What are we looking for?
On Wednesday, we looked at the stocks that most often pop up at the top of the biggest holdings of the 50 largest U.S. mutual funds. Today, we turn our attention to the most popular top holdings for U.S. hedge funds.
Top stocks for hedgies
The idea, and the data analysis, come from Tobias Levkovich, head U.S. equity strategist at Citigroup in New York. Mr. Levkovich believes that the trends in top holdings for mutual and hedge fund managers may provide clues, and even opportunities, for astute investors.
"The goal is to help us identify larger-cap stocks that may be over- or under-owned within the equity mutual and hedge fund universe," he said in a research report.
To that end, Mr. Levkovich recently looked at the 50 biggest hedge funds and the 50 biggest mutual funds in the United States, to see which stocks most frequently show up in their 10 largest holdings. Fund companies typically update their publicly available top 10 holdings lists at least quarterly, allowing Citigroup to track changes in the leading holdings on a quarter-to-quarter basis.
What did we find?
As we reported Wednesday, Mr. Levkovich found that the top mutual fund holdings are skewed toward the information technology sector; this over-representation was even more pronounced among hedge funds. Techs make up nearly half of the top 15 names on the hedge fund list.
However, there are considerable differences among the individual names dominating the hedge fund list compared with the mutual fund list. Apple Inc. is the most common top 10 holding among the hedge funds, appearing on the top 10 lists of 16 of the 50 funds. (It ranked third in the mutual fund list.) But only one other stock - JPMorgan Chase & Co. - reached double figures, compared with 10 stocks that were in double digits on Wednesday's mutual fund list. This suggests that the hedge funds have more diversity in their dominant holdings than do the big mutual funds.
Mr. Levkovich noted that growth-oriented hedge funds' most popular top 10 holdings are Apple, JPMorgan and Citigroup Inc. For value-oriented hedge funds, the three most popular holdings are Apple, Citigroup and Microsoft Corp.
STOCKS APPEARING MOST OFTEN IN TOP 10 HOLDINGS OF THE 50 BIGGEST U.S. HEDGE FUNDS
|Market cap||% price chg||% price chg|
|(US$-mil)||No. of hedge fund top 10 holdings||(Mar. 31-||(June 30-|
|Company Name||Ticker||S&P Sector||(Sep. 2)||2Q11||1Q11||4Q10||3Q10||2Q10||June 30)||Sep. 2)|
|Apple Inc.||AAPL-Q||Info Tech||346,708||16||15||17||16||12||-3.7||11.4|
|JP Morgan Chase||JPM-N||Financials||135,410||10||10||10||13||13||-11.2||-15.4|
|IBM Corp.||IBM-N||Info Tech||199,421||5||6||3||3||3||5.2||-2.7|
|Coca-Cola Co.||KO-N||Consum. Staples||159,914||4||4||4||5||6||1.4||3.6|
|Fidelity National Info||FIS-N||Info Tech||8,194||4||4||3||3||0||-5.8||-12.9|
|Wells Fargo & Co.||WFC-N||Financials||127,732||4||3||4||5||16||-11.5||-13.8|
|Crown Castle Intl||CCI-N||Telecom Svcs.||12,139||4||3||2||4||2||-4.1||3.7|
|Motorola Solutions||MSI-N||Info Tech||13,861||4||3||2||2||0||3.0||-12.3|
|Source: Citigroup, FactSet|
© 2007 The Globe and Mail. All rights reserved.
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