Most Popular Stocks Among Hedge Funds: Part 2 – Apple, Pfizer & More

In the first part of the article, we covered the five most popular stocks among the funds in our database. As we mentioned, the latest round of 13F filings showed some interesting developments related to the smart money investors’ sentiment towards several stocks. During the fourth quarter, investors chose to pile into tech stocks that showed strong results last year. Let’s move on to the second part and discuss the other five stocks that ranked as the most popular among the investors we track as of the end of December. As stated in the first part, Apple Inc. (NASDAQ:AAPL), which ranked on the second spot last quarter, moved down to the seventh position, as the number of funds remained unchanged. Another highlight is the advancement of Pfizer Inc. (NYSE:PFE) into the top 10.

The main reason why we are following these investors is because our research showed that imitating the most popular small-cap picks among them can generate substantial returns over the long term. Our analysis that covered the equity portfolios of several hundred hedge funds showed that this approach can help a retail investor beat the market by double digits annually (see more details here).

As stated earlier, Apple Inc. (NASDAQ:AAPL) has slid five spots from the second spot in our ranking that it held at the end of September. During the fourth quarter, the number of funds bullish on the stock remained unchanged at 133, so the fall in popularity came on the back of more funds taking up positions in other stocks. However, the aggregate value of the positions held by the funds from our database in Apple Inc. (NASDAQ:AAPL) appreciated to $17.72 billion from $17.41 billion over the quarter. Apple’s stock has declined by 12% since the end of September, which has pushed its dividend yield to 2.16%, while its forward P/E currently stands at 9.5, which makes the stock extremely cheap. Investors are concerned about the slowdown of the iPhone’s sales growth, but they should not forget that Apple Inc. (NASDAQ:AAPL) has a strong balance sheet and is committed to returning capital to shareholders. Billionaire Carl Icahn’s Icahn Capital sold 7.0 million shares of Apple during the fourth quarter, reporting 45.76 million shares held in its latest 13F filing. On the other hand, Chase Coleman‘s Tiger Global Management initiated a stake in Apple, which contains 10.60 million shares as of the end of December.

Two financial stocks ranked among the ten most popular and Bank of America Corp (NYSE:BAC) was one of them, as it registered a total of 112 funds from our database holding its shares, which had a total value of $6.80 billion, which was up from 108 funds with stakes worth $6.45 billion a quarter earlier. Harris Associates reported holding almost 138.90 million shares of Bank of America Corp (NYSE:BAC) as of the end of December, while Ken Fisher’s Fisher Asset Management reported ownership of 43.09 million shares. Amid a broader market selloff, Bank of America Corp (NYSE:BAC)’s stock plunged by 27%. For the last quarter of 2015, Bank of America posted adjusted EPS of $0.29, which beat the consensus estimate of $0.26. Its total revenue of $19.53 billion rose by 4.3% on the year. However, the bank also increased its provision for credit losses, as a drop in oil prices and concerns about a slowdown of economic growth in China put more pressure on the credit markets.

Pfizer Inc. (NYSE:PFE) also climbed a couple of spots, as the number of funds bullish on the stock went up to 109 from 97 during the last three months of 2015. At the same time, the aggregate value of their holdings surged to $8.62 billion from $6.09 billion. What has investors excited about Pfizer is its plan to buy Allergan plc (NYSE:AGN) and relocate its headquarters to Dublin. The move would allow the company to slash its tax bill, although the cost savings are projected to be smaller than previously expected. In addition, the merger of Pfizer and Allergan would create the largest drugmaker in the world. However, year-to-date, Pfizer Inc. (NYSE:PFE)’s stock is 8.50% in the red and it currently sports a dividend yield of 3.86%. Among the investors that initiated stakes in the company are activist Barry Rosenstein‘s JANA Partners, Jim Simons’ Renaissance Technologies, and Andreas Halvorsen’s Viking Global Management.

Delta Air Lines, Inc. (NYSE:DAL) also made the top-ten list, which also makes it the most popular airline stock among the funds we track. However, during the fourth quarter, the company witnessed a slight decrease in popularity, as the number of funds bullish on the stock inched down by two to 107, while the aggregate value of their holdings appreciated to $7.83 billion from $7.32 billion. In volatile trading, Delta’s stock has inched up by slightly above 2% in the last 52 weeks. Lower fuel prices helped Delta Air Lines, Inc. (NYSE:DAL) increase its earnings as the company posted a net profit of $1.25 per share for the fourth quarter, compared to a loss of $0.86 a year earlier. However, the currency headwinds slightly offset its revenue, which inched down by 1.5% year-over-year to $9.50 billion. For January, Delta said its consolidated passenger unit revenue (PRASM) slid by 3.0%, which includes 1.5 percentage points of pressure from foreign exchange. Among the funds we track, Lansdowne Partners reported holding 26.06 million shares of Delta Air Lines, Inc. (NYSE:DAL), while Paul Reeder and Edward Shapiro’s PAR Capital Management disclosed a 15.32 million-share stake in its latest 13F filing.

Finally, Citigroup Inc (NYSE:C) slid to the 11th spot in our list (it makes the top-ten because both classes of Alphabet Inc (NASDAQ:GOOGL)’s shares were in the top-ten), as the stock saw an outflow of capital and the number of investors with long positions dropped to 105 from 121. The total value of the stakes held by the funds from our database also fell to $989.29 million from $1.03 billion during the fourth quarter. Among the funds that dumped their entire stakes in Citigroup Inc (NYSE:C) was Bruce Berkowitz‘s Fairholme Capital Management, which unloaded 3.01 million shares between October and December. On the other hand, Fisher Asset Management reported holding 12.03 million shares as of the end of last year. Citigroup’s stock has plunged by some 24% since the beginning of the year, even though the bank holding company delivered results above estimates for the fourth quarter. Earlier today, Citigroup announced plans to sell its retail-banking and credit-card operations in several South American countries, namely Brazil, Argentina and Colombia. The company will maintain its presence in those countries, but the sale of the retail banking segment will allow Citigroup Inc (NYSE:C) to become smaller. The move comes two months after S&P put Citigroup and other banks on a watch list for a ratings cut after the U.S government suggested that it would be less likely to help them in a crisis. However, at the same time, the sales of certain operations in the South American countries will affect Citigroup Inc (NYSE:C)’s exposure to potential earnings in the emerging markets.

Disclosure: None