Following billionaire hedge fund manager Leon Cooperman out of Apple and into Facebook is foolish, yet this is exactly what a number of investors wanted to do Wednesday.
It is said a picture is worth a thousand words. The charts of Apple AAPL and Facebook FB tell the story.
Wednesday afternoon I started receiving a flood of emails asking two basic questions. Should we sell Apple? Should we buy Facebook? Most emails contained a link to one media outlet or another with headlines such as “Cooperman sold Apple,” or “Cooperman bought Facebook.”
Cooperman is a successful investor. It is reported that he generated 26% return last year. It is understandable why investors would want to follow him. After all, some outfits have made a nice business by selling newsletters that supposedly help investors follow billionaires and hedge fund managers.
Here is why it is a folly to sell Apple and buy Facebook on media headlines about Cooperman. If it was Sherlock Holmes, he would say, “It is elementary, Watson.” Take a look at the following reasons.
- The media picks up reports of a hedge fund buying or selling from Form 13Fs filed with the SEC.
- Form 13F only shows holdings at the end of a quarter.
- The 13F does not show when something was bought or when something was sold.
- The 13F is filed with a delay of 45 days.