Four stocks were added to the list of the 15 issues most overweight by hedge funds at the end of the first quarter, according to a new analysis by the quantitative research team at Credit Suisse Securities.
They are Sears Holdings, Visa, Crown Castle and JCPenney. Sears had fallen off this list at year-end after qualifying for this group for a number of quarters.
The four stocks that fell off the list at the end of March are Anadarko, Family Dollar, Williams and Medco Health Solutions.
Several of the 15 stocks were involved in major acquisitions and served as merger arbitrage investments for many investors.
Credit Suisse points out in its report that hedge fund active weights increased the most in Health Care and Telecommunication Services stocks during the first quarter. They remained overweight the most in Consumer Discretionary.
Hedge funds were most underweight in the stocks of consumer staples companies.
An active weight is taken when the weight of a stock within the aggregate hedge fund portfolio differs from the weighting of the stock in the S&P 500, Credit Suisse explains. Overweighted stocks have a greater weight in the hedge fund portfolio than in the S&P 500 benchmark.
Remember, holders of at least $100 million in U.S. equity-oriented investments are required to tell regulators their holdings as of the last day of each quarter in a 13F filing with the Securities and Exchange Commission. It is a snapshot of one day in time. They also have up to 45 days from the end of the quarter to file these reports.
Most hedge funds tend to wait until the last minute before filing. So, the March 31 holdings were mostly reported around mid-May.