NEW YORK (TheStreet) -- Every quarter, the market monitors the 13F filings of institutional investors such as hedge fund managers and mutual funds to see what stocks the so-called "smart money" is getting into and out of.

A 13F filing is a quarterly portfolio disclosure that every institutional investor who manages more than $100 million worth of assets must make to the

Securities and Exchange Commission

.

The buys and sells of hedge funds usually make for the most interesting reads, so

TheStreet

collated the top 10 stocks in which hedge funds raised their stake the most during the second quarter. We also looked for the lowest possible price the institutions may have bought the stock at during the second quarter, as clues for what might make an attractive level to buy the stock.

But while these stocks should definitely be on an investor's radar, it might not be wise to rush out and buy. The disclosures by the biggest investors are often made as much as 45 days after the end of the last quarter and the fund manager could have changed his position in the meantime.

Fund managers such as

Steve Cohen

,

George Soros

and

John Paulson

(above) trade an enormous number of stocks every quarter and move in and out of stocks at a rapid pace.

The filings also disclose only long positions, so it is possible that hedge funds, famous for complex trading strategies, might be short the same stock.

The following are the top ten stocks that figured in the buy list of hedge funds in the second quarter. Financial firms and companies undergoing corporate restructurings were popular picks for the market heavyweights.

10. PMI Group

Current Market Price:

$2.93

Second Quarter Lowest Price:

$2.77

Year-to-Date Return:

16.3%

Mortgage insurer

PMI

( PMI), which protects lenders from homeowner defaults, was a favorite with several hedge funds in the second quarter, as investors bet on the housing recovery. Hedge fund manager

John Paulson

bought 5 million shares in the company and now holds a 3% stake.

Blue Ridge Capital

and

Omega Advisors

are some of the other prominent hedge funds that bought the stock during the second quarter.

The stock has been an outperformer this year despite the weak outlook for housing. It soared to a high of $7.20 in early April but shed more than half its value in the course of the second quarter. The pullback may have offered an attractive entry point for investors looking for a pure play on mortgages. But it might still be a risky bet.

PMI reported its twelfth straight quarterly loss in the June quarter, though it reported lower expenses on claims as the default rate declined. Claims for defaulting homeowners still exceeded premiums earned from new insurance policies as housing loans declined.

Other mortgage insurers, such as

MGIC Investment

(MGIC) - Get Report

, have offered a cautious outlook for the second half, expressing concern that fewer loan readjustments were likely in the future and defaults could still increase.

9. Fidelity National Information Service

Current Market Price:

$25.83

Second Quarter Lowest Price:

$23.25

YTD Return:

10.2%

Banking and payment technology provider

Fidelity National Information Services

(FIS) - Get Report

, saw fresh buys from a host of hedge funds, prominent among them being

Steve Cohen's SAC Capital Advisors

,

Glenview Capital

and

Eton Park Capital

.

The stock garnered interest in May on reports that

Blackstone

(BX) - Get Report

in consortium with other firms was considering a $15 billion buyout of the firm. The buyout would have been the biggest leveraged buyout since the credit crisis began. Fidelity National, however, rejected the $32-a-share bid from Blackstone and its partners.

It recently completed a share repurchase of 86.3 million shares at $29 per share for a total of $2.5 billion.

8. PPL

Current Market Price:

$26.61

Second Quarter Lowest Price:

$23.75

YTD Return:

-17.6%

Hedge funds collectively bought nearly 40 million more shares in U.S. power producer

PPL Corp

(PPL) - Get Report

. Prominent buyers include SAC Capital, the now retiring

Stanley Druckenmiller's Duquesne Capital

and

D.E. Shaw

.

PPL missed estimates in the second quarter, as poor performance of its utility businesses in the United Kingdom and Pennsylvania offset gains from its supply operations, the largest segment of its business. The company also cut its earnings guidance for the year to reflect dilution stemming from a recent equity sale.

The money raised from the equity offering was used to partly fund its $7.6 billion acquisition of Louisville, Kentucky-based E.On U.S., which it expects to complete by the end of the year. The acquisition is expected to help diversify PPL's earnings stream and reduce commodity sensitivity, according to

Zacks Investment Research

.

7. Spectrum Brands

Current Market Price:

$26.72

Second Quarter Lowest Price:

$23.70

YTD Return:

-3.3%

Spectrum Brands

(SPB) - Get Report

which makes everything from batteries and household appliances to pet products, has been a long-time favorite for billionaire investor Philip Falcone's

Harbinger Capital

.

The company filed for bankruptcy in early 2009 and Harbinger Capital, which was already significantly invested in the company at the time, subsequently assumed the role of an activist investor with a say in company management. Spectrum Brands emerged out of bankruptcy late last year and two months ago, it completed a merger with Russell Hobbs, a small household appliance maker.

Having bought an additional 3 million shares in the second quarter, Harbinger now owns well over 60% in the combined entity. Hedge Fund D.E. Shaw now has an additional 7% stake in the company.

Falcone, who focuses on deep value and distressed plays, sees Spectrum as a core investment in the portfolio.

"Spectrum has a great consumer brand portfolio and is strongly positioned to build shareholder value through its objectives for free cash flow generation, growth in earnings and EBITDA and significant debt reduction," he stated in a recent press release.

6. Synovus Financial

Current Market Price:

$2.15

Second Quarter Lowest Price:

$2.45

YTD Return:

4.8%

The Georgia-based regional bank

Synovus Financial

(SNV) - Get Report

has been on the radar of analysts of late as a likely takeover candidate in the widely anticipated consolidation in the banking sector.

