likely account for most buying / selling volume day to day. They buy with inflows (people buying the fund) and buy more when stocks goes higher (market-cap weighted). So how do you use this insight? One is pick stocks in macro / sector flow ($XLE, $XLF, $XLRE, $XLC – top returns YTD – oil prices, rates, real estate, retail – all higher), and style flows ($IJR and $IWD – top returns YTD – small-caps, value). The more % shares are ETF (i.e. passive), the more the stock will move with the factor / sector. Second and very importantly, you must be flexible on valuation. When company’s growth improves, the value of the company increases, so passive funds will buy more of the stock. This is exactly what happened with $TSLA. ETFs will buy MORE as it gets bigger. Use valuation to understand the business and its upside but know that valuation is NOT a reason (alone) to buy or sell something – the majority of funds don’t even look at it. 2 – Hedge funds (HF) These funds that invest with specialized strategies (provide “alpha”). Well-respected names like Lone Pine / WhaleRock for growth, or value HFs like Scion (Burry), Miller, Nuance. When you see a HF they are stock for a reason. There could be a catalyst (“event”) or strategic business change, or some emerging “secular” trend. Use them source of interesting ideas. And check 13Fs for new positions. For example, Lone Pine is playing the new growth of $SNAP and continuous glucose monitors $DXCM. Whale Rock is is in auto travel ($UBER, $CVNA). Pura Vida is in $INOV for its strategic pivot. Now the downside is HF activity can make the stock more volatile. A stock like $MSCI bounced around a lot last year as HFs came in and out. The long/short (LS) funds Citadel, Point72 and Millennium don’t show up on 13Fs – but they are also very active since they crowd in and out of names with leverage (i.e borrowed money). When volatility picks up like in February / March these funds all “de-gross” or reduce exposure and that can be an opportunity to pick up shares sold-off hard. 3 – Long only investors (LO) – These are the mutual funds that manage retail retirement assets. Companies also love them as shareholders because they usually hold for many years. Respected names are Capital, Fidelity, TRowe, JP Morgan, American. How is this useful? Use them to help assess the business. These funds are in high-quality companies (like $SPGI) where there is less risk of blowups like fraud. Fidelity and TRowe have management teams rotating in and out to see them -where they are grilled by specialized sector research teams. They do their diligence. The stock will likely be less volatile since LO’s don’t trade and may buy dips to accumulate shares. Names like Baron, Ballie Gifford, Jennison are very respected at identifying growth / innovative companies. Use them as a vote of confidence in a new company. For example, Baron and Ballie were both early to invest in $TLSA and Jennison in $ADYEN, and have both done very well. Happy investing!! (You can see this information in Atom Finance ownership lists. And WhaleWisdom for 13Fs.) Link to first post (what makes stocks move, how to value a stock, factors) https://www.reddit.com/r/FluentInFinance/comments/mwvp1d/learnings_from_10_yrs_of_wall_st_experience/ submitted by /u/Empty_Performance308 [link] [comments], , Read More, r/StockMarket – Reddit’s Front Page of the Stock Market, r/StockMarket

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