This page has been archived and commenting is disabled.

The "Smart Money" Just Sold The Most Stocks In History

Tyler Durden's picture




 

Last week, following the Fed's latest rate hike punt, stocks soared higher after realizing that not only is the Fed not ready to hike, but it will almost certainly not hike in September nor December (as the country will be covered by GDP crushing snow then). And despite some modest selling on Friday as the first images of Greek ATM lines spread, the S&P still finished nearly 1% higher for the week.

Any other week this would have been a perfectly normal event but according to Bank of America last week, this was not any other week. In fact, according to BofA's Jill Hall, "BofAML clients were big net sellers of US stocks in the amount of $4.1bn, following four weeks of net buying. Net sales were the largest since January 2008 and led by institutional clients—after three weeks of net buying, institutional clients’ net sales last week were the largest in our data history."

What was sold? Pretty much everything, although mostly large caps:

  • Net sales last week were chiefly due to large caps (biggest sales ever of this size segment), though small and mid-caps also saw outflows.
  • Institutional clients were broad-based net sellers of stocks in all ten sectors last week, led by Financials and Tech. Only ETFs saw (small) net buying by this group.
  • Hedge funds were net sellers of eight of the ten sectors last week, led by Health Care and Materials. Only Tech and Utilities, along with ETFs, saw net buying by this group.

It wasn't just the mutual funds: "Hedge funds were net sellers for the ninth consecutive week." Who was buying? Sadly, the dumb, "retail" money: "private clients bought stocks last week following the previous week’s net sales."

Then again, as the chart below shows, the "retail" money is hardly that dumb these days, and has been consistently selling all throughout the rally, leaving the "smart money" scrambling who to sell to, and also leading to such amusing demands as Carl Icahn telling AAPL to please buy his stocks. Because nobody else will...

 

Actually it's not just retail that no longer "buys", both literally and metaphorically, the market. Pension funds have also seen their cumulative stock purchases go back to levels last seen in 2007!

What is perhaps even more surprising is that on a rolling basis, every client class has been a net seller:

  • Hedge funds are net sellers of US stocks on a four-week average basis, which has been the case since late April. They are also net sellers YTD, after selling stocks in 2014 as well.
  • Institutional clients are now net sellers of US stocks on a four week average basis, after being net buyers since late May. They were the biggest cumulative net sellers in 2014, and are also net sellers YTD.
  • Private clients are net sellers of US stocks on a four-week average basis, which has been the case since late April. They were cumulative net sellers of stocks in 2014, but are net buyers YTD.

Which begs the question: how is the market just shy of all time highs... we ask rhetorically, of course...

So was this all a pre-Grexit cash out panic? Perhaps, but it also appears to have been quite targeted, with an emphasis on what has become the biggest industry bubble within the broader market: health care. In fact, healthcare selling was the biggest ever:

Net sales last week were broad-based, with stocks in all ten GICS sectors seeing outflows, led by Health Care and Financials.  Net sales of Health Care were actually the largest in our data history (see our Chart of the Week, below), and the sector continues to have the longest net selling trend at six consecutive weeks. It has also seen the largest outflows year-to-date. This sector has generally outperformed the market over the last four years. The more defensive sectors of Staples, Utilities and Telecom saw the smallest outflows last week; only ETFs saw net buying.

 

The two Consumer sectors, Financial, Health Care, Energy, Industrials and Telecom saw net sales from institutional  clients, private clients and hedge funds alike last week. Only ETFs saw inflows from all three groups.

Charted:

Finally, in the New Normal, it is no longer the smart, or dumb, money that is the marginal price setter but corporations themselves, via record amounts of stock buybacks. This is how they fared:

Energy stocks have notably seen a tick-up in buybacks by our corporate clients over the last three weeks, with <$6mn per week in Energy buybacks year-to-date through June but between $40-100mn each of the last three weeks.

Buybacks last week were largest within the Financials sector, followed by Consumer Staples. This was also true the previous week.

 

Indeed, with everyone else selling, it was corporations that continued their buyback ways.

And the worst news: with everyone else dumping stocks at a (near) record pace, the buyer of last resort, corporate buybacks, are about to enter that most dreaded period of the quarter: the blackout period that surrounds earnings releases. As such, starting this week and continuing for the next month, stock repurchases will grind to a halt.

One can hope that the Bank of Japan and the Swiss National Bank have some serious firepower left to pick up the slack: they are now, quite literally, the buyers of last resort.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 06/23/2015 - 15:08 | 6226485 Dazman
Dazman's picture

I hit the sell button by accident. I meant to BUY MOAR MOAR MOAR. It's all good, Yellen Smellen got my back.

