Smart Money Is Selling: What Hedge Funds Know That You Don’t
The quarterly “Whale” reports are in and they don’t reflect well on where the market may be headed.
13F filings released by the large institutions and names like Warren Buffet and Michael Burry (The Big Short) this week offered a sobering message to anyone paying attention: the big money is quietly heading for the exits.
The message has been building since late 2024 when headline after headline revealed the war chest that Warren Buffet’s Berkshire Hathaway was building. As of 2024, the “Oracle” had built a cash position that was larger than what he amassed ahead of the Great Financial Crisis.
Now, many of the institutional investors that investors watch for cues have made decisively defensive allocations changes to their portfolios, according to the latest 13-F filings.
The Big Money Crowd is Turning Bearish
From a 10,000-foot view, the tone of the most recent disclosures is decidedly bearish. While it’s not uncommon to see some rotation each quarter, the sheer scale and coordination of selling activity across some of the largest and most respected hedge funds is worth noting. Mega-cap tech, major financials, and economically sensitive sectors all
saw substantial reductions. This isn’t about trimming around the edges, this is de-risking, plain and simple.
And while some managers simply lightened up on positions, others went a step further. Michael Burry, who gained notoriety for predicting the 2008 crash, took out bearish put options against high-flyers like NVIDIA (NVDA) and Chinese tech stocks. He didn’t just walk away from the market. He is betting that the market is set to break in a big way.
Why 13F Filings Matter More This Time
Most of the time, 13F filings are more of a curiosity than a crystal ball.
They reflect positions as of the end of the prior quarter, and strategies may have already shifted. But every so often, they light up like a warning flare. This is one of those times.
When the largest funds start to move in the same direction — raising cash, rotating into defensives, buying downside protection — that’s not coincidence. That’s signal.
Tracking 13F activity gives retail investors a behind-the-curtain look at how professional money is positioning itself.
The truth is, most quarters, this data is interesting but not actionable. But every few years, there’s a clear consensus shift that reveals what the smartest money on the street is preparing for. Right now, it looks like they’re preparing for trouble.
This Month’s Filings: Signs of a Shift
Let’s break down what we saw in the latest batch of filings:
- Heavy Selling in Tech and Consumer Names
- Third Point exited Tesla (TSLA) and Meta (META) completely and trimmed Amazon.
- Duquesne Family Office dumped Alphabet (GOOG), cut Tesla (TSLA), and sold off airline stocks (XAL).
- Berkshire Hathaway reduced exposure to Bank of America (BAC), Capital One (COF), and Citigroup (C).
These aren’t minor trims. These are core holdings being let go. The common denominator? High-beta, economically sensitive, or over-owned names that tend to fall hard when sentiment shifts.
- Put Buying and Downside Bets
- Michael Burry bought put options against Chinese tech names and trimmed nearly all long positions.
This is rare. It signals not just a lack of confidence, but a belief that something major could go wrong. Michael Burry now holds one long position in his portfolio – Este’ Lauder (EL) with the resto of his portfolio’s $1.99 billion sitting in cash and aggressive short positions.
- Tactical Rotations That Reveal Caution
- Bill Ackman exited Nike (NKE) and added Uber (UBER), a trade that looks more like a positioning shift than a bullish bet.
- Starboard Value cut its Pfizer stake in half following an unsuccessful activist campaign.
These moves reflect repositioning, not optimism. The emphasis is on managing risk.
History Rhymes: When the Whales Moved in Sync
This isn’t the first time institutional managers have acted in concert before broader markets caught on. There are clear precedents:
Q4 2007: Before the Great Financial Crisis
- Major funds cut financials like Lehman, Bear Stearns, and Citi.
- Defensive sectors like healthcare and gold miners saw inflows.
Similarity: Big banks being sold today mirror that period. And back then, they knew what was coming.
Q2 2015: China Fears and Earnings Concerns
- Funds rotated out of Apple, Qualcomm, and other global plays.
Similarity: Today’s trimming of mega cap tech echoes this cycle. Concerns about China haven’t gone away either.
Q4 2018: Fed Hikes and Volatility Spikes
- Hedge funds dumped growth stocks and loaded up on Treasuries and gold.
Similarity to today: Tech weakness and put buying lined up then, just like now.
Q1 2022: Post-Stimulus Reality Sets In
- Institutional selling hit ARKK-style growth, crypto proxies, and Chinese ADRs.
Similarity: Many of the same names are getting hit again now. Once again, Burry was early with puts.
What Makes Q1 2025 Stand Out
This cycle has its own flavor. What makes this batch of filings unique is the combination of:
- Coordinated selling across multiple sectors, especially tech and financials
- Derivative-based bets on major downside
- A lack of dip-buying in beaten-up growth stocks
- And a broader macro environment that still looks unstable
We’re looking at Fed policy uncertainty, geopolitical risks, a frothy AI-led tech rally, and growing divergence between investor enthusiasm and economic data. That’s a tough environment for risk assets, and the whales are adjusting accordingly.
What to watch over the next 3-4 weeks
Stocks have made a strong 20% bounce following the April 9 lows as the Trump Administrations has started negotiations with trading partners. That bounce in stocks is still within the scope of a “bear market rally”. Read more about the history of bear market rallies here.
Investors need to pay special attention to the market technicals as we get closer to June. The old saying “Sell in May” is partially true as the month of June holds the second worst returns for the market over the last 20 years. Find out more about June’s seasonality here.
Looking at the S&P 500 ETF’s chart, a move back below $575 will likely tip the balance of power in the market back to the bears. Furthermore, a move back below $550 would signal that investors should expect to see a fresh round of new lows from stocks before things get better.
This is exactly what the “Whales” are positioning for.
How to Use This to Your Portfolio’s Advantage
You don’t need to copy every trade from a hedge fund to benefit from this data. But you can learn from the playbook:
- Consider rotating into defensive sectors like utilities, healthcare, and consumer staples.
- Explore defined-risk hedging strategies like put spreads or inverse ETFs to protect against a broader market drawdown.
- Avoid the temptation to chase speculative tech just because it’s been working.
- Build a watchlist of names that institutional money is exiting and be ready to pounce if they become true bargains later.
Sometimes, the best trades come not from being early, but from being ready. This is one of those times.
This article was originally published on this site
