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.
Please click here for Apple chart about Cooperman selling.
Please click here for Facebook chart about Cooperman buying.
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.
