2020 has been a wild year for everyone: even blue-chip
stocks and the "smart money" investors that hold them.
Hedge funds ended 2019 with a record $3.32 trillion in
assets under management (AUM). However, in 2020, volatility and a stock market
led by only a narrow range of equities have damaged hedge fund returns and
forced a number of investors to head for the exits.
Just have a look at industry statistics. Hedge funds'
collective assets under management fell 11% to $2.96 trillion in the quarter
ended March 31, according to Hedge Fund Research. That's the first time AUM has
fallen below $3 trillion since the third quarter of 2016. More than $333
billion in assets was wiped out by performance losses, while net outflows
claimed another $33.3 billion.
And yet hedge funds are still worth keeping tabs on. They
command a vast pool of assets and have unparalleled resources for research.
Heck, the best of the best can make a billion dollars in a single trade.
To get a sense of what hedge funds are holding these days,
we turned to WhaleWisdom, which is a fount of data when it comes to
institutional investors. We were able to determine hedge funds' favorite bets
based on the number of funds holding a position in any given stock.
It should come as no surprise that big blue-chip stocks
dominate the list. Indeed, of the 25 most popular hedge fund stocks, 14 are
components of the Dow Jones Industrial Average. Partly that's a function of
their massive market capitalizations and attendant liquidity. There's ample
room for big institutional investors to build or sell large positions.
All these names likely appeal to the smart money because of
their size and strong track records. But we'll delve into a few specifics that
make each pick special.
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