We believe one of the best tools for ordinary investors who are on the hunt for new ideas is 13F filings. Once every quarter hedge funds with at least $100 million in total positions in publicly traded US stocks/options are required to open the kimono and disclose the number of shares and the total value of its positions in each of the stocks and options in its portfolio. On Thursday, around 600 hedge funds which waited till the last minutes of the filing deadline disclosed their US equity holdings as of September 30th. Another 150 hedge funds disclosed their positions a few days earlier.
Hedge funds hire some of the smartest Ivy League graduates as their analysts, have access to industry insiders whom they “consult” with, unconventional data sources that cost tens of thousands of dollars, years of experience and millions of dollars as incentives to come up with the next great investment idea. Every quarter we process around 750 hedge funds’ 13F filings to identify each hedge fund’s new moves, top stock picks, and more importantly overall sentiment changes towards each of the 4000 stocks that are publicly trading. We publish all of our analysis in our premium quarterly newsletter (download a free sample), and then share interesting bits and pieces on our website.
On Friday we published the list of 30 most popular stocks among hedge funds. This list’s top 20 stock picks have been performing much better than the market indices that you see on your financial news websites and channels. In 2019 the top 20 most popular hedge fund stocks returned nearly 34% and outperformed the S&P 500 Index by more than 8 percentage points. If you have $500,000 invested in an index fund that tracks the market, you left $40,000 on the table this year by not imitating hedge funds’ top 20 stock picks.
This weekend we listed the 5 mega-cap stocks that hedge funds are crazy about (stocks with at least $100 billion in market capitalization), 5 very large-cap stocks hedge funds are buying (market caps between $60 billion and 100 billion), and 5 large-cap stocks hedge funds are piling into (market caps between $20 billion and $60 billion). We also listed the top 5 financial stocks, top 5 media stocks as well as hedge funds’ top 5 healthcare stock picks. In this article we will take a look at hedge fund’s favorite software stock picks.
Software stocks have been among the hottest stocks in the market in recent years. Nevertheless, several software stocks experienced a correction during Q3. For example, Twilio (NYSE:TWLO) which ranked 7th (among software stocks) at the end of September among the 750 hedge funds tracked by Insider Monkey, saw its shares fall from $150 to sub-$100 levels and that was even before reports about Whatsapp cutting back its usage of Twilio’s technology surfaced. So, did hedge funds saw the correction as a buying opportunity or did they flock towards bigger, safer software stocks?
Later this week we will publish similar rankings for mid-cap stocks, small-cap stocks, and micro-cap stocks. We will also publish similar rankings for top IPO stocks among hedge funds, top biotech stocks, and top dividend stocks.
Below is our video about the 5 most popular stocks among hedge funds. The list of top 5 stocks hasn’t changed since the end of March.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Here is our list of the 5 best media and entertainment stocks to buy according to hedge funds:
5. Activision Blizzard, Inc (NASDAQ:ATVI): $53
Number of Hedge Funds: 71
Total Dollar Amount of Long Hedge Fund Positions:$3 billion
Percent of Hedge Funds with Long Positions: 9.5%
Fourth Quarter Return (through November 14th): -0.4%
Popularity Ranking (Q2): 124
Noteworthy Hedge Fund Shareholders: Philippe Laffont, Stephen Mandel
4. ServiceNow, Inc. (NYSE:NOW): $260
Number of Hedge Funds: 85
Total Dollar Amount of Long Hedge Fund Positions:$5.3 billion
Percent of Hedge Funds with Long Positions: 11.4%
Fourth Quarter Return (through November 14th): 0%
Popularity Ranking (Q2): 25
Noteworthy Hedge Fund Shareholders: Philippe Laffont, Gabriel Plotkin
3. Adobe Inc. (NASDAQ:ADBE): $297.50
Number of Hedge Funds: 91
Total Dollar Amount of Long Hedge Fund Positions:$8.3 billion
Percent of Hedge Funds with Long Positions: 12.2%
Fourth Quarter Return (through November 14th): 2.1%
Popularity Ranking (Q2): 15
Noteworthy Hedge Fund Shareholders: Stephen Mandel, Ken Fisher
Copyright: photogearch / 123RF Stock Photo
2. Salesforce.com Inc (NYSE:CRM): $163
Number of Hedge Funds: 102
Total Dollar Amount of Long Hedge Fund Positions:$9.4 billion
Percent of Hedge Funds with Long Positions: 13.6%
Fourth Quarter Return (through November 14th): 9.8%
Popularity Ranking (Q2): 15
Noteworthy Hedge Fund Shareholders: Ken Fisher, Stephen Mandel
Copyright: drserg / 123RF Stock Photo
1. Microsoft Corporation (NASDAQ:MSFT): $150
Number of Hedge Funds: 173
Total Dollar Amount of Long Hedge Fund Positions:$26.9 billion
Percent of Hedge Funds with Long Positions: 23.1%
Fourth Quarter Return (through November 14th): 6.5%
Popularity Ranking (Q2): 2
Noteworthy Hedge Fund Shareholders: Ken Fisher, Boykin Curry
Disclosure: None. This article is originally published at Insider Monkey.
