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Why You Should Buy Hedge Funds' 5 Favorite Stocks


On the other hand, I am a fan of Apple ( AAPL). I own it too. And so do hedge funds apparently -- funds picked up 119,000 shares of the tech giant in the latest quarter, raising their total bet on Apple to $2.39 billion.

Apple has spent most of 2013 as a hated stock. While the S&P 500 has absolutely rocketed this year, its biggest component has managed to slip around 2% year-to-date. Yes, ouch.

But the hate is very overblown -- despite all of the competition and risk, Apple remains a cash cow. Apple's margins are, by far, the biggest in the industry, and while the firm has ceded market share in order to keep margins, that decision has helped the firm hang onto the most lucrative segment of customers. iOS users spend more time on their devices than owners of other devices, and they spend more on apps too. With numbers in for the iPhone 5s and 5c, it's clear that the naysayers were wrong - and early on, the newest iterations of the iPad are moving fast for the holiday season.

Considering the dominance of the iOS products, the Macintosh has been on most analysts' back burners for years now. But that could change thanks to a new Mac Pro offering set to launch next month and refreshed MacBook Pros. The halo effect is still keeping consumers in the Apple ecosystem, and Apple's recently announced policy of free software updates should help spur more Mac-buying in the year ahead. With a mountain of cash on the books, Apple looks cheap right now.

General Motors

It's been a great year for carmakers, and that's shining through in shares of General Motors ( GM) -- since the first trading session of the year, GM's shares have climbed more than 33%. Hedge fund managers must think that it'll keep on driving higher; that's why funds picked up 7.69 million shares of the Detroit automaker, ratcheting their position to $1.21 billion.

General Motors has had a tumultuous five years. The firm emerged from bankruptcy in 2009, after shedding a handful of unfruitful brands, unloading debt, and renegotiating union contracts. Worldwide, GM now operates 11 brands -- Chevrolet, Cadillac, GMC, and Buick are the survivors here in the U.S. Along with cost cutting, GM has found big success in ramping up build quality, churning out cars that consumers actually want to own again.

>>5 Stocks Poised for Breakouts

The end result has been profitability - record profitability, in fact. The firm's breakeven points are drastically lower after slashing hourly labor costs by more than two-thirds, and that means that GM can realistically compete with imports (including those assembled here in the U.S.) again. Even though GM is certainly an American icon, some of its biggest growth opportunities are coming from abroad right now. In fact, nearly 70% of GM vehicles are sold outside of North America today, with a huge share coming from emerging-market countries such as China and Brazil.

Now, with a combination of bullish technical and fundamental factors in play, General Motors' upside trajectory should carry on into the new year.
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