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Hedge funds this year have struggled, mostly on their big bets on the technology sector, though of late their performance has improved.
An average gain of 4% for equity hedge funds in the last two months has helped pull their performance against the broader market to roughly even for the year, according to an analysis from Goldman Sachs.
HFR, FactSet, Goldman Sachs Global Investment Research
A team of analysts looked at 795 hedge funds’ long positions at the start of the third quarter based on filings as of Aug. 15 and published its 50-strong VIP list of “stocks that matter most” that appear most frequently among the top 10 long holdings within hedge fund portfolios.
Company
Ticker
Sub-sector
Number of funds with stock as top 10 holding
Total return year-to-date, %
Amazon.com Inc
Internet & Direct Marketing Retail
92
-15
Microsoft Corp.
Software
84
-13
Alphabet Inc.
Interactive Media & Services
55
-17
Meta Platforms Inc.
Interactive Media & Services
51
-48
Visa Inc.
Data Processing & Outsourced Services
37
0
Apple Inc.
Technology Hardware Storage & Peripherals
36
-2
Uber Technologies
Trucking
34
-28
Mastercard Inc.
Data Processing & Outsourced Services
25
0
Berkshire Hathaway
Multi-Sector Holdings
22
+2
ServiceNow Inc.
Systems Software
19
-25
Source: Solactive, FactSet, data compiled by Goldman Sachs Global Investment Research
Hedge fund of late have cut leverage and shifted back toward growth stocks, buying the likes of Apple and Amazon. The switch came from hedge funds slashing their positions in the energy and materials sector.
NVIDIA topped Goldman’s list of the largest short positions as of the end of July, a prescient call given the company’s profit warning in early August.
Related: Cathie Wood’s ARK Invest cuts its stake in the graphics chipmaker ahead of its results.
Here are the top 10 stocks with the largest short positions:
Company
Ticker
Sub-sector
Total return year-to-date, %
Value of short interest as of Jul. 29, $ billion
NVIDIA Corp.
Semiconductors
-36
6.1
Amgen Inc.
Biotechnology
14
4.3
Occidental Petroleum
Integrated Oil & Gas
125
4
Exxon Mobil Corp.
Integrated Oil & Gas
59
3.5
Chevron Corp.
Integrated Oil & Gas
39
3.1
Pfizer Inc.
Pharmaceuticals
-16
3
International Business Machines
IT Consulting
8
3
Texas Instruments
Semiconductors
-3
2.9
S&P Global Inc.
Financial Exchanges & Data
-18
2.9
KLA Corp
Semiconductor equipment
-10
2.9
Source: FactSet, data compiled by Goldman Sachs Global Investment Research
Companies that see large increase in hedge fund holdings, Goldman Sachs says, can be strong signals for future stock performance.
Rising Stars, they call them, have typically ended up outperforming its peers during the quarters following their rise in popularity.
Rising Stars in the report include tech infrastructure company Switch Inc,
SWCH,
+0.07%
which saw 23 hedge funds pour in during the second quarter, and energy firm Chevron Corporation
CVX,
+0.13%,
which had 20 more hedge funds own the stock.
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