A number of mid-sized hedge funds accumulated the stock in the second quarter, including New York-based

Anchorage Advisors

which bought 28 million shares in the company.

Synovus missed analyst expectations in the second quarter, showing a smaller decline in provisions for loan losses and a more elevated level of net charge-offs. The impact of the Gulf oil spill on its operations has also been a source of concern.

However, with the bank raising $800 million, it is well capitalized to bear losses and that appears to have arrested worries about its stability.

5. Alcatel-Lucent

Current Market Price:

$2.56

Second Quarter Lowest Price:

$2.25

YTD Return:

-23%

Alcatel-Lucent

(ALU)

won the attention of

Artis Capital

, a Silicon Valley-based hedge fund,

Morgan Stanley's

(MS) - Get Report

Frontpoint Partners

and

Citadel Advisors

during the second quarter, among others. Artis Capital, which makes venture capital-like investments, bought 64 million shares in the stock.

The telecommunications equipment provider posted a positive operating profit in the second quarter. Since the Alcatel-Lucent merger in 2006, the merged entity has delivered a profit in only two quarters.

The company is expected to benefit from the investments in telecommunication networks by mobile carriers to accommodate application-rich devices such as the iPhone.

Only 4 out of 13 analysts rate it a buy, however, according to

Thomson Reuters

. Although the company maintained its annual guidance, analysts expect a chip shortage to continue curbing sales.

4. American Capital

Current Market Price:

$4.92

Second Quarter Lowest Price:

$4.16

YTD Return:

102%

Private equity and global asset manager

American Capital

(ACAS)

was another financial stock that drew the attention of Paulson & Co during the second quarter. Paulson bought 43.7 million shares in the company, while

Bridgewater Associates

,

Fortress Investment

and

Blackrock

also took positions in the stock.

The stock has more than doubled in 2010 and attracted the attention of big investors as a prime restructuring play. Late last year, the company began a restructuring process that slashed its debt by $1.04 billion.

That and a further capital raise helped the company improve its asset coverage ratio (which refers to its ability to cover its debt with assets after all liabilities have been satisfied) to more than 200% in the second quarter, removing the restriction on its ability to pay dividends. The company also said that the pace of new troubles in its portfolios had slowed down significantly in the recent quarter and that it was turning its attention to new investments.

American Capital narrowed its losses to $291 million, or 88 cents per share, in the second quarter, from $306 million, or $1.41 per share, in the same period a year earlier. It also generated a 27% return on equity in the June quarter. The consensus recommendation in the analyst community is, however, a hold at this point.

3. Motorola

Current Market Price:

$7.46

Second Quarter Lowest Price:

$6.52

YTD Return:

-3.8%

The maker of the Droid smartphone is a favorite for legendary shareholder activist

Carl Icahn

. Icahn has about $1.5 billion invested in

Motorola

( MOT), having recently bought an addition 8.1 million shares in the company. Large hedge funds such as D.E. Shaw and Bridgewater Associates also increased positions in the company.

Motorola recently launched the Droid 2 smartphone but said shipments are likely to be constrained by a shortage of handset chips. Still, the growing popularity of the Android operating system has analysts positive about the stock.

Motorola plans to sell its wireless infrastructure business to Nokia by the end of the year and the company intends to spin-off its smartphone business to a separate entity early next year, which is also expected to boost valuations.

2. Popular

Current Market Price:

$2.54

Second Quarter Lowest Price:

$2.49

YTD Return:

12.2% vs Nasdaq return of -3.9%

Puerto Rico-based regional bank

Popular

(BPOP) - Get Report

, was a much sought after stock in the second quarter for institutional investors. Hedge fund manager

John Paulson

notably bought 66.6 million shares in the stock during the second quarter, while other prominent hedge funds including

Lone Pine Capital

and

AXA

added to their positions.

The bank missed analyst estimates in the second quarter, but the market cheered the improvement in its asset quality as the company continued to narrow its losses on declining provisions for credit losses.

The bank is also expected to benefit from consolidation in the Puerto Rican banking sector. Earlier this year, it participated in an FDIC-assisted deal to take over the deposits and $9.4 billion worth of assets of failed bank

Westernbank Puerto Rico

.

And with the stock trading at less than its book value, it has evinced interest from "value" hawks. Six of eight analysts covering the stock rate it a buy or an outperform according to

Thomson Reuters

. Morgan Stanley recently initiated coverage on the stock with an overweight rating.

1. Citigroup

Current Market Price:

$3.71

Second Quarter Lowest Price:

$3.53

YTD Return:

12.1%

The one big bank that was a clear favorite with hedge fund managers was

Citigroup

(C) - Get Report

. During the second quarter,

Bill Ackman

bought146.5 million shares of the company. In an interview with

Tech Ticker

in June, the hedge fund manager called Citigroup "one of the best capitalized banks" in the market thanks to the government's still substantial holdings.

Other prominent hedge fund owners include

Paulson & Co.

and David Tepper's

Appaloosa Management

.

Citigroup surprised in the second quarter, delivering earnings of 9 cents a share versus an average analysts' estimate for a profit of a nickel per share. The bank's substantial earnings outside the U.S. set it apart from the other money-center banks that are more dependent on the domestic economy. In that vein, Citigroup recently said it would add 130 jobs in Asia to support the growth in the Asian fund management business.

In other recent news, Citigroup agreed in July to settle SEC charges of fraud for failing to disclose the full extent of its subprime mortgage exposure. But a federal judge subsequently rejected the $75 million settlement figure.

--Written by Shanthi Venkataraman in New York

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Shanthi Venkataraman

.

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