This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hedge Funds' Best Picks Show the Way for 2012


Like the materials sector, industrials have been a dog for investors this year. Industrial companies in the S&P 500 are down 5.6% this year through Nov. 10, according to Capital IQ, the third worst sector performer this year. Unsurprisingly, hedge funds sold off shares of industrial stocks during the quarter.

While much of the selling was scattered across different subsectors, the group of industrials stocks that frequently popped up were the railroads. Vinik Asset Management, Soros Capital, and Caxton Associates sold stocks like CSX (CSX), Norfolk Southern (NSC) and Union Pacific (UNP). These stocks sold off sharply from the beginning August through September. Since the end of the third quarter, though, these names are up between 15% and 25%.

Railroad companies weren't the only transportation names sold during the quarter. Vinik also sold shares of both FedEx (FDX) and UPS (UPS), while Third Point dumped shares of Swift Transportation (SWFT). Soros also sold shares of FedEx, while Omega Advisors lightened up on United Continental (UAL).

There were some buyers of industrial companies during the quarter. Och-Ziff picked up a basket of industrial stocks like United Technologies (UTX), Emerson Electric (EMR), Caterpillar (CAT), General Electric (GE - Get Report) and Deere (DE). Highbridge Capital added shares of Parker-Hannifin (PH) and Honeywell (HON).

It remains to be seen whether those industrial bets pay off, but for now analysts are looking positively on the sector. According to FactSet Research, industrial companies in the S&P 500 should see earnings grow 13% next year, tied with consumer discretionary for the second highest growth rate for any sector. But with industrials sales up only 9% in the third quarter from a year ago and share prices slipping during August, it's easy to see why some chose to cut and run from the sector.

The outlook for consumer discretionary stocks seems to be bright. After earnings grew a solid 16% during the third quarter from a year ago, the sector is tied with industrials for second overall with an expected earnings growth rate of 13% in 2012.
4 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
BAC $12.95 0.00%
BP $30.46 0.00%
C $39.86 0.00%
GOOG $683.57 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs