Hedge Funds' 25 Top Blue-Chip Stocks to Buy Now

 

What is the "smart money" up to lately? We explore the 25 most popular blue-chip stocks among the hedge fund crowd.

 

Hedge funds as a group don't have the greatest long-term track record – and they haven't been too hot in 2021, either – but there's still something irresistible about knowing what the so-called smart money is up to.

 

Surprise, surprise: Hedge funds continue to herd into big, blue-chip stocks, regulatory filings show.

 

So, how poorly have hedge funds fared so far this year? The Eurekahedge Hedge Fund Index delivered a total return (price appreciation plus dividends) of 8.5% for the year through Nov. 30. Meanwhile, the S&P 500 was up 23.2% on a total-return basis over the same span.

 

But to be fair: Hedge funds can pursue dozens of investing strategies. A broad measure of their performance doesn't necessarily make for an apples-to-apples comparison with, say, the S&P 500.

 

And that's why it's always interesting – and, yes, sometimes even edifying – to see which names rank as hedge funds' favorite stocks. Although the so-called smart money might be lagging as a group, there's still some collective wisdom to be found in this crowd.

 

Most investors won't be surprised by many of hedge funds' favorite picks. Dow stocks are heavily over-represented when it comes to names with the highest number of hedge fund shareholders; fully 13 of the Dow's 30 blue-chip stocks rank among hedge funds' 25 top picks.

 

That's partly a function of Dow components' massive market capitalizations and attendant liquidity, which creates ample room for institutional investors to build or sell large positions. Big-name blue-chip stocks also carry a lower level of reputational risk for professional money managers. (It's a lot easier to justify holding a large position in a Dow stock than a no-name small-cap if restive clients start grumbling about their returns.)

 

But hey, more than half these names are not in the famed blue-chip average, and a few of these picks might seem completely out of left field. So either way, each hedge-fund favorite is an intriguing idea worth a closer look.

 

 

Have a look at hedge funds' 25 top blue-chip stocks to buy now. All these names likely appeal to elite funds because of their size, strong track records or outsized growth prospects. But we'll delve into a few specifics that make each blue chip special.

 

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