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Sneak Peek: 5 Stocks Hedge Funds Love This Fall

Stocks in this article: ACE BIDU GM TEL TXN

BALTIMORE ( Stockpickr) -- Gutpunch. If there's one word to use to describe this week's market action so far, that's the one. Since Monday, the S&P 500 has shed more than 2%, the biggest two-day slip in stocks in recent memory.

>>5 Stocks Insiders Are Scooping Up

The catalyst? Why, Congress, of course. As the unresolved issue of the government shutdown progresses the U.S. closer to a theoretical default on the national debt, investors should expect more of the same.

But in spite of all of the drama in Washington, hedge funds are buying with both hands right now.

Even though you might not feel all that bullish this October, the S&P 500 is still up more than 16% on the year. So with funds starting off 2013 underexposed to stocks, it's time to play performance catch up before the end of the quarter. To do that, fund managers are turning to a small set of stocks. Today, we'll take a sneak peek at five names they love.

Here's how: Institutional investors with more than $100 million in assets are required to file a 13F -- a form that breaks down their stock positions for public consumption. From hedge funds to mutual funds to insurance companies, any professional investors who manage more than that $100 million watermark are required to file a 13F.

>>5 Stocks Set to Soar on Bullish Earnings

In total, approximately 3,400 firms file 13F forms each quarter, and by comparing one quarter's filing to another, we can see how any single fund manager is moving their portfolio around. While the data is generally delayed by about a quarter, that's not necessarily a bad thing - research shows that applying a lag to institutional holdings can generate positive alpha in some cases. That's all the more reason to crack open the moves being made with institutions' $14.6 trillion under management. So far, less than 10% of firms have submitted their 13Fs to the SEC - so that small sample gives us a sneak peek at which stocks institutions favor right now.

Today, we'll focus on five institutional favorites for the third quarter of 2013.

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