3 Tech Stocks That Hedge Funds Are Buying

NEW YORK ( TheStreet) -- As hedge funds try to beat the broader equity market to attract client money, they are placing increased bets on the same companies, particularly faster-growing technology stocks.

Goldman Sachs has put out its "hedge fund 'very important position' (VIP) list," made up of the stocks that hedge funds have taken large stakes in, betting on the fundamental outlook for a select group of companies.

Goldman Sachs: How to Invest Like a Hedge Fund

The Goldman "VIP" stock list includes Apple ( AAPL), Google ( GOOG) and Microsoft ( MSFT). In total there are 50 companies on the list.

Amazon ( AMZN), Ariba Networks ( ARBA) and Citrix Systems ( CTXS) are some of the others.

Here are the three top tech stocks that appear most often in hedge funds' portfolios.

Apple

Apple makes the most frequent appearance among hedge funds used to generate Goldman Sachs' list, appearing as a top-10 holding 113 times, and 150 times among hedge funds with 10 to 200 positions. Shares of the Cupertino, Calif.-based maker of the iPhone account for an average portfolio weighting of 8% among those top 10 holdings.

Apple shares have been a stalwart this year, gaining 62%, far outpacing the 18% gain in the Nasdaq. Even though Apple missed analysts' estimates in the third quarter, investors are excited about the iPhone 5 and potential iPad Mini, expected to be released in September.

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Apple recently became the most valuable company ever, surpassing Microsoft, which set the mark at the height of the dot-com boom in December 1999.

Google

The Mountain View, Calif.-based Internet search company appears on the Goldman Sachs list most frequently after Apple. It's a top-10 holding 63 times, and 96 times among hedge funds with 10 to 200 positions. Google shares account for an average portfolio weighting of 6% among the 10 biggest holdings.

Google shares have underperformed this year, gaining only 3.7%. However, over the past month, Google has gained 9.6%, doubling the 4.8% return in the Nasdaq. Google had strong second-quarter results, exceeding analysts' consensus.

Google is attacking Apple on the tablet front, and that's piquing investor interest. Google is launching the Nexus 7 tablet, a 7-inch tablet, priced at $199.

Microsoft

Goldman Sachs noted that Microsoft has been among the top 10 names on the list for each of the past 46 quarters. Microsoft stock appears as a top-10 holding for 47 funds and accounts for an average portfolio weighting of 6%.

Microsoft shares have outperformed the Nasdaq and the S&P 500 this year, climbing 19%. Investors are excited about Microsoft's new operating system, Windows 8, which runs on chips from Intel ( INTC) and processors using ARM Holdings' ( ARMH) design for the first time in Microsoft's history.

Investors have trained their eyes on the Microsoft Surface, the company's answer to the iPad, as both Microsoft and Google try to chip away at Apple's dominance. Microsoft has not released pricing details of the Windows 8 tablet, though CEO Steve Ballmer did say it would be "competitive."

Microsoft said the device will be available for sale Oct. 26.

Interested in more on Microsoft? See TheStreet Ratings' report card for this stock.

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-- Written by Chris Ciaccia in New York

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