Big Retirement Funds Are Dumping These Stocks — Should You?

Find out if you should adjust your investment strategy now.
  • Managers of large pension plans and retirement funds have been selling shares of stocks like General Electric and Lowe’s Companies Inc.
  • These managers carefully study the market and companies, so these sales could be a sign for you to do the same.
  • You will want to keep in mind the reasons the managers could be selling shares, such as bringing a portfolio back to its target allocation.

Large pension plans and retirement funds buy and sell stocks all the time. There have been some recent moves with big retirement funds dropping certain stocks that you might want to pay attention to.

The people who manage these funds take a number of factors into consideration when they decide to make these moves, so you will want to take that into account.

Click to read more about the best short-term stock investments and see what has been sold by these big retirement funds:

  • Teacher Retirement System of Texas sold 69,566 shares of NetApp (Nasdaq:NTAP), reducing its holdings by 56.1 percent, according to its most recent Securities and Exchange Commission 13F filing.
  • State of New Jersey Common Pension Fund D reduced its holdings in Flowserve Corp. (NYSE:FLS) by 54.8 percent as it sold 85,000 shares of the industrial products company.
  • New York State Teachers’ Retirement System sold 4.9 percent of its shares of Energizer Holdings (NYSE:ENR) in the second quarter, although it still owned 111,480 shares after this reduction.
  • IBM Retirement Fund sold 12.3 percent of its shares of Lowe’s Companies Inc. (NYSE:LOW), reducing its stake by 2,529 shares to 17,954 shares, according to its most recent filing with the SEC.
  • State Board of Administration of Florida Retirement System sold 21,277 shares of HP Inc. (NYSE:HPQ), which represented 0.9 percent of its stake in the computer maker. It also reduced its position in Avista Corp. (NYSE:AVA) by 9.8 percent or 3,970 shares. It still owns nearly $2 million worth of stock in the energy company as of its most recent filing with the SEC.
  • The California State Teachers’ Retirement System sold 405,154 shares of General Electric (NYSE:GE) stock, which represented 2.5 percent of its position in that company.

Considering that the managers of these pension funds carefully study the market and the companies in which they invest, does it make sense to follow their lead? If you own these stocks, should you make the same moves?

Read: How to Short a Stock — and Why You Shouldn’t

The answer to that question is a resounding “maybe, or maybe not.” Fund managers often buy and sell specific stocks to bring their portfolios back to their target allocation, which can mean that the stocks they’re selling are actually doing well. For example, if a portfolio is intended to hold 10 percent in transportation stocks, and those stocks surge, those stocks might now represent 11 or 12 percent of the portfolio. The manager will sell some positions in transportation to get that sector back to 10 percent of the total.

Related: 9 Safe Stocks for First-Time Investors

When adjusting your own portfolio, you can watch the pension funds but understand the reasons why fund managers might be selling.

Click through to read more about the stocks Warren Buffett has invested a ton of money in.

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