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Best of the Blogs: Hedge Funds Went Shopping for What?


Plus, retail investors continue to exit stocks.

This column highlights the most interesting and useful business and financial commentary from around the Web each day.

Barron's: Focus on Funds
Link: Smart Money's Biggest 2Q Buys Were … Consumer Staples?

"You read that well-known hedge-fund managers upped their gold holdings and sold off several big financial stocks as of midyear. But major hedge-fund managers' biggest second-quarter moves may well have pertained to …consumer staples?

"Yes, according to one study, even though it's a staid, stable sector that the largest hedge funds usually love to hate.

"[...] Recall that George Soros' Soros Fund Management made Wal-Mart (WMT) its third-largest equity position as of midyear, this week's filings revealed."

Link: Retail Exodus From Stocks Continues: Another $3.6 Billion Pulled Out Last week

"In the past two years, or 106 weeks of market data, there here been 17 weeks of inflows, or 16% of the total, amounting to $31 billion. The remainder? Outflows for a total of $300 billion. In the 32 weeks of YTD 2012 money flows, there have been 5 weeks of inflows for a total of $3.6 billion (which was also equal to the outflow in the last week alone) none of which coincided with market tops, and in fact the biggest out flows occurred just as the market hit interim highs. The most recent inflow, as tiny as it may have been, curious occurred during the May lows, proving retail is if anything, the smart money now. In other words, those looking for hints about the market based on retail flows are advised to look elsewhere. What this data does show is that no matter what happens in the stock market, the outflows will persist and are unlikely to reverse direction. Because if the S&P (^GSPC) at fresh 2012 (and multi-year) highs is unable to draw retail out of hibernation, nothing will."

The Wall Street Journal: MarketBeat
Link: Dividends & Tech Stocks: Silicon Valley All Grown Up

"Is it possible to get both risk and reward in one sector? If you're talking about the tech sector, the answer just may be yes.

"The tech sector now has higher dividend payouts on a percentage basis than any other large-cap sector in the S&P 500, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Cisco Systems' (CSCO) boosted dividend, announced last night, propelled tech to the top spot, claiming the ranks from the consumer-staples sector."

The Atlantic
Link: How the Great Recession Proved, Beyond a Doubt, the Value of a College Degree

"The U.S. economic recovery has been anemic by almost any standard. But for Americans with just a high school degree or less, it's been worse than anemic. It's been non-existent.

"This week, Georgetown University's Center on Education and the Workforce published a new report breaking down job growth during and after the Great Recession by education levels. And as it illustrates in the graph below, employment has been essentially flat since January 2010 for adults who never went to college. (The center's analysis only extends through February, but according to similar data from the BLS, employment has barely budged for the demographic since)."

The New York Times: DealBook
Link: After MF Global, a Need to Find New Ways to Protect Customers

"The MF Global (MFGLQ) story still lingers as an insolvency matter, but now we hear rumblings that there will be no criminal charges. It may well be that no crimes were committed, but if this is so, it is time to seriously rethink how broker-dealers handle customer property.

"In theory, customer property at a brokerage firm should be even more secure than money in a bank, because banks use fractional reserves, meaning that by design they have 'used' a large part of the deposits, while customer property at a brokerage firm is supposed to be segregated in a special fund at a third-party custodian bank."

Pragmatic Capitalism
Link: Why QE Is Not Working….

"The way QE works is just like all monetary policy. The Fed alters the amount of reserves in the banking system and alters the demand for credit. But the big difference between altering the Fed Funds Rate and implementing QE is that they manipulate prices in setting the FFR. That is, the Fed sets the price of overnight loans by SPECIFICALLY naming the price of the loans. This has a dramatic impact on the banking system and the profitability of loans. But QE has been implemented in an entirely different manner. It's been enacted not by setting a price, but by naming a quantity (like, 'we're buying back $600B of US t-bonds')."
Twitter: @ChrisWitrak
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