With four new consumer discretionary companies in the top twenty, the direction of hedge fund weighting is clearTenet Healthcare ( THC) is the most crowded position among hedge funds, who own 39% of the company's total equity cap versus an S&P 500 of 5% hedge fund ownership according to recently filed second quarter 13Fs, but whether that makes is an attractive or unattractive investment depends on your overall stance on where the market is headed in the next year. Another healthcare firm, Actavis plc ( ACT), was the second most crowded position, but the most represented sector was consumer discretionary with seven out of twenty of the most concentrated hedge fund positions last quarter, four of which are new to the list. Using a slightly different methodology Actavis plc ( ACT) is number one, while Apple is number two – see chat below Hedge Fund high concentration basket has outperformed YTD Investing in heavily concentrated positions is something of a mixed bag. On the one hand, a lot of sophisticated investors clearly like the stock, so you would expect that is must have something going for it though it's not irrelevant that 13F data is always slightly out of date, and it's entirely possible that the smart money has already moved on from a once underpriced position. But when things go south, they tend to fall hard as lots of players move for the exit following more or less the same signals. "The high hedge fund concentration strategy works in an upward-trending market but tends to perform poorly during choppy or flat markets," write Goldman Sachs analysts Ben Snider, David Kostin, and Amanda Sneider. "In line with this tendency, the basket lagged the S&P 500 in 1Q, but has outperformed YTD by 460 bp +11.7% vs +7.1%." So if you think that the current bull market still has plenty of life in it, you should probably start looking through the most concentrated positions to find some that fit into your portfolio the list isn't sector neutral, and reflects hedge funds' shift toward consumer spending.