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- Hedge funds traded stocks during the first quarter at the fastest pace since 2011, according to a Goldman Sachs report.
- Stocks that increase the most in popularity typically go on to outperform their sector peers, the report also said.
- It listed the 20 stocks with the highest increase in hedge fund ownership during Q1 based on an analysis of 822 hedge funds with $1.2 trillion in long equity positions.
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The stock market's historic volatility during the first quarter kept hedge funds busy as they tried to minimize losses and pounce on opportunities.
A recent Goldman Sachs report showed that funds' portfolio turnover, meaning the frequency with which they traded stocks, was at its highest since 2011. This frenzy has helped the average fund outperform the market year-to-date. A basket of the most popular hedge fund stocks is down 1% versus -7% for the S&P 500.
Goldman strategist Ben Snider found that the changes in hedge funds' portfolios can serve as a strong signal of which stocks do well. Since 2002, stocks with the biggest popularity growth have outperformed their sector peers by 52 basis points on average, he said.
"During the last 18 years, stocks with the largest increase in number of hedge fund investors ('rising stars') have typically gone on to outperform sector peers during the quarters following their rise in popularity," Snider said in the note.
"'Falling star' stocks with the largest decline in number of owners have subsequently underperformed peers by a similar magnitude."
The list below features the top 20 of these so-called rising stars in hedge fund portfolios. It is based on Goldman's analysis of 822 hedge funds with $1.2 trillion in long equity positions, and listed in ascending order of the change in ownership.
20. Xcel Energy
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Ticker:XEL
Number of hedge funds owning stock: 35
Increase in number of owners: 14
Year-to-date total return: -4%
Source: Goldman Sachs
19. Intel
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Ticker:INTC
Number of hedge funds owning stock: 72
Increase in number of owners: 14
Year-to-date total return: 7%
Source: Goldman Sachs
18. Webster Financial
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Ticker:WBS
Number of hedge funds owning stock: 34
Increase in number of owners: 14
Year-to-date total return: -52%
Source: Goldman Sachs
17. Pegasystems
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Ticker:PEGA
Number of hedge funds owning stock: 37
Increase in number of owners: 14
Year-to-date total return: 13%
Source: Goldman Sachs
16. Amphenol
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Ticker:APH
Number of hedge funds owning stock: 53
Increase in number of owners: 14
Year-to-date total return: -16%
Source: Goldman Sachs
15. Under Armour
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Ticker:UAA
Number of hedge funds owning stock: 37
Increase in number of owners: 15
Year-to-date total return: -62%
Source: Goldman Sachs
14. Campbell Soup
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Ticker:CPB
Number of hedge funds owning stock: 50
Increase in number of owners: 15
Year-to-date total return: -1%
Source: Goldman Sachs
13. Clorox
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Ticker:CLX
Number of hedge funds owning stock: 43
Increase in number of owners: 15
Year-to-date total return: 35%
Source: Goldman Sachs
12. Darden Restaurants
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Ticker:DRI
Number of hedge funds owning stock: 57
Increase in number of owners: 16
Year-to-date total return: -28%
Source: Goldman Sachs
11. D.R. Horton
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Ticker:DHI
Number of hedge funds owning stock: 66
Increase in number of owners: 16
Year-to-date total return: 0%
Source: Goldman Sachs
10. Taubman Centers
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Ticker:TCO
Number of hedge funds owning stock: 44
Increase in number of owners: 16
Year-to-date total return: 25%
Source: Goldman Sachs
9. Idex Corporation
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Number of hedge funds owning stock: 41
Increase in number of owners: 17
Year-to-date total return: -11%
Source: Goldman Sachs
8. JPMorgan Chase
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Ticker:JPM
Number of hedge funds owning stock: 96
Increase in number of owners: 18
Year-to-date total return: -33%
Source: Goldman Sachs
7. WEC Energy Group
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Ticker:WEC
Number of hedge funds owning stock: 38
Increase in number of owners: 18
Year-to-date total return: -4%
Source: Goldman Sachs
6. Mastercard
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Ticker:MA
Number of hedge funds owning stock: 137
Increase in number of owners: 20
Year-to-date total return: 0%
Source: Goldman Sachs
5. Change Healthcare
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Ticker:CHNG
Number of hedge funds owning stock: 47
Increase in number of owners: 22
Year-to-date total return: -26%
Source: Goldman Sachs
4. Activision Blizzard
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Ticker:ATVI
Number of hedge funds owning stock: 107
Increase in number of owners: 29
Year-to-date total return: 25%
Source: Goldman Sachs
3. Charter Communications
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Ticker:CHTR
Number of hedge funds owning stock: 109
Increase in number of owners: 33
Year-to-date total return: 6%
Source: Goldman Sachs
2. Amazon
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Ticker:AMZN
Number of hedge funds owning stock: 239
Increase in number of owners: 45
Year-to-date total return: 35%
Source: Goldman Sachs
1. Microsoft
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Ticker:MSFT
Number of hedge funds owning stock: 218
Increase in number of owners: 45
Year-to-date total return: 18%
Source: Goldman Sachs