BOSTON ( TheStreet) -- Hedge funds took a surprisingly contrarian tack in the second quarter, bulking up on consumer-discretionary stocks, despite slowing global economies, high unemployment and signs that Americans are getting stingier.
The consumer-discretionary stocks sector grew by 1.1 percentage points to a 16.1% weighting of the $1.2 trillion in assets held by 795 hedge funds tracked by Bloomberg, double the growth of any other industry. Consumer-discretionary companies' products range from alcohol, personal-care products and luxury goods to services ranging from restaurants to travel and entertainment.
Among the stocks in that group seeing big buying were Internet retailer Amazon.com (AMZN - Get Report), Rupert Murdoch's media conglomerate News Corp. (NWSA), online-travel Web site Expedia (EXPE), Arcos Dorados Holdings (ARCO), which operates and franchises McDonald's restaurants in South America, and Pandora Media (P), a provider of Internet radio services.
Other companies' shares bought up include: carmaker General Motors (GM), 17 million in share buys; Netflix (NFLX - Get Report), which rents DVDs by mail and is building a video-streaming service, 2 million shares; retailer Bed, Bath & Beyond (BBBY), 6 million shares; and the department-store chain Macy's (M - Get Report), 8.8 million in new-share buys.Financials made up the largest sector weighting for hedge funds, at 17.7%, down 0.6 percentage point in the quarter, followed by information technology, at 17.5%, up the same amount. Bank stocks that suffered big selling were: JPMorgan Chase (JPM - Get Report), 17.6 million shares, Bank of America (BAC - Get Report), 68 million shares, and Wells Fargo (WFC), 17 million shares. But Citigroup (C - Get Report) experienced net buying of 6.4 million shares. The bank is the third-largest holding of the aggregated hedge funds, with a market value of $8.8 billion at June 30. ConocoPhillips (COP), the oil and natural gas industry giant, had the biggest decline in dollar terms of all hedge-fund holdings, as 14.7 million shares were sold off and its share price fell in the period. Hedge funds now hold $2.7 billion of its shares, down by $1.3 billion. Energy's weighting among hedge funds shrank 0.5 percentage point, perhaps on profit-taking as oil prices and industry profits boomed in the second quarter. For example, Exxon Mobil (XOM) reported that its second-quarter profit jumped 41% on rising production, high oil prices and improved refining profit margins. But the company's shares have also declined over the past few months. IPhone and iPad maker Apple (AAPL - Get Report) remained the largest hedge-fund holding, at $13.4 billion, followed by the international chemical-industry giant LyondellBasell (LYB), which had a market value of $9 billion. In the technology sector, which grew by a 0.6 percentage point weighting in the quarter, Qualcomm (QCOM) was far and away the big winner, seeing 7.4 million in share buying. Here are six stocks that had the most hedge fund action in the second quarter: