In hindsight, it may seem like the first quarter of 2025 was the calm before the storm in comparison to the whipsaws markets have faced since the start of April. However, despite starting the quarter with strong momentum and a fresh record high, equities slumped and ended the quarter on a weak note driven by mounting tariff uncertainty and softening economic data. Rising macro turbulence and a threat to U.S. tech dominance led institutional investors to act, and the latest 13F filings provide key insights.

 

A “13F” is a form required by the Securities and Exchange Commission (SEC) for institutional investment managers who oversee at least $100 million in assets under management (AUM) to be submitted within 45 days of each quarter end. The report, which details each manager’s equity positions, was created to help provide transparency for the marketplace into institutional investors’ investment strategies. The reports are also commonly used to provide insights into how hedge funds, pension funds, endowments, and private equity firms, for example, are navigating the market. Additional types of funds that are required to file include venture capital firms, banks, traditional corporations, insurance companies, and brokerage firms.

 

Mag Seven Sell Off

---

While it may seem like ancient history now, the rocky first three months of 2025 were partly fueled by big tech leadership dissipating in the wake of the January DeepSeek upheaval and increasing scrutiny around artificial intelligence (AI) capex. Wall Street’s largest investors broadly followed this trend, slashing allocations to technology companies by 2.7% — more than reversing the 0.7% addition to the sector in the final quarter of 2024. Magnificent Seven (Mag Seven) stocks were culprits of the reductions, making up five of the top ten largest aggregate position decreases, with institutional managers selling out of 8.4 billion shares across NVIDIA (NVDA), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and A-class shares of Google parent company Alphabet (GOOGL). Simultaneously, additions to financials companies spilled over with managers increasing allocations by another 0.6% after the fourth quarter’s 0.6% increase. Increasing trade uncertainty, cracks in the AI theme, and economic growth fears drove a flight to defensive pockets of the market from Main Street to Wall Street, with institutional allocations raising healthcare and consumer staples positions by 0.8% and 0.3%, respectively. Allocations toward the cyclical leaning consumer discretionary were reduced by 0.6%, while most of the remaining sectors were little changed. Broadly, top buys across all institutional managers included aircraft manufacturer Standard Aero (SARO) and Ingram Micro Holdings (INGM), adding 241.3 and 233.0 million shares, respectively. The top three names to bear the brunt of institutional selling were none other than NVDA, AAPL, and AMZN.

 

Sector Changes During Q1 2025

• Source: LPL Research, Bloomberg 06/09/25
• Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

 

Buffett Requests Confidentiality, Endowments Buck the Trend

---

Directionally, hedge fund managers moved in lock step with Wall Street’s wider trend — cutting technology positions by 1.4% and shifting to financials, healthcare, and consumer staples. Warren Buffett, just a few months before announcing his upcoming retirement, captivated headlines once more with the latest Berkshire Hathaway (BRK) mystery stock. While rare, institutional investors can request confidential treatment from regulators to keep one or more positions secret, allowing the legendary investor to quietly manage the position without augmenting price action. The “Oracle of Omaha” has utilized confidential treatment in the past, most recently to build a position in insurance provider Chubb (CB) from late 2023 to early 2024, of which Buffett still owns 27 million shares. In contrast, Scion Asset Management, under Big Short-famous CEO Dr. Michael Burry, left it all on the table, selling completely out of 12 of his 13 positions to leave just a 200,000-share position in Estee Lauder (EL).

 

Meanwhile, endowments have bucked the broader trend. Endowments, which most commonly benefit universities and uniquely boast an infinite time horizon, went risk on last quarter, axing aggregate healthcare allocations by 4.7% and taking advantage of the slide in tech shares to bolster positions by 1.6%.

 

Conclusion

---

At the broader market level, managers increased exchange traded fund allocations by 0.9%. Based on the top five position increases, institutional managers rotated into developed international equities, preferred and convertible securities, and climate conscious funds focused on reducing exposure to greenhouse gas emissions. Based on the five largest position reductions, institutional managers faded U.S. large cap growth and core U.S. bonds.

 

LPL Research maintains a tactically neutral position toward stocks and bonds, and an overweight to diversifying alternative investments, funded from cash. Domestically, we hold a slight preference for growth stocks and large cap companies. Geographically, we are positioned neutrally across emerging markets, development markets, and U.S. equities. We favor the financial and communication services sectors as they have both shown strong technical progress. Within financials, credit conditions are stable, and we expect tariff-related resiliency despite broader uncertainty. Digital media companies, which have less tariff sensitivity and had a strong earnings season, support our overweight to communication services.

 

• Important Disclosures
• This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.
• Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.
• Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
• This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
• Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
• Asset Class Disclosures –
• International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
• Bonds are subject to market and interest rate risk if sold prior to maturity.
• Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.
• Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.
• Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
• Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.
• High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.
• Precious metal investing involves greater fluctuation and potential for losses.
• The fast price swings of commodities will result in significant volatility in an investor's holdings.
• This research material has been prepared by LPL Financial LLC.
• Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations | Not Bank/Credit Union Guaranteed | May Lose Value
• For Public Use – Tracking: #751839

 

Contact us directly should you have questions about this topic.