100 hedge funds trimmed or sold out of positions in Apple during the fourth quarter, the stock was among the top 10 holdings for 79 funds as of Dec. 31, heading the so-called VIP list.
Goldman, which limits the hedge fund universe to funds with 10 to 200 distinct equity positions, says the hedge fund VIP list offers an easy vehicle for investors seeking to "follow the smart money" based on 13-F filings. According to the data, this basket of 50 stocks most important to hedge funds outperformed the S&P 500 in 2009 (40% to 27%) and 2010 (19% to 15%). The VIP list has a return of 6.3% so far this year, outpacing the 5.8% increase on the S&P 500. Large-cap stocks account for 47% of hedge funds' aggregate equity assets, with Ford ( F), Qualcomm ( QCOM) and Wal-Mart ( WMT) making the cut. The typical hedge fund allocates 35% of its assets to large-cap stocks, Goldman analysts write, and the difference between the average and the aggregate "suggests that hedge funds with the largest assets under management target large-cap stocks." Commodities were also important to hedge funds in the quarter. Hedge funds owned about $23 billion of long positions in gold stocks and ETFs as of Dec. 31, according to Goldman's data. If investors are looking for fresh investment ideas, though, new entrants to the VIP list included energy and materials stocks such as Halliburton ( HAL), ConocoPhillips ( COP) and Potash of Saskatchewan ( POT). The following pages detail the 10 stocks that represent the most important positions for hedge funds, according to Goldman's data, and are ranked by the number of funds that count each stock as a top 10 holding.
9. Alcon ( ACL) Company Profile: Alcon develops and sells pharmaceuticals, surgical equipment and devices and consumer eye-care products to treat diseases and disorders of the eye. Number of Funds With Stock as Top 10 Holding: 28 Major Hedge Fund Investors: Alcon was a top holding for Steven Cohen's SAC Capital Advisors and Paulson & Co., as the funds held 3.5 million and 2.5 million shares of Alcon, respectively. Overall, Alcon has a low level of institutional ownership at 20%, while public corporations own more than 77% of the company's outstanding shares. Other big hedge fund investors include York Capital Management and Pentwater Capital Management.
7. General Motors ( GM) Company Profile: GM is the world's second-largest automaker, which emerged from Chapter 11 bankruptcy and completed the world's biggest initial public offering in November. Number of Funds With Stock as Top 10 Holding: 35 Major Hedge Fund Investors: Several hedge funds jumped quickly on GM's IPO, including Bill Ackman's Pershing Square Capital Management, which snapped up more than 7.1 million shares of the automaker. Jana Partners, Alyeska Investment Group and Kingdon Capital Management were also big investors, buying more than 3 million shares each of GM. Appaloosa Management and Glenview Capital were also investors in GM during the fourth quarter.
5. Google ( GOOG) Company Profile: Google is the well known Internet search engine, and also offers advertising services and cloud computing. Number of Funds With Stock as Top 10 Holding: 40 Major Hedge Fund Investors: Google's share price, which is hovering over $600, is prohibitive to individual investors. Indeed, the public accounts for less than 15% of Google's outstanding shares, while institutions own more than 64% of the Internet giant's outstanding shares. However, hedge fund managers only account for 4.5% of institutional ownership, compared to 86% for traditional money managers. Among the biggest hedge fund owners of Google, Citadel Investment Group owns nearly 705,000 shares of Google, a position that carried a market value of $430 million as of Dec. 31. Adage Capital, Maverick Capital, and Renaissance Technologies were other major owners of Google.
3. Microsoft ( MSFT) Company Profile: Microsoft is best known for its flagship Windows operating systems, as well as other software applications and consumer products, like the Xbox 360 video-game console. Number of Funds With Stock as Top 10 Holding: 48 Major Hedge Fund Investors: Adage Capital is the largest hedge fund owner of Microsoft, with a holding of 10.6 million shares worth $283 million as of Dec. 31. Shumway, Einhorn, Tepper, and D.E. Shaw are other big hedge fund owners, each holding more than 6 million shares of Microsoft.
1. Apple ( AAPL) Company Profile: Apple makes personal computers, mobile communication devices, and portable digital music and video players. The company is best known for its Mac line of computers, the iPod, iPhone and iPad devices, and iOS operating system. Number of Funds With Stock as Top 10 Holding: 79 Major Hedge Fund Investors: Apple, the darling of fast-growth stocks, attracts some of the biggest names in the hedge fund world. SAC Capital, Einhorn's GreenLight Capital, Ainslie's Maverick Capital, Robert Citrone's Discovery Capital, Chris Shumway, Phillip Gross' Adage Capital, George Soros' Soros Fund Management and Chase Coleman's Tiger Global were among the top 25 hedge fund holders of Apple. However, Citadel Investment Group was the biggest of them all, owning nearly 3.3 million shares of Apple with a value of $1.1 billion as of Dec. 31.