Four companies were added to the list of 15 stocks most overweighted by hedge funds at the end of the second quarter: Cephalon, El Paso Corp., Fortune Brands and Netflix.
They bumped out Cigna Corp., Family Dollar Stores, Massey Energy Co. and Pioneer Natural Resources Co., according to a new analysis by the quantitative research team at Credit Suisse Securities.
Of the remaining 11, the overweight list was heavily reshuffled, with Motorola Solutions zooming to the top of the priority ranking. As we have pointed out previously, the surviving company of the Motorola breakup earlier this year has drawn the attention of a number of activists, including Carl Icahn and ValueAct Capital Partners’ Jeffrey Ubben.
An active weight is taken when the weight of a stock within the aggregate hedge fund portfolio ddiffers from its weighting in the Standard & Poor’s 500 index, Credit Suisse explains.
AutoNation, AutoZone and Sears Holdings Corp. are longtime large holdings of Edward Lampert’s ESL Investments.
On the other hand, Microsoft Corp. was the only new addition to the list of companies that hedge funds most underweighted in the second quarter. It replaced Schlumberger, which had replaced Microsoft in the first quarter.
Hedge funds seem to have lowered their emphasis on energy stocks in general, given that giants Exxon Mobil Corp. and Chevron Corp. are the two most underweight issues and that two energy stocks fell off the list of the 15 most overweighted stocks.
