Using SEC Form 13F To Track Warren Buffett’s Trades

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Today, investors rely on a number of tools to make better decisions. One such tool which all investors should be aware of is the Securities Exchange Disclosure form 13F which tracks large institutional money manager performance.

The Securities Exchange Commission’s (SEC) Form 13F is a quarterly report that all money managers who manage at least $100 million dollars must complete. Money managers are required by law to file Form 13F within 45 days of the end of a quarter where they have bought and sold securities for their customers.  On the surface this reporting was created by Congress to offer transparency on the holdings of the nation’s largest investors. But there are certain challenges in studying these filings.

Congress created the 13F requirement in 1975 with the intention of increasing investor confidence by being able to monitor the holdings of the world’s largest institutional investors.  13F filings are often used by smaller investors to try and follow the smartest and most successful money managers.

The first challenge with the 13F form reporting process is that no one at the SEC actually verifies the accuracy or the completeness of the filing.  Money managers file the form to make sure they are within the confines of the law but many analysts claim the reliability of the data is often problematic. As hard as it may be to believe, Bernie Madoff, the former market maker, investment advisor, financier, hedge fund manager, financier convicted fraudster who is currently serving a federal prison sentence for offenses related to a massive Ponzi scheme, dutifully filed his 13F filings every quarter.

A second major problem with Form 13F is the timeliness and context of the information. Since the reports are filed 14 days after the end of the quarter, and since most money managers submit their 13F’s as late as possible because they do not want to tip off their rivals on what they are doing, it is conceivable that a smaller investor will be receiving information that is up to 4 ½ months old.  If the smart money has already invested, the smaller investor is entering the market much later and less advantageous prices. Because of this, many investor groups have been lobbying for reform of the 13F process, petitioning that these forms should be filed monthly, within 15 days of the end of each month.

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Wall Street Jack 1 month ago Member's comment

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Craig Newman 2 months ago Member's comment

Thanks for the post.

Susan Miller 2 months ago Member's comment

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Alpha Stockman 2 months ago Member's comment

Interesting, thanks.