Like Apple? So do Hedge Funds, as 180+ Hedge Funds’ hold Apple shares.
Hedge Funds’ net weighting in Consumer Discretionary remains the highest of all sectors at 17% followed by Information Technology. Hedge Funds increased their Materials exposure during 2Q 2010 and remained most underweight Consumer Staples and Financials.
Hedge funds have the most positive directional view on Telecom Services given the 65% net long positioning when you combine long and short exposures. Hedge funds appear to hold a 10% net weighting in Materials and are more overweight relative to the Russell 3000 than long exposure alone suggests. Similar portfolio skew occurs in underweights of the Financials and Consumer Staples sectors.
The typical hedge fund allocates 37% of its assets to stocks with less than $2 billion in equity capitalization and 33% to large–caps ($10+ billion). Mid-cap stocks ($2-$10 billion) account for 31% of the average fund’s portfolio. On an aggregate asset basis, hedge funds allocate just 22% of their assets to small-cap stocks, while 43% is allocated to largecap stocks. The difference between the average and the aggregate suggests that the hedge funds with the largest assets under management target large-cap stocks.
The hedge fund VIP list consists of stocks in which fundamentally-driven hedge funds have a large stake. Stocks that “matter most” to hedge funds are positions that appear most frequently among the top ten holdings within hedge fund portfolios. For this analysis, limit your hedge fund universe to those funds with 10 to 200 distinct equity positions in an attempt to isolate fundamentally-driven investors from quantitative funds or funds that mirror private equity investments.
The hedge fund VIP list offers investment ideas and tracks long exposure of hedge funds. By construction, the VIP list identifies the 50 stocks whose performance will largely influence the long side of many fundamentally driven hedge funds.
Turnover for the basket during 2Q 2010 was in line with the historical average, with 15 new stocks entering the VIP list compared with a quarterly turnover of 16 stocks since 2001.
From an implementation standpoint, the hedge fund VIP list offers an efficient vehicle for investors seeking to “follow the smart money” based on 13-F filings. The VIP basket has a large-cap bias with a median market capitalization of $39 billion compared with $9 billion for the S&P 500. The VIP list contains stocks from eight of the ten sectors, with Telecommunication Services and Utilities absent. The VIP basket overweights the Information Technology sector (34%) and underweights Consumer Staples (4%).
The basket of the 50 stocks that “matter most” has outperformed the S&P 500 by 71 bp on a quarterly basis since 2001.
Click To Enlarge The VIP LIst:
~special thanks to tyler durden and zerohedge, how do they do it? ~money.
