Out of stock ideas? Might want to play the top trades of the hedges.
While the average equity hedge fund has returned a decent 2% year to date says Goldman Sachs (S&P 500 Index undefined flat), their top positions are out-performing. Funds have made few changes among their top holdings this year, which has served them well. Goldman's "Hedge Fund VIP" basket of the most popular long positions has out-performed the S&P 500 by 91 basis points year to date (3.5% vs. 2.6%) despite bouts of market turbulence in late January and April. The VIP list contains the 50 stocks that appear most often among the top 10 holdings of fundamentally-driven hedge funds.
Since 2001, the VIP basket has out-performed the S&P 500 in 63% of quarters, generating an excess return of 58 basis points.
The list's current top five holdings include tech and media giants Facebook (FB) - Get Facebook, Inc. Class A Report , Amazon (AMZN) - Get Amazon.com, Inc. Report , Time Warner (TWX) , Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report and Alphabet (GOOGL) - Get Alphabet Inc. Class A Report . All five were also the top five holdings in the prior quarter. Goldman points to 13 new additions to the list of hedgie favorites:
- Adobe (ADBE) - Get Adobe Inc. Report
- Anadarko (APC) - Get Anadarko Petroleum Corporation Report
- GCI Liberty (GLIBA) - Get GCI Liberty, Inc. Class A Report
- Cheniere Energy (LNG) - Get Cheniere Energy, Inc. Report
- NRG Energy (NRG) - Get NRG Energy, Inc. Report
- Orbital ATK (OA)
- Palo Alto Networks (PANW) - Get Palo Alto Networks, Inc. Report
- Stamps.com (STMP) - Get Stamps.com Inc. Report
- TransDigm Group (TDG) - Get TransDigm Group Incorporated Report
- UnitedHealth Group (UNH) - Get UnitedHealth Group Incorporated Report
- VICI Properties (VICI) - Get VICI Properties Inc Report
- Worldpay (WP) - Get Worldpay, Inc. Class A Report
Goldman's research findings are derived from the analysis of 848 hedge funds with $2.3 trillion of gross equity positions.
Facebook, Amazon, Microsoft, Alphabet, Anadarko and UnitedHealth Group are holdings in Jim Cramer's Action Alerts PLUS.
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Before proceeding, don't hesitate to look into what it takes to start your own hedge fund.