Hedge Fund Faves Beat the Market

According to SEI Novus’s list of the firms’ most widely held stocks, only nine of 20 lost money in the past three months.


Credit: Bigstock Photo

Hedge funds’ favorite stocks outperformed the S&P 500 in the second quarter.

The 20 stocks most often held by hedge funds — according to SEI Novus’s database — posted an average gain of 5.15 percent for the period, an Institutional Investor analysis reveals. This compares with 3.92 percent for the widely followed benchmark.

This elite group nonetheless lagged the tech-heavy Nasdaq Composite, which climbed 8.26 percent in the second quarter. And unlike in previous periods, there was wide dispersion in performance among the most popular stocks.

Six stocks surged by double-digit rates, two of which were the different classes of Google parent Alphabet. But nine of the 20 stocks were in the red for the quarter.

The top performer — surprise, surprise — was chip juggernaut Nvidia, which rose “only” 36.7 percent in the latest quarter. The fifth-most-popular hedge fund, it stock surged 150 percent in the first half of the year. At the end of the first quarter, Nvidia was the largest U.S.-listed long of Light Street Capital Management and Whale Rock Capital Management.

Nvidia was followed closely by another chip giant — Taiwan Semiconductor Manufacturing Co. — which several hedge funds have touted as the next-best artificial intelligence play. The stock gained nearly 28 percent for the second quarter.

In first-quarter 2024, 45 hedge funds bought stakes in TSMC and just 11 sold it off, according to SEI Novus. As of March 31, it was the 14th-most–widely held stock among hedge funds, up from 27th place the previous quarter.

In his first-quarter client letter, Valiant Capital Management founder Chris Hansen said the firm used the market weakness in April to increase its exposure to TSCM as several other hedge funds established new mall, or midsize positions, 13F filings show. The firms included Whale Rock, Trian Fund Management, and Kingdon Capital Management. In addition, Light Street boosted its stake by nearly 50 percent in the first quarter, making TSCM the Tiger Grandcub’s second-largest U.S.-listed long, according to regulatory filings.

Alphabet’s two different classes of stock rose between 20.5 percent and 21 percent in the first quarter.

The biggest loser in the group of 20 was cloud-based software company Salesforce, down nearly 15 percent. Chip maker Advanced Micro Devices dropped more than 10 percent in the quarter. And payments giants Mastercard and Visa were in the red, dropping 8.4 percent and 5.9 percent, respectively.

Other losers included companies from a wide variety of industries: Warren Buffett conglomerate Berkshire Hathaway, drug giant Merck, ride-hailing app Uber Technologies, energy giant ExxonMobil, and health care products giant Johnson & Johnson.

Here is how the 20 most widely held stocks among hedge funds as of March 31, 2024, performed in the second quarter:

Advanced Micro Devices down 10.1 percent

Alphabet “A” up 20.7 percent

Alphabet “C” up 20.5 percent

Amazon up 7.1 percent

Apple up 22.8 percent

Berkshire Hathaway down 3.5 percent

Eli Lilly up 16.4 percent

ExxonMobil down 1 percent

Johnson & Johnson down 7.6 percent

JPMorgan Chase up 1 percent

Mastercard down 8.4 percent

Merck down 6.2 percent

Meta Platforms up 3.8 percent

Microsoft up 6.2 percent

Nvidia up 36.7 percent

Salesforce down 14.6 percent

Taiwan Semiconductor Manufacturing up 27.8 percent

Uber Technologies down 5.6 percent

UnitedHealth up 2.9 percent

Visa down 5.9 percent