Determining Investor Sentiment in Industries by Examining Institutional Funds Flow

2017-08-24 - by Wilton, Contributing Analyst

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One of the more interesting types of analysis available on Fintel is overall investor sentiment in industries. When doing analysis on individual securities, it is wise to examine the overall health of the company's industry. Rising tides lift all boats, and the same can be said for securities.

Just like with companies, industry performance moves in cycles. As the performance of industries rise and fall, so does the investor sentiment and total investment . This phenomenon is called "sector rotation" and it is an important part of investing.

Fintel provides a tool that allows you to visualize the institutional funds flow into any industry. This allows investors to get a sense of the overall institutional sentiment of the industry, and to know whether money is pouring in, or pouring out.

What we do is examine the 13F filings made by every institution and cross-reference them against the self-reported SIC codes of every company that files with the SEC. We aggregate the total reported share and total reported value of these reports, and present them in a table and graph form. This allows investors to get a sense of the overall macro sentiment of an industry.

To see the industry sentiment, follow these steps.

  1. From the top navigation menu, select Industries then select the industry that you are interested in researching. For this example, I will select Gold and Silver Miners.

  2. On the Gold and Silver Mining Page, select the Investment Trend tab.

  3. On the Investment Trend page, you will see a graph and a table of the reported shares and reported value of the investments. To create this graph, we aggregate all the reported shares of all the funds that file 13F filings with the SEC, and group the fund investments by security. Then, we cross-reference each security with the company's self-reported SIC code (from the 10K). And finally, we sum the shares and valuations from the 13F reports by industry and by quarter. What you see in this graph is a trend line showing total shares and total valuations of holdings for an industry, by quarter.

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