The latest round of 13F filings is complete, giving our research team at Insider Monkey access to a wealth of information on hedge fund activity concerning the 730 funds we track in our database (you can track these funds as well; simply navigate to a fund’s page and click on the “get email alerts” button, and we’ll notify you via email of all the latest news and portfolio changes concerning that fund). In addition to publishing our latest quarterly newsletter which includes our top small-cap picks for the next three months, we’ve also unveiled the top ten stock picks among hedge funds, which included a big upset at the top of the list.
The professional investors we track spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However we know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012, returning 144.4% and beating the market by more than 84 percentage points since then, and by 4.5 percentage points so far this year (see the details).
Apple Inc. (NASDAQ:AAPL) may have been dethroned by Actavis plc (NYSE:ACT) for the title of most popular stock among hedge funds, but it continues to rule the tech world with an iron fist. Apple, which owns one of the most profitable businesses ever, still has 150 funds from our database with positions in it, an increase of one from the previous reporting period. The aggregate capital invested by these 150 funds also increased to $21.52 billion from $20.88 billion. However, given the appreciation of Apple Inc. (NASDAQ:AAPL)’s shares by over 13% during the first quarter, the aggregate capital suggests funds actually decreased their share ownership slightly during the quarter.
Understandably, there is no easily reached consensus on the growth prospects for the iPhone-maker. While bulls like Carl Icahn believe Apple will enter into and dominate new segments like automobiles and TV over the coming years, adding potentially limitless revenue streams to its books, bears look at the stock as one that has peaked, at least for the short-term. With smartphone sales in China declining and some disappointing follow-up numbers starting to trickle in concerning Apple Watch sales after brisk pre-orders, there is concern over near-term growth catalysts for the most valuable company in the world. Daniel Benton slashed his large position in Apple Inc. (NASDAQ:AAPL) by 91% during the first quarter, while Leon Cooperman sold out of his Apple position completely.
Nonetheless, Apple Inc. (NASDAQ:AAPL) remains the most popular tech stock and second-most popular stock overall, with Icahn, Ken Fisher, David Einhorn, and Stephen Mandel just some of the bullish investors of the Cupertino, California company. Apple Inc. (NASDAQ:AAPL)’s shares are up by more than 6% in the second quarter.
Facebook Inc (NASDAQ:FB) moves into second, surpassing Google Inc (NASDAQ:GOOG) with 129 funds owning stakes in the social media giant as of March 31. That’s an increase from 118 at the end of 2014, while invested capital increased to $7.36 billion from $6.11 billion. Facebook Inc (NASDAQ:FB) is one of the tech stocks that moved past Apple in Daniel Benton’s portfolio, while investing legend Julien Robertson recently gave a vote of confidence to Facebook as well, which he’s owned for over a year. Facebook Inc (NASDAQ:FB) has failed to hit its stride in 2015, gaining just 3% so far following strong returns in 2013 and 2014. There are several near-term growth prospects for Facebook however that could suggest great upside potential for the stock, including the monetization of WhatsApp, the soon-to-be-released Oculus VR headset, and the company’s push into publishing with the purchase of Tugboat Yards. Mandel, Philippe Laffont and Donald Chiboucis are just some of the investors with large stakes in Facebook.
Google Inc (NASDAQ:GOOG) drops to third among tech stocks, although its total ownership is harder to pin down given that the company’s stock is split into both Class A (GOOGL) and Class C (GOOG) shares, and there is overlap in the ownership of both classes of stock. Google’s Class A shares are owned by 121 funds, while its Class C shares are owned by 108 funds. That compares to 120 and 105 respectively at the end of 2014. The total invested capital among both classes of stock stands at $1.42 billion, an increase from $1.18 billion. While Facebook’s aforementioned move into publishing could most directly impact Google’s AdSense revenue, there is seemingly little cause for concern as Google Inc (NASDAQ:GOOG)’s revenue continues to soar and it has built a dominant mobile infrastructure that will make it a leader in mobile advertising for years. Among other recent initiatives, Google Inc (NASDAQ:GOOG) will unveil a “Buy” button when mobile users search for products at qualified retailers who pay for Google Product Listing ads. So while Facebook is taking aim at Google, the search engine giant is taking aim at Amazon.com, Inc. (NASDAQ:AMZN). Billionaires Mason Hawkins and Andreas Halvorsen are among the bullish investors of Google.
Disclosure: None
