Investors are still bullish coming out of the first quarter, but they’re prioritizing value over growth.
That’s according to the March edition of the Investor Movement Index (IMX), TD Ameritrade’s monthly review of investor sentiment based on its clients’ portfolio activity, which climbed a modest 1.31 percent to 4.65.
The Frugal Investor
TDA clients remained buyers of equity over the course of the month. While investors ended the quarter by expanding their equity exposure, however, the stocks they prioritized we’re generally trading at a steep discount.
The auto segment was of particular interest to TDA clients in March, which kicked off with disappointing vehicle sales figures from February. There was also turmoil in the electric vehicle market, from Elon Musk announcing Tesla, Inc. (NASDAQ: TSLA) likely won’t be profitable over Q1 to China cutting its national electric vehicle subsidy in half. The volatility from these headlines helped Ford Motor Company (NYSE: F), Tesla and Chinese electric vehicle maker NIO Inc. (NYSE: NIO) make it into the portfolio of TDA clients over the course of the month.
Other stocks highlighted as net buys over the month included a few names considered value stocks, including CVS Health Corp. (NYSE: CVS) and Kraft Heinz Co. (NASDAQ: KHC), both of which started the month on disappointing 2019 guidance. AT&T Inc. (NYSE: T) rounds out the list of slow growth names that attracted investors in March after the company announced its intent to restructure its WarnerMedia and Directv assets through a planned content streaming service.
One standout among the most purchased stocks among TDA clients was Aurora Cannabis Inc. (NYSE: ACB). Neither a value name nor a safety investment, Aurora drew massive investor interest upon the announcement that Nelson Peltz would be joining the company as a strategic adviser. Aurora ended the month up more than 23 percent.
Investors De-FANG Into Earnings
As you might expect, while investors were busy adding stocks trading at a coupon, they were also selling the stocks priced at a premium. This comes in approach to an earnings season most analysts expect will disappoint compared to what the Street has seen over recent reporting seasons.
No stocks better exemplify that than the blue-chip tech stocks that make up FANG, which ended the quarter up anywhere from 10 percent to 30 percent. All four FANG stocks — Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL), Netflix Inc. (NASDAQ: NFLX) and Google-parent Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) — were net sold on the month.
Other high valuation tech names like Twilio Inc. (NYSE: TWLO), which ended the quarter up 25 percent, Intel Corporation (NASDAQ: INTC) and Twitter Inc. (NASDAQ: TWTR), which both ended the quarter up about 15 percent, were also among TDA clients’ net sold names.
While the performance of these companies during the first three months of the year certainly warranted investors' profit taking, none of them matched the huge gains made by Chinese tech giant Alibaba Group Holding Ltd. (NYSE: BABA). Although the stock experienced a more than 6-percent drop in March thanks to continued worries over the country’s economic strength, Alibaba still finished the first quarter up 35 percent.
Click here to read the full IMX report.
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