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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Hedge Funds Love -- and So Should You

General Motors

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Detroit auto giant General Motors (GM) has been enjoying some stellar performance in the last six months, rallying more than 42% since the end of the summer alone. That performance caught hedge funds' attention in the fourth quarter of 2012, with funds doubling their total holdings by picking up an extra 4.42 million shares. Ironically, hedge funds were big net sellers of GM in the prior quarter -- but they've since changed their tune on the carmaker.

>>4 Big Stocks to Buy in February -- and One to Sell

GM is a dramatically different company than it was just a few years ago. Following its tumultuous bankruptcy, the firm emerged cutting a new, more svelte corporate profile. A much lower breakeven point for the firm is a very big deal for investors, particularly after the auto industry built up a reputation for carrying insurmountable costs on their income statement. A government exit from the stock should ease some shareholder concerns over Uncle Sam's stake in the firm -- and help the firm lose its "Government Motors" moniker.

The real kicker is that GM has been building better cars. By slashing at the huge brand portfolio that the firm had built up over decades, it was able to get rid of redundant nameplates that offered little in the way of uniqueness and only confused consumers. Emerging markets like China and India still offer some big growth potential in the years ahead, as a burgeoning middle class starts becoming more mobile. And now, with stellar balance sheet health post-bankruptcy, the firm actually has the financial wherewithal to pull it off.

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