5 Stocks Hedge Funds Are Absolutely Crazy About

Insider Monkey tracks more than 700 equity hedge funds and around 650 of them disclosed their equity and options positions in publicly traded US stocks recently. 13F filings are excellent sources of investment ideas. Our research has shown that the most popular small-cap stocks among hedge funds outperformed the market by an average of 18 percentage points per year during a back-test covering a 10 year period. There are a lot of investment strategies that perform well in back tests but fail to deliver in real trading. Fortunately our investment approach is still working. We have been forward testing this strategy since the end of August 2012. Its stock picks outperformed the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) by 41 percentage points since then (see the details here).

Barry Rosenstein JANA PARTNERS

Hedge funds’ large cap and concentrated positions also outperform the market but the margins are smaller. Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) are two of the three most popular stocks among hedge funds (see the 10 most popular stocks) but hedge funds don’t own a large percentage of these stocks’ outstanding shares. In this article we will focus on stocks that are owned by at least 65 hedge funds and hedge funds own a large percentage of outstanding shares.

Equinix Inc (NASDAQ:EQIX) tops our list. Sixty nine hedge funds own more than 45% of Equinix Inc (NASDAQ:EQIX)’s outstanding share at the end of 2013. Activist Barry Rosenstein, billionaire John Paulson, and Jeffrey Tannenbaum had nearly $1.5 billion invested in the stock.

Charter Communications, Inc. (NASDAQ:CHTR) is in 79 hedge funds’ portfolio and hedge funds collectively own 42% of Charter’s outstanding shares. Hedge funds were betting on Charter on the expectation that it will be able to gain scale by acquiring Time Warner Cable Inc (NYSE:TWC). John Scully, John Griffin, and Philippe Laffont hold the three largest positions in CHTR among the hedge funds we track.

Dollar General Corp. (NYSE:DG) ranks third in our list. Seventy six hedge funds own more a third of DG’s outstanding shares. Dollar General seems like a “growth at a reasonable price” play. It expects to earn around $3.2 per share in FY 2014 and it is expected to increase its top and bottom lines by around 10% in FY 2015. Billionaire Stephen Mandel is Dollar General’s biggest fan with a $1.14 billion position at the end of December.

Hertz Global Holdings, Inc. (NYSE:HTZ) is in 109 hedge funds’ portfolio. Hedge funds collectively own more than 32% of Hertz’s outstanding shares. Hedge fund manager Phillippe Laffont was recently added to Hertz’s board. “We are fortunate to add a new member to the Hertz Board who has a strong background in identifying and capitalizing on long-term technology trends based on fundamental research,” said Hertz’s chairman and CEO. Laffont’s Coatue doesn’t own any shares in Hertz but activist hedge fund manager Dan Loeb initiated a 1.4% position in the stock during the fourth quarter.

Constellation Brands, Inc. (NYSE:STZ) ranks fifth in our list. Sixty six hedge funds own nearly 31% of STZ’s outstanding shares. The stock has been beating earnings expectations by large margins since it completed the acquisition of Crown Imports this summer. Billionaire Andreas Halvorsen boosted his bet on STZ by more than 150% during the last three months of 2013.

Recommended Reading:

Edward Gilhuly and Sageview Capital’s New Stock Moves

Lance Helfert and Paul Orfalea’s Top Holdings and Latest Sales

New Picks of Steve Cohen’s SAC Capital Advisors

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!