Tue, 06/23/2015 - 15:23 | 6226564 pemdas
pemdas's picture

So Bof A Merrill Lynch clients are the smart money? How soon can I open an account?

Tue, 06/23/2015 - 15:33 | 6226610 Stuck on Zero
Stuck on Zero's picture

Stocks look like real estate - fewer buyers and higher prices. Go figure.

Tue, 06/23/2015 - 15:38 | 6226632 ParkAveFlasher
ParkAveFlasher's picture

More middlemen + infinite funding = higher prices

Tue, 06/23/2015 - 15:42 | 6226654 CClarity
CClarity's picture

Most important bit in this piece is about the blackout period for the corp buybacks.  Good work.  That's the cascade point potentially~

Tue, 06/23/2015 - 15:51 | 6226692 kliguy38
kliguy38's picture

gotta get the bells and whistles goin off for the suckers to take the casino chips........

Tue, 06/23/2015 - 15:56 | 6226723 Port of Pursia
Port of Pursia's picture

A Fox News anchor hit a guy with an axe resulting in an accidental publicity stunt

https://youtu.be/Mw3jssYRz_A

Tue, 06/23/2015 - 17:41 | 6227208 Funny Money
Funny Money's picture

"This time it's for real!"

 

Yeah, right.  Wake me up when the sky is actually falling.

Tue, 06/23/2015 - 21:49 | 6228054 tdag
tdag's picture

What, so they BTFD next week.

Tue, 06/23/2015 - 15:30 | 6226596 inhibi
inhibi's picture

We dont got no sell buttn over here, yellen took em all. 

Tue, 06/23/2015 - 16:05 | 6226766 saints51
saints51's picture

I am an American. All I saw on top of some chart was "CUM FLOWS".

Tue, 06/23/2015 - 23:19 | 6228298 AngelaTwerkle
AngelaTwerkle's picture

Those flows decrease proportionately with whiskey sales.

Tue, 06/23/2015 - 15:57 | 6226728 ZH Snob
ZH Snob's picture

those who got out really were smart.  they collected all the way up and now they know the party is over, or at least too risky to participate in anymore.  all they have to do now is convert those profits into tangible assets that will weather the coming storm and they'll be freakin' geniuses.

Tue, 06/23/2015 - 17:34 | 6227173 Ultimate_Warrior
Ultimate_Warrior's picture

It is nice choice, making more income $67 a hour from computer at home. My sisters friend has been earning 20k for a months and she works about 15 hour a working week. I make 10k last month, it is in real easy and meaningful , here you can checking... www.earnmore9.com

Wed, 06/24/2015 - 10:08 | 6229353 order66
order66's picture

Those year to date cum flows are hard for retail to swallow.

Tue, 06/23/2015 - 15:11 | 6226507 youngman
youngman's picture

Withe the Greece deadline here...can you blame them..no one believes that it will be contained....and many think it might take down the EU..and the Western world as far as that goes....just CYA i think.....but no run to gold and silver..quite the opposite

Tue, 06/23/2015 - 15:28 | 6226579 Bastiat
Bastiat's picture

Hard to know by price what's going on with supply and demand in the gold and silver markets -- as those "markets" aren't markets.

Tue, 06/23/2015 - 15:57 | 6226730 Consuelo
Consuelo's picture

And there won't be until a status-changing event in Ukraine or China's regional waters upsets the apple cart enough for both of those nations to take decisive action in the markets.   

Tue, 06/23/2015 - 15:37 | 6226631 RushRoolz
RushRoolz's picture

Yeah my gold ain't exactly going up... wonder what's happening with tulips...

 

Tue, 06/23/2015 - 16:02 | 6226753 trader1
trader1's picture

tulip season is coming to a close.

Tue, 06/23/2015 - 22:12 | 6228120 mt paul
mt paul's picture

 

Poppies

are the new tulips

Tue, 06/23/2015 - 15:25 | 6226534 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Beavis he said cum flows.

Nothing like subtle sexual double plus not so good propaganda programming to add secondary meaning into a deflating stock market.

If they are all blowing their loads who or what is the cum dumpster then?

Tue, 06/23/2015 - 15:28 | 6226584 Four chan
Four chan's picture

an algo just came. what else is this market?

Tue, 06/23/2015 - 15:55 | 6226722 Excursionist
Excursionist's picture

Unsure about the current cum dumpster, but here's a prediction you can bookmark:  the H2 2015 cum dumpster will be all the alleged "smart money" that's been selling the past three months.

