Q4 2017 Hedge Fund Holdings: Top Stocks, New Buys & More
5:29 AMPosted by: John S Kiernan
The 50 largest U.S.-based hedge funds on the Barron's Penta Top 100 Hedge Funds boast more than $6 trillion in assets. For comparison, that’s more than the GDP of the 36 smallest U.S. states combined. Furthermore, the median yearly earning for a hedge fund manager is now $350,000, but there are many who are billionaires.
So it makes sense that people pay attention to what they’re buying, selling and holding. We want to replicate their success. Hedge funds’ quarterly public disclosures, mandated by the Securities and Exchange Commission, give us a window into their recent activity.
To help investors make informed decisions about where to put their money, WalletHub analyzed the filings of over 400 top hedge funds, identifying their biggest holdings, new positions, recent exits and more. You can check it all out below, including a breakdown of the names that billionaire stock pickers – from Warren Buffett to George Soros – prefer these days.
- Most Popular Hedge Fund Stocks
- Top Billionaire Stock Picks
- Most Bought & Sold Stocks
- Hedge Fund Holdings by Sector
- Ask the Experts: What Can We Learn From Hedge Funds?
- Methodology
| Rank | Name of the Company | Ticker | Change from Last Quarter |
|---|---|---|---|
| 1. | Microsoft Corp. | MSFT | --- |
| 2. | Amazon.com, Inc. | AMZN | ↗ |
| 3. | Apple, Inc. | AAPL | ↙ |
| 4. | Facebook, Inc. | FB | --- |
| 5. | Alphabet, Inc. | GOOG | --- |
| 6. | Wells Fargo & Co. | WFC | --- |
| 7. | JPMorgan Chase & Co. | JPM | --- |
| 8. | Bank of America Corp. | BAC | ↗ |
| 9. | Visa, Inc. | V | ↙ |
| 10. | UnitedHealth Group, Inc. | UNH | --- |
| 11. | The Boeing Company | BA | ↗ |
| 12. | Citigroup, Inc. | C | ↙ |
| 13. | Comcast Corp. | CMCSA | --- |
| 14. | Mastercard, Inc. | MA | ↗ |
| 15. | Netflix, Inc. | NFLX | ↗ |
| 16. | Johnson & Johnson | JNJ | ↙ |
| 17. | The Coca-Cola Company | KO | ↙ |
| 18. | The Home Depot, Inc. | HD | ↗ |
| 19. | Cisco Systems, Inc. | CSCO | ↗ |
| 20. | Broadcom Ltd. | AVGO | ↙ |
| 21. | AbbVie, Inc. | ABBV | ↗ |
| 22. | Philip Morris International, Inc. | PM | ↙ |
| 23. | Oracle Corp. | ORCL | ↙ |
| 24. | The Priceline Group Inc. | PCLN | ↙ |
| 25. | Intel Corp. | INTC | ↙ |
Top Billionaire Stock Picks
Hedge funds have become so popular that the billionaires behind them have celebrity status. Not only are they rich and famous, but they can move markets with just a few words. Investors worldwide follow their every move.
If you, too, are curious to see how billionaire investors such as Warren Buffett, Carl Icahn and Bill Ackman are making their money these days, just check out the following infographic. You’ll find the top three holdings of 12 big-name billionaires, plus an overview of the stocks they’ve been buying and selling lately.
Hedge funds’ most recent moves clue us into their managers’ latest thoughts on where the market is moving and which sectors are heating up or cooling down. Below, you can see which companies’ shares hedge funds have been grabbing lately, as well as those they’ve been selling particularly quickly.
Q3 2017’s Most Bought Stocks| Rank | Company | Ticker Symbol |
|---|---|---|
| 10 | Eli Lilly and Co | LLY |
| Rank | Company | Ticker Symbol |
|---|---|---|
| 10 | Alphabet, Inc. | GOOG |
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Hedge Fund Holdings by SectorDiversification is key to investing success. That’s because spreading your chips around reduces risk and allows you to benefit from the broader market’s long-term upward trend. That’s why even the world’s best investors hedge their bets by allocating capital to various segments of the economy.
The investments don’t simply match the economy’s makeup, however. And they’re not always the same year to year, either. That’s why we can learn a lot from the way in which hedge funds diversify their investments. With that in mind, here’s a breakdown of where the money was during Q4 2017.
In search of advice on how much stock we should put into billionaires’ stock picks, WalletHub asked the following questions to a panel of investing experts. You can check out their bios and responses below.
