The smart money is sounding the alarm, and few are listening.
The quarterly “Whale” reports are in and they don’t reflect well on where the market may be headed.
13F filings released by the large institutions and names like Warren Buffet and Michael Burry (The Big Short) this week offered a sobering message to anyone paying attention: the big money is quietly heading for the exits.
The message has been building since late 2024 when headline after headline revealed the war chest that Warren Buffet’s Berkshire Hathaway was building. As of 2024, the “Oracle” had built a cash position that was larger than what he amassed ahead of the Great Financial Crisis.
Now, many of the institutional investors that investors watch for cues have made decisively defensive allocations changes to their portfolios, according to the latest 13-F filings.
From a 10,000-foot view, the tone of the most recent disclosures is decidedly bearish. While it’s not uncommon to see some rotation each quarter, the sheer scale and coordination of selling activity across some of the largest and most respected hedge funds is worth noting. Mega-cap tech, major financials, and economically sensitive sectors all saw substantial reductions. This isn’t about trimming around the edges, this is de-risking, plain and simple.
And while some managers simply lightened up on positions, others went a step further. Michael Burry, who gained notoriety for predicting the 2008 crash, took out bearish put options against high-flyers like NVIDIA (NVDA) and Chinese tech stocks. He didn’t just walk away from the market. He is betting that the market is set to break in a big way.
Most of the time, 13F filings are more of a curiosity than a crystal ball.
They reflect positions as of the end of the prior quarter, and strategies may have already shifted. But every so often, they light up like a warning flare. This is one of those times.
When the largest funds start to move in the same direction — raising cash, rotating into defensives, buying downside protection — that’s not coincidence. That’s signal.
Tracking 13F activity gives retail investors a behind-the-curtain look at how professional money is positioning itself.
These aren’t Reddit trades or FOMO plays. They’re deliberate, often months-in-the-making decisions rooted in macroeconomic forecasts, portfolio stress tests, and institutional-level research.
The truth is, most quarters, this data is interesting but not actionable. But every few years, there’s a clear consensus shift that reveals what the smartest money on the street is preparing for. Right now, it looks like they’re preparing for trouble.
Let’s break down what we saw in the latest batch of filings:
These aren’t minor trims. These are core holdings being let go. The common denominator? High-beta, economically sensitive, or over-owned names that tend to fall hard when sentiment shifts.
This is rare. It signals not just a lack of confidence, but a belief that something major could go wrong. Michael Burry now holds one long position in his portfolio – Este’ Lauder (EL) with the resto of his portfolio’s $1.99 billion sitting in cash and aggressive short positions.
These moves reflect repositioning, not optimism. The emphasis is on managing risk.
This isn’t the first time institutional managers have acted in concert before broader markets caught on. There are clear precedents:
Similarity: Big banks being sold today mirror that period. And back then, they knew what was coming.
Similarity: Today’s trimming of mega cap tech echoes this cycle. Concerns about China haven’t gone away either.
Similarity to today: Tech weakness and put buying lined up then, just like now.
Similarity: Many of the same names are getting hit again now. Once again, Burry was early with puts.
This cycle has its own flavor. What makes this batch of filings unique is the combination of:
We’re looking at Fed policy uncertainty, geopolitical risks, a frothy AI-led tech rally, and growing divergence between investor enthusiasm and economic data. That’s a tough environment for risk assets, and the whales are adjusting accordingly.
Stocks have made a strong 20% bounce following the April 9 lows as the Trump Administrations has started negotiations with trading partners. That bounce in stocks is still within the scope of a “bear market rally”. Read more about the history of bear market rallies here.
Investors need to pay special attention to the market technicals as we get closer to June. The old saying “Sell in May” is partially true as the month of June holds the second worst returns for the market over the last 20 years. Find out more about June’s seasonality here.
Looking at the S&P 500 ETF’s chart, a move back below $575 will likely tip the balance of power in the market back to the bears. Furthermore, a move back below $550 would signal that investors should expect to see a fresh round of new lows from stocks before things get better.
This is exactly what the “Whales” are positioning for.
You don’t need to copy every trade from a hedge fund to benefit from this data. But you can learn from the playbook:
Sometimes, the best trades come not from being early, but from being ready. This is one of those times.