One way or another, every institutional guy is comp'ed on outperformance.  September will roll around, and the 'smart money' will start thinking "Shit!  Where's that goddamned pullback / correction / crash / apocalypse my research team has been going on and on about?  I'm lagging my index by [x] bps... this sucks!  And I promised my hooker I'd upgrade her SL600 to a DB9 next year.  Now how am I gonna get laid?"

So sometime around the middle of Sept. you'll see a stampede back into all the assets currently getting sold, and we'll have something akin to a market blowoff.  That's when the truly smart money will start to sell.

But I'm open to being wrong about this.

Tue, 06/23/2015 - 16:12 | 6226796 saints51
saints51's picture

haha missed your comment Dewey. Are you an American like me? We tend to pick up this type of subliminals due to all the propaganda displayed 24-7 .

Tue, 06/23/2015 - 15:17 | 6226535 booboo
booboo's picture

If ur sellin

really sellin

just call fugly Yentil Yellen

She's buyin what ur sellin like a jewish jail house felon.

Tue, 06/23/2015 - 18:32 | 6227426 NotApplicable
NotApplicable's picture

Kevin Henry got her back.
Poor guy.

Tue, 06/23/2015 - 15:18 | 6226538 Tall Tom
Tall Tom's picture

I wonder why the smart money cashed out and left the table.

 

Too much skim, perhaps, by dishonest dealers?

 

Can the Casino of Wall Street be broke?

Tue, 06/23/2015 - 15:22 | 6226555 tarabel
tarabel's picture

 

 

Broke, no.

But maybe getting close to closing time.

Some jurisdictions still have blue laws.

Tue, 06/23/2015 - 15:19 | 6226542 BlindMonkey
BlindMonkey's picture

The muppets are about to take one for the team.

Tue, 06/23/2015 - 22:13 | 6228125 mt paul
mt paul's picture

the few

the brave

 

the muppet..

Tue, 06/23/2015 - 15:20 | 6226547 geekz_rule
geekz_rule's picture

this is bullish, right?

o.0

Tue, 06/23/2015 - 15:28 | 6226583 Black Forest
Black Forest's picture

Right. Institutionals are scary, whiny pissbabies.

Tue, 06/23/2015 - 15:21 | 6226550 tarabel
tarabel's picture

 

 

If some benevolent stranger were to be so kind as to provide me with a non-collateralized signature loan, I would be delighted to buy all the stocks I can get my hands on.

I could even quit my current job making 64,000 every weekend on the Internet.

Tue, 06/23/2015 - 15:25 | 6226570 kchrisc
kchrisc's picture

The dollar is up on "exit."

Liberty is a demand. Tyranny is submission.

Tue, 06/23/2015 - 15:31 | 6226585 Rainman
Rainman's picture

Buy everythings while blood in the streets . Proceeds from sales of Dow20k hats will go to me charitable foundation. 

Tue, 06/23/2015 - 15:30 | 6226591 stock market loser
stock market loser's picture

Death to the human race. Long live the non human species!

Tue, 06/23/2015 - 15:34 | 6226620 Ignorance is bliss
Ignorance is bliss's picture

If everyone is selling...then why is the market still up? Someone somewhere is buying..just not through BofA.

Tue, 06/23/2015 - 15:34 | 6226621 richiebaby
richiebaby's picture

They will be buying again when Yellin gives them the green light 

Tue, 06/23/2015 - 15:40 | 6226643 SPAREPARTS
SPAREPARTS's picture

Markets can do anything, exciting stuff if you are playing and in the game, amazing how this has happened, mindboggling that its all absurdity, yet continues, it simply has to come apart, hardware is breakin up, the makers of the rules are losing it. But everyone is gonna hate the medicine, we all are gonna suffer regardless of any precautions too many varibles to be certain.

Tue, 06/23/2015 - 15:43 | 6226663 harrybrown
harrybrown's picture

The Blood on the streets is not the primary move, its the deadly shit they will spray on'em from above thats the real goal....
once they're all snuffed out, then there will be no complaints from anyone about anything... Just like Rome "had no enemies"

Tue, 06/23/2015 - 15:46 | 6226668 Comte d'herblay
Comte d&#039;herblay's picture

A trillion here and a trillion there and soon you're talking about REAL money.\

3 ,'s  just is so, yesterday.

Tue, 06/23/2015 - 15:45 | 6226671 Secret Weapon
Secret Weapon's picture

If they are with BOA I doubt they are the "smart money".

Tue, 06/23/2015 - 15:46 | 6226672 Dr. Engali
Dr. Engali's picture

Sell now before it's illegal later.   

Tue, 06/23/2015 - 15:52 | 6226700 reader2010
reader2010's picture

Karl Marx famously said, "History repeats itself first as tragedy then as farce." How can some money be called "Smart Money" if it hadn't purchased state power and all its institutions in the first place? No, it's not smart moeny per se but the power sucking blood from society at large.

