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 (^GSPC) 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 Report , Amazon (AMZN) - Get Report , Time Warner (TWX) , Microsoft (MSFT) - Get Report and Alphabet (GOOGL) - Get 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 Report
- Anadarko (APC) - Get Report
- GCI Liberty (GLIBA) - Get Report
- Cheniere Energy (LNG) - Get Report
- NRG Energy (NRG) - Get Report
- Orbital ATK (OA)
- Palo Alto Networks (PANW) - Get Report
- Stamps.com (STMP) - Get Report
- TransDigm Group (TDG) - Get Report
- UnitedHealth Group (UNH) - Get Report
- VICI Properties (VICI) - Get Report
- Worldpay (WP) - Get 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.