Hedge funds’ favorite stocks are beating the broader market due to the continuous strength of technology giants, according to Goldman Sachs. The Wall Street bank analyzed the holdings of 693 fundamentally driven hedge funds with $2.8 trillion of gross equity positions at the end of the second quarter, based on regulatory filings. It then compiled a basket of the most popular long positions, dubbed Goldman’s “Hedge Fund VIP basket,” consisting of 50 stocks that most frequently appear among hedge funds’ 10 largest holdings. The VIP basket has outperformed the S & P 500 this year with a gain of 19%, compared to the S & P 500’s 17% return. This Goldman portfolio has a long history of beating the market especially during elevated volatility, trouncing the S & P 500 in 59% of the quarters since 2001. “From an implementation standpoint, the Hedge Fund VIP list represents a tool for investors seeking to ‘follow the smart money’ based on 13-F filings,” Goldman said. The VIP basket includes stocks from nine of the 11 S & P 500 sectors with real estate and utilities absent from the list. Technology stocks have the largest representation in the portfolio with a 24% weighting. Most of the “Magnificent Seven” megacap tech stocks — Amazon , Microsoft , Meta , Google’s Alphabet , Apple and Nvidia — stood at the top of the list, the bank said. Tech shares have continued to power the bull market despite a short-lived pullback a few weeks ago. Meta shares have gained more than 50% this year, while Nvidia is up more than 158%. Uber , Taiwan Semiconductor , Hess and Eli Lilly were also among stocks that mattered the most to hedge funds in the second quarter, according to Goldman. — CNBC’s Michael Bloom contributed reporting.
Goldman’s hedge fund VIP portfolio is outperforming the market this year amid volatility
Aug 21, 2024
