The last 12 months have been marked by a series of events that adversely affected the performance of hedge funds and other institutional investors. Amid turmoil in China, a selloff in the U.S stock markets, and plunging commodity prices, the returns of smart money investors took a hit and many top funds closed 2015 with losses. According to Hedge Fund Research, the HFRI Equity Hedge (Total) Index is down by 4.08% over the last 12 months, while the HFRI Event-Driven (Total) Index has declined by 5.29%. Nevertheless, with the latest round of 13F filings completed, we have analyzed the equity portfolios of more than 700 funds from our database and compiled a list of the most popular stocks among them as of the end of December. The list is heavily dominated by tech stocks, as many companies attracted more investors in the final three months of last year. In this article we are going to discuss five companies that ranked at the top of the list. Surprisingly, Apple Inc. (NASDAQ:AAPL), which ranked as the second-most popular stock at the end of September and has ranked in the top-two for several quarters in a row, slid to the seventh spot, even though the number of funds with long positions in Apple was unchanged.
The reason we follow the activity of smart money investors is because we believe that imitating some of the picks that they are collectively bullish on can help an everyday investor outperform the market. The key is to focus on small-cap stocks, which are usually less followed and have a higher chance of being undervalued (see more details here).
Let’s start our discussion with Allergan plc Ordinary Shares (NYSE:AGN), which maintained its position as the most popular stock among the funds we track amid a boost in popularity registered during the last three months of 2015. The number of funds with long positions, among those we track, went up to 159 from 151, while the aggregate value of their holdings surged to $22.22 billion from $20.47 billion. The increase in popularity came amid a 16% growth registered by the stock during the last three months of 2015.
In November, Pfizer Inc. (NYSE:PFE) agreed to acquire Allergan plc Ordinary Shares (NYSE:AGN) in a $160 billion deal that sparked a lot of discussions regarding the moral side of tax inversion deals. Nevertheless, if the deal is completed, it will create the largest drugmaker in the world and allow Pfizer to focus on its portfolio of branded products and dispose of drugs facing generic competition, even though its management previously said that it would delay this move for two years. Among the investors we track, Andreas Halvorsen‘s Viking Global Management and John Paulson’s Paulson & Co. trimmed their positions in Allergan plc Ordinary Shares (NYSE:AGN) to 5.98 million shares and 5.53 million shares, respectively, while Dan Loeb’s Third Point raised its holding to 5.40 million shares.