What are the largest hedge funds in 2019? A lot of investors erroneously see hedge fund size as an indicator of investment success. High returns is a necessary factor in attracting assets but in our experience marketing skills are much bigger factors. Hedge funds like Pershing Square and Greenlight Capital generated poor returns for extended periods of time whereas more successful but unknown hedge funds that we know of failed after a short stretch of poor performances. Investors can definitely fooled by marketing and public relations tricks.
One common characteristic of the biggest and successful hedge funds is that they had much higher returns when they were much smaller. Most large hedge fund managers (except Warren Buffett) wouldn’t acknowledge the fact that there is a negative relationship between fund size and fund returns. Our analysis shows that hedge funds in general generate more outperformance in the small-cap space than the large-cap space, yet they are forced to invest in large-cap stocks as their assets under management swell. So, all biggest hedge funds experience a style drift towards large-cap stocks, even the hedge fund managers who failed to generate meaningful alpha in the large-cap space. Nothing is sweeter than collecting 2% management fees and raking in hundreds of millions of dollar by secretly investing in the S&P 500 stocks. Most pension fund managers are dumb enough to hand hedge funds hundreds of billions of dollars in assets for inferior returns.
In this article, we compiled the list of the biggest equity hedge funds in 2019 based on the size of their 13F portfolios. There are hedge funds that invest in bonds, derivatives, currencies, or some obscure assets around the world. There is no way for us to benefit from these hedge funds’ wisdom without paying them an arm and a leg in fees. We also don’t care whether Bridgewater Associates raised $50 billion or more from investors just to buy Treasury bills or some other type of bonds. What we really care about is hedge funds’ stock picks because they have to reveal their entire US portfolio in publicly traded companies once every three months.
This gives us the opportunity to see their portfolio movements and estimate their stock picking skills. This is especially true for hedge fund managers who trade infrequently and hold on to a position for several years.
In this article we expect to see that most of the biggest positions of the largest hedge funds are large cap stocks like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Facebook Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG) which are among the top 30 most popular stocks among hedge funds. That’s true to a certain degree, but we came across another large cap stock that is more popular than Apple, Facebook, Amazon, and Google. We will reveal the name of this stock at the end of the article. We also expect to see a few surprising stock picks by the largest hedge funds.
So, keep in mind that the hedge funds we listed in this article will be large and decent hedge funds but, they won’t necessarily be the best hedge funds to follow. Every quarter we publish a list of the 40 best performing hedge funds, and you will notice that only a few of them are very large hedge funds and none of them are among the 10 largest hedge funds in the world. Anyway, here is the rundown of the 25 largest hedge funds in 2019:
25. Orbis Investment Management
Founded By: William Gray
13F Portfolio Value: $13.9 Billion
Top Stock Pick: Netease.com (NTES)
24. Generation Investment Management
Founded By: David Blood and Al Gore
13F Portfolio Value: $14.5 Billion
Top Stock Pick: Alphabet Inc (NASDAQ:GOOG)
Robert Joseph Caruso
13F Portfolio Size: $14.7 billion
Top Stock Pick: Martin Marietta Materials (MLM)
Founded By: Julian Baker and Felix Baker
13F Portfolio Size: $14.7 billion
Top Stock Pick: Seattle Genetics Inc (SGEN)
Felix Baker of Baker Bros.
Founded By: Paul Singer
13F Portfolio Size: $14.9 billion
Top Stock Pick: Arconic Inc (ARNC)
Paul Singer of Elliott Management
Founded By: Matthew Hulsizer
13F Portfolio Size: $15 billion
Top Stock Pick: Amazon.com Inc (NASDAQ:AMZN)
Matthew Hulsizer of PEAK6 Capital
Founded By: Dmitry Balyasny
13F Portfolio Size: $15.6 billion
Top Stock Pick: United Technologies (UTX)
Dmitry Balyasny of Balyasny Asset Managemnet
Founded By: Stephen Mandel
13F Portfolio Size: $16.1 billion
Top Stock Pick: Adobe Systems (NASDAQ:ADBE)
Stephen Mandel of Lone Pine Capital
Founded By: Chase Coleman
13F Portfolio Size: $18.5 billion
Top Stock Pick: Microsoft Corp (NASDAQ:MSFT)
Chase Coleman of Tiger Global
16. OZ Management
Founded By: Daniel S. Och
13F Portfolio Size: $18.8
Top Stock Pick: Altaba Inc (AABA)
Daniel Och, Founder of OZ Management
Founded By: Steve Cohen
13F Portfolio Size: $19.1 billion
Top Stock Pick: Alibaba Group (BABA)
Steven Cohen of Point72 Asset Management
14. Viking Global
Founded By: Andreas Halvorsen
13F Portfolio Size: $22.3 billion
Top Stock Pick: Adaptive Biotechnologies (ADPT)
Andreas Halvorsen of Viking Global
Founded By: Panayotis “Takis” Sparaggis
13F Portfolio Size: $25.3 billion
Top Stock Pick: Synopsys (SNPS)
12. Icahn Capital
Founded By: Carl Icahn
13F Portfolio Size: $26.5 billion
Top Stock Pick: Icahn Enterprises (IEP)
Carl Icahn of Icahn Capital
11. GLG Partners
Founded By: Noam Gottesman
13F Portfolio Size: $27.7 billion
Top Stock Pick: Microsoft Corp (MSFT)
Noam Gottesman of GLG Partners
Founded By: Boykin Curry
13F Portfolio Size: 28.6 billion
Top Stock Pick: Microsoft Corp (MSFT)
Boykin Curry of Eagle Capital
Founded By: Phill Gross and Robert Atchinson
13F Portfolio Size: $40.2 billion
Top Stock Pick: Microsoft Corp (MSFT)
Phill Gross of Adage Capital Management
Founded By: John Overdeck and David Siegel
13F Portfolio Size: $40.2 billion
Top Stock Pick: Amazon.com Inc (AMZN)
John Overdeck of Two Sigma Advisors
Founded By: Peter Rathjens, Bruce Clarke and John Campbell
13F Portfolio Size: $44.8 billion
Top Stock Pick: Mastercard Inc (MA)
Founded By: Israel Englander
13F Portfolio Size: $66.5 billion
Top Stock Pick: Altaba Inc (AABA)
Israel Englander of Millennium Management
5. D E Shaw
Founded By: David E. Shaw
13F Portfolio Size: $80.2 billion
Top Stock Pick: Alibaba Group (BABA)
David E. Shaw of D.E. Shaw
Founded By: Cliff Asness
13F Portfolio Size: $89.6 billion
Top Stock Pick: Microsoft Corp (MSFT)
Cliff Asness of AQR Capital Management
Founded By: Jim Simons
13F Portfolio Size: $113.6 billion
Top Stock Pick: Verisign Inc (VRSN)
Jim Simons of RENAISSANCE TECHNOLOGIES
Managed By: Warren Buffett (yes, Berkshire is a secret hedge fund with no fees)
13F Portfolio Size: $208 billion
Top Stock Pick: Apple Inc (NASDAQ:AAPL)
Warren Buffett
Founded By: Ken Griffin
13F Portfolio Size: $218 billion
Top Stock Pick: Facebook Inc. (NASDAQ:FB)
Ken Griffin of Citadel Investment Group
The most popular top stock pick among these largest hedge funds in 2019 is Microsoft. Alibaba Group surprisingly ranked second. Hedge funds got Alibaba exposure either directly through BABA shares or indirectly through AABA shares. The third spot belongs to Amazon.
Disclosure: None. This article is originally published at Insider Monkey.
