What Are Institutions Buying? Tracking Big 3 & 13F Filings

Concepts

Who Are Taiwan's Big Three Institutional Investors?

In the Taiwan stock market, the "Big Three Institutional Investors" (san da fa ren) refer to:

• Foreign Investors: Overseas funds, banks, hedge funds, and other institutional investors. Foreign investors are the single largest force in the Taiwan market, holding roughly 40% of total market capitalization. Their buying and selling has a significant impact on the broader market.
• Investment Trust Companies (Investment Trusts): Domestic Taiwanese fund companies that manage money on behalf of local investors. Investment trusts tend to favor small- and mid-cap stocks, as they seek to generate alpha above the benchmark.
• Dealers (Proprietary Trading Desks): Securities firms trading with their own capital. Dealers tend to trade short-term, so their activity is generally less useful as a directional signal.

The Taiwan Stock Exchange publishes net buy/sell data for these three groups every day after market close. Taiwan is one of the few markets in the world that discloses institutional activity on a daily basis -- an incredibly valuable resource for retail investors.

How to Interpret Institutional Net Buying and Selling

"Net buying" means the institution bought more than it sold that day; "net selling" means the opposite. A few key points when reading this data:

1. Consecutive days matter more than single-day amounts: A one-day net buy of NT$1 billion by foreign investors may not mean much, but 20 consecutive days of net buying signals a clear trend.
2. Foreign investors + investment trusts buying together is the strongest signal: When both types of professional investors are bullish on the same stock, the signal is more reliable.
3. Cross-check with trading volume: Institutional buying on thin volume may just be small-scale positioning; institutional buying on heavy volume suggests active accumulation.

What Is a 13F Report in the U.S.?

In the United States, institutional investment managers with over $100 million in assets under management are legally required to file a 13F report with the SEC (Securities and Exchange Commission) every quarter, disclosing their holdings.

This means you can see exactly what Berkshire Hathaway (Warren Buffett), Bridgewater Associates, ARK Invest, and other well-known firms hold each quarter -- what they bought, what they sold, and how much.

However, 13F filings come with a few caveats:

• Time lag: 13F reports are filed up to 45 days after quarter-end, so the data is at least six weeks old.
• Long positions only: 13F filings do not disclose short positions, so you can only see what a fund owns, not what it is betting against.
• Positions may already be closed: By the time the report is public, the fund may have already exited the position.

Despite these limitations, 13F filings remain highly valuable. Large funds' core holdings typically do not change dramatically from quarter to quarter, and tracking their shifts reveals long-term trends.

Hands-On: Using CTSstock

CTSstock's Institutional page (/vip/institution) consolidates institutional data for both Taiwan and U.S. markets.

Taiwan Institutional Data:

1. View daily net buy/sell figures by the Big Three for individual stocks
2. Track cumulative net buying/selling trends for foreign investors, investment trusts, and dealers
3. Identify stocks with consecutive days of institutional net buying or selling

U.S. 13F Data:

1. View the latest holdings of well-known funds
2. Compare holdings across quarters to see whether a fund is adding to or trimming a position
3. Discover stocks that multiple large funds are buying simultaneously

Tips for using this data:

• For Taiwan stocks, focus on names where foreign investors and investment trusts are both net buyers for 5+ consecutive days
• For U.S. stocks, rather than following a single fund, look for stocks where multiple funds are increasing their positions -- the higher the consensus, the more noteworthy
• Always combine institutional data with fundamental analysis. Do not buy a stock simply because foreign investors did -- first confirm that the company's financials and valuation make sense

FAQ

Q: Does foreign investor net buying guarantee the stock will go up?

Not necessarily. Foreign investors sometimes buy for hedging, arbitrage, or index rebalancing purposes -- not because they are bullish on a particular stock. They can also be wrong. The more reliable signal is "sustained, significant net buying" combined with "improving fundamentals."

Q: Is it too late to follow 13F filings?

Because of the time lag, copying 13F trades blindly may mean buying at the top. A better approach is to use 13F data as "stock idea generation" -- see what the big funds bought, then do your own research to decide if the stock is still worth buying. If the fundamentals have not changed and the stock has not run up too much, it is not too late.

Q: Are investment trust picks better suited for retail investors?

To some extent, yes. Investment trusts favor small- and mid-cap stocks that often have higher growth potential than large caps, and their buying can catalyze price moves. However, small- and mid-cap stocks tend to have lower liquidity and higher volatility, so manage your risk accordingly.