Despite Rising Market, "Smart Money" Sells For Record 17th Consecutive Week

Another week, and another quiet exodus by the "smart money" clients of Bank of America (hedge funds, institutionals and private money), who collective sold $218 million in stocks, the 17th consecutive week of selling completely oblivious of a market that "wants to go higher" according to Bob Pisani, and as BofA notes, "continuing the longest uninterrupted selling streak in our data history (since '08)."


Here is the full breakdown:

The rolling four-week average trends by client type:

  • Hedge funds have been net sellers on a 4-week average basis since early Feb.
  • Institutional clients have been net sellers on a 4-week average basis since early Feb.
  • Private clients have been net sellers of US stocks on a 4-week average basis since early January.
  • The four-week average trend for buybacks by corporate clients suggests a bigger seasonal slowdown in buybacks than what we have seen the last few years at this time

The silver lining is that selling, just like at the end of February and then again at the end of March, appears to be slowing down again.

Sales have now been slowing for the last four weeks, with last week’s net sales of $218mn notably the smallest since late February (see chart below). Institutional and private clients continued to sell US stocks for the 13th and 15th consecutive weeks, respectively, though net sales by institutional clients were the smallest since mid-February. Hedge fund clients were net buyers, after selling stocks the previous four weeks. Net sales were entirely in mid-caps last week, as small caps saw net buying for the second week, and large caps saw net buying for the first time since January.

On net, however, there was selling, which is confusing because as stock rose in the past week, BofA also reported that "buybacks by corporate clients decelerated last week, and quarter-to-date are tracking below levels we saw both last year and the year before. Year-to-date, buybacks are cumulatively tracking slightly above last year’s levels but below 2014’s record levels."

Finally, here is the breakdown by sector:

  • Net buying: Telecom since late April
  • Net selling: Tech since late Jan.; Staples since early Feb.; Industrials since mid-Feb.; Materials and Health Care since mid-March; Consumer Discretionary since late March, Utilities since early April, ETFs since late April.
  • Notable changes in trends: Energy saw a reversal back to net selling after a brief period of net buying; Financials saw a reversal to net buying after net selling since late Feb.