The SNB’s latest 13-F form filings (yes, the Swiss central bank lists its US equity holdings like the hedge fund that it is) to the SEC were released this week. And, like every other quarter, we take a closer look to see what stocks the world's only
hedge fund central bank that prints money out of thin air bought, and on rare occasions, sold. This was one of those rare quarters.
After some modest fluctuations earlier this year, the SNB's reported equity allocation was unchanged in 3Q at 21% (and includes no bank stocks to avoid conflicts of interest, yet somehow owning a chunk of equity of virtually every other US public company is not a conflict of interest?). This is notable because as JPMorgan writes, the SNB’s behaviour in 3Q18 appears contrarian.
While the chart below shows that the overall value of the SNB's US listed long holdings rose by over $2 billion to $90 billion, most of this was due to the price appreciation and according to JPM calculations, the central bank sold around $7bn of equities in Q3 based on the returns on non-financial sector equities. This compares to purchases during 1H18 of around $6bn. The central bank also reportedly bought around $3bn of bonds in 3Q, following largely flat bond purchases in 1H18.
In addition to taking some profits just as the market peaked this year and ahead of the nasty October rout, here are some other notable observations: in the third quarter, after the SNB printed money out of thing air, it then sold 1.1 million shares of Apple, 893K shares of MSFT, 44K shares of Amazon, 83K shares of Alphabet, 296K shares of FB, and 526K shares of XOM. Also according to some calculations, the SNB's portfolio now generates over $1 billion worth of dividends, or as @SheepleAnalytics notes, "they print money and we ship them our profits."
Still, we wouldn't be too worried: after all, when a central bank can and does create money out of thin air, any buying pause is only temporary, especially if its portfolio drops to a level when the local politicians may start asking questions.