Fund managers' actions can be good contra-indicators

Sometimes, professional fund managers sell stocks because they are facing redemption pressure, and not because they have lost conviction in them. There is a lag between the actions of fund managers and the time when this data come to you. If prices have changed, what was a good buy a month earlier may no longer be so. Nonetheless, buy and sell data can be useful in some circumstances. Suppose you want to buy a stock but see that fund managers have been selling it in large volumes. You may want to pause and research further to check your views on the stock.

Suppose you are holding a stock that has done well. Now, you are wondering if you should book profit in it. Then you see that fund managers have bought it in large quantities. You may again want to review your action. In the mid- and small-cap space, this data could provide you with new stock ideas.