- Hedge funds kept loading up on certain stocks during the market’s late-2018 plunge, according to Goldman Sachs.
- The firm’s revised “hedge fund VIP” list is still dominated by big tech stocks, but Goldman says hedge funds are putting more money into smaller tech companies and health care leaders as well.
- Goldman reveals the nine new stocks that made their way on to the list in the fourth quarter of 2018.
As the market burned in late 2018, hedge funds still showed an appetite for video games and discount merchandise.
That’s according toGoldman Sachs, which analyzed the holdings of 880 hedge funds at the end of last year. The firm was revising its “Hedge Fund VIPs” list, which is made up of the companies most frequently found in the top 10 holdings of funds that invest based on fundamentals.
Goldman devised the group to help investors “follow the smart money,” and says the VIP index has beaten the stock market in 62% of quarters dating back to 2001. It’s up 14% so far in 2019 compared to an11% gain for the S&P 500.
When all was said and done, nine new stocks made their way on to Goldman’s VIP list. Five of those additions were in the tech/internet sectors.
The most popular new stock, according to analyst Ben Snider, was health insurerCigna. While Cigna has notably underperformed the broader market so far this year, most of the new additions to the VIP list have made larger gains than the S&P 500.
The top holdings overall were also dominated by techand internet companies like Amazon and Microsoft. That reflects a strong preference among hedge funds for cyclical stocks that stand to do better during periods of strong economic growth.
More defensive stocks might as well be blocked by a bouncer and a velvet rope: There are no household goods or real estate stocks on the VIP list.
Without further ado, here are the nine new entries into Goldman’s VIP list, as of Dec. 31, 2018.
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