- Lori Calvasina of RBC Capital Markets reveals the favorite high-growth stocks of hedge funds at the end of 2019.
- She says the stocks the funds overweighted have beaten the rest of the market so far in 2020, as they did far better than average during the coronavirus plunge.
- The list is heavy on technology, internet, media, and communications companies — a group that has been a Wall Street favorite for more than a decade.
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Everything has changed, and not that much has changed.
The stock market has been on one of the wildest rides in its history over the past two months, but the types of stocks that are thriving relative to their peers hasn't shifted that dramatically. High-tech growth stocks are still in demand.
That's according to Lori Calvasina, head of US equity strategy for RBC. She and her team dug through the holdings of 721 actively managed hedge funds at the end of the fourth quarter and revealed the names that growth funds like the best.
That would be a historical footnote except that those stocks have held up better than average this year. They outperformed substantially during the market downturn in February and March, and they've been broadly in-line with the rest of the market since stocks hit their low on March 23.
"The basket bounced back in the final months of 2019 and is outperforming so far in early 2020," Calvasina wrote in a note to clients.
The result is a list of the 11 stocks listed on the Russell 1000 index that are most likely to be overweighted by growth-focused hedge funds. Given their market-beating performance throughout the coronavirus sell-off, they appear to be strong bets at the moment.
They're listed below in increasing order of the percentage funds overweighting those stocks:
11. Zoetis
Ticker: ZTS
Sector: Healthcare
Percentage of growth funds overweight: 43%
2020 relative return: 5.8%
Source: RBC Capital Markets
10. Nike
Ticker: NKE
Sector: Consumer discretionary
Percentage of growth funds overweight: 43%
2020 relative return: -5.8%
Source: RBC Capital Markets
9. ServiceNow
Ticker: NOW
Sector: Information technology
Percentage of growth funds overweight: 44%
2020 relative return: 7.0%
Source: RBC Capital Markets
8. Alphabet
Ticker: GOOGL
Sector: Communication services
Percentage of growth funds overweight: 45%
2020 relative return: -1.4%
Source: RBC Capital Markets
7. Amazon
Ticker: AMZN
Sector: Consumer discretionary
Percentage of growth funds overweight: 48%
2020 relative return: 19.1%
Source: RBC Capital Markets
6. Mastercard
Ticker: MA
Sector: Information technology
Percentage of growth funds overweight: 51%
2020 relative return: -1.2%
Source: RBC Capital Markets
5. Facebook
Ticker: FB
Sector: Communication services
Percentage of growth funds overweight: 51%
2020 relative return: -6.1%
Source: RBC Capital Markets
4. Adobe Systems
Ticker: ADBE
Sector: Information technology
Percentage of growth funds overweight: 53%
2020 relative return: 5.2%
Source: RBC Capital Markets
3. PayPal
Ticker: PYPL
Sector: Information technology
Percentage of growth funds overweight: 56%
2020 relative return: 6.4%
Source: RBC Capital Markets
2. Salesforce
Ticker: CRM
Sector: Information technology
Percentage of growth funds overweight: 59%
2020 relative return: 3.6%
Source: RBC Capital Markets
1. Visa
Ticker: V
Sector: Information technology
Percentage of growth funds overweight: 70%
2020 relative return: 1%
Source: RBC Capital Markets