Tue, 06/23/2015 - 15:52 | 6226706 Firewood
Firewood's picture

Surf's up and its gnarly.

Tue, 06/23/2015 - 15:54 | 6226716 LawsofPhysics
LawsofPhysics's picture

Okay, fine, tell me, what did they buy?

Tue, 06/23/2015 - 15:59 | 6226740 SmallerGovNow2
SmallerGovNow2's picture

LOP or anyone, can you explain in simple terms how net sales can be so high yet the composites still go up?

Tue, 06/23/2015 - 16:10 | 6226786 Winston Churchill
Winston Churchill's picture

i ask myself that everyday about my local RE market.

Very little selling, but the prices keep going up.I used to just put it down to LSD flashbacks,

but now I'm not so sure.

The answerr my friend, is they are lying about everything.Capice ?

Tue, 06/23/2015 - 17:10 | 6227051 LawsofPhysics
LawsofPhysics's picture

Exactly.  If everyone is going to cash, should the "market" fall?  

But I digress, we all know that the Fed is back-filling...

IMO hyperinflation has begun already.

Tue, 06/23/2015 - 21:26 | 6227999 Sages wife
Sages wife's picture

Clearly friend, hyperinflation is inevitable.

Tue, 06/23/2015 - 22:16 | 6228131 mt paul
mt paul's picture

with the price of gold and silver

wonder if they bought in on the cheap

Tue, 06/23/2015 - 16:00 | 6226746 mojojojo
mojojojo's picture

It is really quite polite of corporations to buy back stock. Taking it for the team.

Tue, 06/23/2015 - 16:01 | 6226751 arrowrod
arrowrod's picture

Smart?  And then, what do you do with $5T?

Put it where?

All I see with all this churn is stock broker extravagant (yeah I had to look it up to make sure I spelled it correctly) penthouse buying.

Oh, by the way, here in Florida, Cumberland is building gas stations like they know something is coming.  (Maybe all the cash from stock sales.)

 

Tue, 06/23/2015 - 16:04 | 6226762 trader1
trader1's picture

Something?

Tue, 06/23/2015 - 16:28 | 6226866 replaceme
replaceme's picture

An army of old people.

Tue, 06/23/2015 - 16:02 | 6226754 I Write Code
I Write Code's picture

And so what did they do with the proceeds?

Tue, 06/23/2015 - 21:27 | 6228004 2thepeople
2thepeople's picture

I bet they didn't buy bonds.

Tue, 06/23/2015 - 22:20 | 6228144 mt paul
mt paul's picture

i;d hedge that bet

 

"they loot the treasury last"

ie treasury bonds

Tue, 06/23/2015 - 16:13 | 6226802 mojojojo
mojojojo's picture

If I was an investor with toxic stock to offload, I would be loving buybacks. Just gotta move wealth and self offshore so the suckers can deal with fallout.

Tue, 06/23/2015 - 16:50 | 6226969 Raoul_Luke
Raoul_Luke's picture

Hahaha!  And we're green!  Who the ef cares about the "smart money?"  Ef them!

Tue, 06/23/2015 - 20:24 | 6227821 steveharless
steveharless's picture

 

China’s stock market fell hard last week—really hard 

http://qz.com/433012/chinas-stock-market-fell-hard-this-week-really-hard/

so it begins...

Tue, 06/23/2015 - 20:24 | 6227822 steveharless
steveharless's picture

1

 

Tue, 06/23/2015 - 20:29 | 6227846 Atomizer
Atomizer's picture

Pop goes the weasel. 

Tue, 06/23/2015 - 21:12 | 6227969 Sages wife
Sages wife's picture

"...me?, no, I'm just going to the washroom. Maybe some bad Kobe, I'll be right back."

Tue, 06/23/2015 - 22:16 | 6228133 TheRideNeverEnds
TheRideNeverEnds's picture

Sounds convincing but for one major detail.  This is the 21st century so why would actual buyers or sellers be relevant to the price of anything?  There are two main pricing mechanisms in today's age and neither one cares about supply and demand at least in the USSA.  One is the conglomerate of private interests we call government and the other is people with fancy enough computers and enough money already under the supervision of the aforementioned and usually at least tangentially a part of them.  I fail to see how the decisions of the masses effect that of the aforementioned in any material way thus most price is non correlated to supply and demand.  

Wed, 06/24/2015 - 04:02 | 6228673 Rodders75
Rodders75's picture

Why are institutions considered to be "smart money"?

Do NOT follow this link or you will be banned from the site!