- Goldman Sachs finds that the stocks most owned by hedge funds have outperformed the broader market in 2019.
- The firm has also conducted research suggesting that high hedge-fund ownership is a signal of future gains.
- Goldman identified the 17 stocks most loved by hedge funds, according to an analysis of 855 firms with $2.1 trillion worth of gross equity positions.
- Visit Business Insider's homepage for more stories.
If you're ever at a loss for what to do in the stock market, following the so-called smart money is never a bad idea.
This has been especially true in 2019. Boasting an 18% return, a Goldman Sachs-maintained basket of the stocks most popular with hedge funds has beaten the benchmark by a full 3 percentage points this year.
And lest you think it's too late to invest in these stocks since they've already risen so much, Goldman is here to dispel that notion. The firm has run the numbers and found that hedge-fund ownership has historically been a strong signal for future stock returns.
"Rather than signaling 'over-ownership,' stocks with a large number of hedge fund owners have consistently outperformed peers," a group of Goldman strategists wrote in a recent client note. "Surprisingly, this pattern has held even for stocks with elevated multiples relative to their histories."
The chart below shows this dynamic at play:
With that established, following the lead of hedge funds seems like a sound strategy. To that end, we've provided below the stocks most popular with them.
The list is based on the holdings of 855 hedge funds with $2.1 trillion worth of gross equity positions, as analyzed by Goldman at the start of the second quarter. The 17 most popular stocks are listed in increasing order of how many hedge funds own them.
17. Apple
Ticker:AAPL
Market cap: $896 billion
Year-to-date return: 21%
No. of funds with stock as top 10 holding: 25
Source: Goldman Sachs
16. Citigroup
Ticker: C
Market cap: $155 billion
Year-to-date return: 28%
No. of funds with stock as top 10 holding: 27
Source: Goldman Sachs
15. Adobe
Ticker: ADBE
Market cap: $138 billion
Year-to-date return: 25%
No. of funds with stock as top 10 holding: 27
Source: Goldman Sachs
14. PG&E Corp.
Ticker: PCG
Market cap: $10 billion
Year-to-date return: -23%
No. of funds with stock as top 10 holding: 28
Source: Goldman Sachs
13. Mastercard
Ticker: MA
Market cap: $257 billion
Year-to-date return: 35%
No. of funds with stock as top 10 holding: 28
Source: Goldman Sachs
12. Red Hat
Ticker: RHT
Market cap: $33 billion
Year-to-date return: 6%
No. of funds with stock as top 10 holding: 30
Source: Goldman Sachs
11. Worldpay
Ticker: WP
Market cap: $38 billion
Year-to-date return: 58%
No. of funds with stock as top 10 holding: 31
Source: Goldman Sachs
10. Walt Disney
Ticker: DIS
Market cap: $244 billion
Year-to-date return: 24%
No. of funds with stock as top 10 holding: 31
Source: Goldman Sachs
9. PayPal Holdings
Ticker: PYPL
Market cap: $134 billion
Year-to-date return: 35%
No. of funds with stock as top 10 holding: 33
Source: Goldman Sachs
8. Visa
Ticker: V
Market cap: $289 billion
Year-to-date return: 25%
No. of funds with stock as top 10 holding: 37
Source: Goldman Sachs
7. Celgene
Ticker: CELG
Market cap: $67 billion
Year-to-date return: 49%
No. of funds with stock as top 10 holding: 41
Source: Goldman Sachs
6. Netflix
Ticker: NFLX
Market cap: $157 billion
Year-to-date return: 34%
No. of funds with stock as top 10 holding: 42
Source: Goldman Sachs
5. Alibaba
Ticker: BABA
Market cap: $447 billion
Year-to-date return: 28%
No. of funds with stock as top 10 holding: 47
Source: Goldman Sachs
4. Alphabet
Ticker: GOOGL
Market cap: $717 billion
Year-to-date return: 13%
No. of funds with stock as top 10 holding: 56
Source: Goldman Sachs
3. Microsoft
Ticker: MSFT
Market cap: $989 billion
Year-to-date return: 28%
No. of funds with stock as top 10 holding: 77
Source: Goldman Sachs
2. Facebook
Ticker: FB
Market cap: $446 billion
Year-to-date return: 43%
No. of funds with stock as top 10 holding: 78
Source: Goldman Sachs
1. Amazon
Ticker: AMZN
Market cap: $937 billion
Year-to-date return: 27%
No. of funds with stock as top 10 holding: 96
Source: Goldman Sachs