Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Goldman Sachs Puts Its ‘Conviction Buy’ Stamp Of Approval On These 3 Stocks

Credit Suisse Group AG (ADR) (NYSE:CS), BlackRock, Inc. (NYSE:BLK), and InterOil Corporation (USA) (NYSE:IOC) were recently added to Goldman Sachs’ Conviction Buy list, which represents the companies that the investment bank believes will outperform the market. While Credit Suisse’s rating remained at ‘Buy’, the price target was raised to SFr32.50 ($33.54) from SFr30.80 ($31.79). BlackRock’s secularity of business in terms of the wide variety of asset classes that the firm deals with, including ETFs and Multi-Asset Alternatives impressed the Goldman analysts, who upgraded the stock to ‘Conviction Buy’ from ‘Buy’. Moreover, the M&A activity in Papua New Guinea, along with the undervalued stock price of InterOil and the company’s strong flow test results earned it a ‘Conviction Buy’ rating and a price target of $45, which provides an upside of more than 30%.

Benguhan /

Benguhan /

Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return 118% over the last 36 months and outperformed the S&P 500 Index by 60 percentage points (see the details here).

Analysts at Goldman Sachs believe that there is a high probability of reform at Credit Suisse Group AG (ADR) (NYSE:CS) owing to an outsider CEO which could break the tradition of highly ambitious and unmet targets that the earlier management was setting for the company. They believe that the firm’s valuation could significantly improve if it follows the restructuring path that UBS Group AG (USA) (NYSE:UBS) took and cuts down on its investment banking division and concentrates more on private banking operations instead. Hedge funds were generally bullish about Credit Suisse during the second quarter. Among those that we track, a total of six funds had an aggregate investment of $316 million at the end of June, up from four funds holding $323 million in shares on March 31. Ken Fisher‘s Fisher Asset Management topped this list and after a 5% increase in its Credit Suisse Group AG (ADR) (NYSE:CS) holding during the second quarter, owned about 10.08 million shares valued at $278 million.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.