When the smart money moves into a stock, investors may want to take notice, because it just might signal the start of an upswing in its value. Similarly, when the smart money withdraws its money from a holding, you may want to pay attention, because it may see problems others are missing.

The smart money can definitely be dumb sometimes, but it's probably never wise to dismiss its moves out of hand. Recently, personal-finance website WalletHub examined the most recent SEC disclosures filed by more than 400 hedge funds and found their funds were going in similar directions at the end of the second quarter of 2017.

Here are the top five stocks hedge funds were selling, which may help you gain insight into where they think the stock market is cooling off.

Pouring milk into a bowl of cereal

Image source: Getty Images.

1. Kellogg

Cereal maker Kellogg (NYSE:K) has been pressured first by the overall weakness in the food industry, but also by changing consumer preferences surrounding breakfast, changes that have been evident for several years now.

While cold cereal remains a popular favorite for most people in the morning, higher-protein foods such as yogurt and grab-and-go snacks have been gaining popularity. Kellogg is transitioning itself to keep pace with the new reality and recently noted that where cereal used to make up the lion's share of its business in 2000, today snacks account for half of sales.

2. Apple

Were hedge funds anticipating the seemingly tepid response to Apple's (NASDAQ:AAPL) new iPhone X? Where previous releases were greeted by long lines and people camping out overnight to get their hands on the latest iteration, the newest iPhone had none of that, with numerous reports of there being no lines and no wait. It could have something to do with the $1,000 price of the phone, which may have kept people away, but also as each new generation of iPhone comes online, the obsolescence of previous models decreases. Someone with an iPhone 8 (or even a 6) might not feel the need to upgrade right away, as that model is more than up to the task of meeting most users' needs.

Still, Apple also happened to be one of the top five stocks that other hedge funds were buying, perhaps in anticipation that the iPhone X would be a blowout.

Scientists looking at a specimen

Image source: Getty Images.

3. Eli Lilly

Early this year, drugmaker Eli Lilly (NYSE:LLY) was stunned when the FDA rejected the application it and partner Incyte submitted for baricitinib, a therapy for rheumatoid arthritis. While it was supposed to be a blockbuster drug for Lilly, it had to face the prospect of years of delays and new clinical trials. It's understandable why investors sold off the drugmaker.

But Eli Lilly subsequently surprised the market. It and Incyte were able to negotiate with the FDA to not have to perform new studies with the drug, and Eli Lilly said it could resubmit its application for consideration as early as January 2018. This could be a case where the smart money moved too quickly.

4. Johnson & Johnson

Consumer-products and pharmaceutical giant Johnson & Johnson (NYSE:JNJ) has been an exemplary stock for decades, delivering outsized returns for investors, but it could have been the acquisition of Swiss drug developer Actelion for $30 billion that soured hedge funds' outlook. While it would significantly bolster Johnson & Johnson's portfolio of prescription drugs, it also makes the company even more dependent on that arm of its business. With heightened risks from drug-pricing reform to therapies always moving off patent, and competitive pressures at a peak, the smart money may have decided it was a good time to leave.

Global stock chart rising

Image source: Getty Images.

5. JPMorgan Chase

The stocks of the biggest U.S. banks took hard hits early on in the year, as the prospects of lower revenue resulting from declining fixed income took a toll. Both JPMorgan Chase (NYSE:JPM) and Bank of America were hit hard in March, with shares of each falling about 10% on concern that second-quarter results would come under pressure.

Stock market activity had been fairly subdued, and without singular events to keep rolling the waters, such as Brexit or President Trump's election, the trading revenues the biggest banks generated was expected to drop. Perhaps the smart money should have been smarter to know that nothing remains in stasis forever, and after hitting a summer low, the stocks of both JPMorgan and Bank of America have jumped 15%.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Johnson & Johnson. The Motley Fool has a disclosure policy.