Single Stock Inflows are Near Historic Highs

By Senad Karaahmetovic

Bank of America equity strategist Jill Carey Hall noted that stocks attracted the third consecutive week of huge inflows last week when the closed 4.7% higher. Overall, Bank of America’s clients were buying equities for the sixth consecutive week.

While institutional clients were selling stocks, hedge funds led buying, followed by retail clients. Sector-wise, clients bought stocks across seven sectors, led by Tech, Health Care, and Communication Services.

On the other hand, Financials and Energy stocks saw the largest outflows. The analyst noted that Consumer Discretionary flows recently turned negative for the first time since April, while Communication Services’ 4-week average inflows are at record highs.

“Over the last three weeks, inflows into single stocks (as a % of S&P 500 mkt. cap) were in the 99th percentile of history since ’08 and two standard deviations above average, and still in the 92nd percentile excluding corp. client buybacks,” Carey Hall wrote to clients in a note.

“Prior times 3-wk. single stock flows as a % of mkt. cap were this extreme were followed by above-avg. S&P 500 returns over the subsequent 1/3/6/12 months (i.e. wasn’t a contrary indicator). But as a caveat, most prior instances of extreme (+2 st. dev.) inflows following the Global Financial Crisis typically were preceded by extreme (-1 st. dev.) outflows in the several months prior – not the case this time. Cumulative $ inflows YTD have also been the most positive in our data history,” the analyst concluded.

As far as futures positioning is concerned, Citi’s Chris Montagu noted that changes in this aspect were limited despite a big rally in stocks. has continued to attract new bearish bets with short levels now nearing the lowest levels witnessed in the last 3 years.

“Moderate amounts of new long flows led to falling bearish positioning in the S&P, whereas Nasdaq short positioning extended further despite recent positive price momentum,” the analyst wrote to clients.