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In One Chart: 20 stocks that big-time hedge funds love most

Hedge funds have a reputation for being secretive, so it’s no wonder that investors are longing for a peek at what top investors are conserving.

Big investors had been required to show their largest first-quarter holdings this week once they filed closely tracked 13-F forms with the Securities and Exchange Commission. The forms, which are due 45 days after the end of every quarter, require investors to divulge long positions in stocks, convertible bonds and options.

Hedge funds haven’t lined themselves in glory in recent times. So while some investors observe the filings to be able to mimic top performers, others look at the data for contrarian indicators on crowded trades.

However an investor needs to slice it, RBC Capital took an extensive look at the most recent round of filings 340 primary hedge funds that experience significant stakes in unmarried U.S. stocks in a 44-page notice published Wednesday. The chart below offers their look at the S&P 500 SPX, -0.19%  shares that experience probably the most hedge-fund bucks invested.

RBC Capital

In the notice, Lori Calvasina, RBC’s head of equity strategy, mentioned the checklist is ruled by way of tech, media and internet-related shares, with Facebook Inc. FB, -0.19% coming in tops. RBC found 40% of hedge funds in the find out about own Facebook shares, amounting to one.7% of the ones funds belongings.

Newcomers to the checklist, which RBC dubs the “hedge fund sizzling canines,” in the first quarter include Booking Holdings Inc. BKNG, +0.55% Electronic Arts Inc. EA, -0.47% Mastercard Inc. MA, -0.54% and UnitedHealth Group Inc. UNH, +0.60% Meanwhile, Apple Inc. AAPL, -0.59%  remained on the checklist but fell from No. 8 to 18, while PayPal Holdings Inc. PYPL, +0.96%  was once amongst shares that dropped off the checklist.

In a 2nd checklist, which RBC termed “hedge fund motels,” the analysts ran down the shares that experience the most important proportion of their market capitalization owned by way of hedge funds. It was once a extra numerous workforce, sector-wise, headed by way of Envision Healthcare Corp. EVHC, +0.06%  at 28.1%.

Calvasina mentioned the hedge fund “sizzling canines” have outperformed strongly since 2010, which could be viewed as “a testomony to lively management.” Two of the three years where they failed to outperform—2014 and 2016—had been years when enlargement stocks failed to overcome price, which could indicate the basket’s efficiency displays its underlying bias towards enlargement, she mentioned.

The so-called motels, meanwhile, have mostly lagged the market since 2015, she mentioned, after a run of sturdy outperformance in 2012-2014.

As for worries about crowded trades, Calvasina mentioned that in RBC’s experience, “crowded names amongst lively managers are generally crowded for a just right explanation why (just right basics).”

She mentioned that most of the company’s baskets have outperformed since RBC started tracking the data on the end of 2010, but added, “we still think positioning is a risk factor value monitoring.”

She additionally mentioned that the outperformance noticed because the beginning of the find out about has passed off towards the backdrop of sturdy leadership by way of enlargement stocks “and may simply reflect the underlying taste bias of the market.”