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Fund Spy

Manager Question of the Month: How Much Attention Do Managers Pay to Rival Trades?

Stock managers especially watch large investors, activists, and insiders.

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When Morningstar asked in recent meetings, many active equity stock managers admitted to paying at least some attention to the trades their peers and other large investors make. Reasons for peeking ranged from learning the views of informed investors--namely, company insiders and activist investors who can drive shareholder-friendly changes--to looking for potential contrarian opportunities, or even to spy on moves by environmental-, social-, and governance-focused investors.

“We really pay attention when there’s an informed owner,” said Benjamin Garosi, a Dodge & Cox Stock (DODGX) manager. Well-regarded private equity investor KKR’s (KKR) stake in Fiserv (FISV) through its First Data acquisition in 2019 helped its managers become comfortable with buying payments firm Fiserv in 2020’s fourth quarter.

Drew Carter does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.