- How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
- To what extent does President Trump’s administration deserve credit for recent stock market performance?
- Is the current stock market prone for a correction, or is there still room for growth?
- What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
Morgan R. Milner Associate Professor of Management at Eastern Michigan University
Steven D. Dolvin Eugene Ratliff Endowed Chair in Finance in the Lacy School of Business at Butler University
David L. Ikenberry Former Dean and Professor of Finance in the Leeds School of Business at the University of Colorado Boulder
Jim Cusser Adjunct Associate Professor of Political Science at Johnson County Community College
Donald Cummings Founder and CEO of Blue Haven Capital
F. John Deyeso III President and Financial Planner at Financial Filosophy
Rick Johnston Associate Professor of Accounting in the Collat School of Business at the University of Alabama at Birmingham
Yiming Qian Associate Professor of Finance and Henry B. Tippie Research Fellow at the University of Iowa
Stacy Francis President and CEO of Francis Financial
Eric Gabor Founder of Eagle Grove Advisors
Khaled Elkhal Associate Professor of Finance at the University of Southern Indiana
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
Corporate tax reform will positively impact stock prices in the short run. Lower corporate tax burden translates, for most organizations, into higher profits. In the long run, there are a lot of variables that influence stock price (and underlying organizational performance). The tax cut impacts those long-term variables in contradictory ways, for example, providing more cash for organizations to reinvest in new technology or labor development, while also creating higher systemic risk due to rising debt levels and inflation. The recent sell-off this week is a great example, as it is a reaction to wage inflation. As long as market shocks are brief and within normal corrective ranges, the long-term outlook remains positive.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
The performance of the stock market is based upon a collective assessment of business outlook given present economic reality. The present reality is favorable. Policies adopted after the Great Recession in 2008 helped stabilize both corporate and consumer markets. The economy that this administration inherited was stable and growing, reflected in metrics such as decreasing unemployment and a rising stock market. Yet, President Trump's tax cut has influenced the future outlook. So, to answer the question, does President Trump deserve credit for the general upward trend of the market? No -- that trend was firmly established based upon stable market conditions. However, does President Trump deserve credit for the accelerated uptrend since introducing deregulation and tax policies? Yes. Note, however, that sharp acceleration of trends often results in higher volatility, and if not properly balanced, instability.
Is the current stock market prone for a correction or is there still room for growth?
Both. The current stock market is prone for a correction (and there's room for growth). The DJIA can retreat back to 23000 and still be well within healthy levels of correction. Given the short-term economic and corporate outlook, there remains room for growth.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
As an individual investor, tips include staying aware of broad economic and cultural trends and exercising patience. Avoid short-term fads and manias, though limited investment of a small, disposable sum might be educational. Sectors expected to grow are congruent with larger societal trends -- technology and telecom, particularly companies that benefit from data aggregation; financial, will benefit from reduced regulation; industrial, slated to benefit from increased automation and potential infrastructure investment; health care, will benefit from aging population and continued consolidation. Note that all of this is dependent upon proper balancing of macro-economic factors, such as inflation and consumer sentiment.
Steven D. Dolvin Eugene Ratliff Endowed Chair in Finance in the Lacy School of Business at Butler University
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
All else equal, a lower tax rate should increase stock prices. With lower taxes, firms have higher margins. The extra cash flow that this creates can be used to do such things as increase dividends, buyback stock, or reinvest in the business -- all of which create value for shareholders.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
The recent runup in stock prices is a culmination of many different factors -- strong GDP growth, low inflation, an expected tax cut, and overall low volatility. It is difficult to say if the administration is responsible for any of these things, but the pro-business/pro-economic policies pushed by President Trump have been favorable for companies, and therefore their stock.
Is the current stock market prone for a correction or is there still room for growth?
We have seen a pullback the last couple days, which is to be expected given the length of the current bull market and the lack of any significant correction in the recent past. The big driver of the pullback seems to be fears of increased inflation due to a tightening labor market and the associated wage growth.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
If you are investing for retirement, stay focused on the long-term and don’t get caught up in the short-term volatility and rhetoric.
David L. Ikenberry Former Dean and Professor of Finance in the Leeds School of Business at the University of Colorado Boulder
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
Generally speaking, recent reforms to the U.S. corporate tax rates should create several positive side benefits for equity markets. First, the lowering of corporate taxes and the move to a territorial tax system bode well for employees and shareholders alike. In effect, this change lowers the overall cost structure of firms, and provides more breathing room for wage increases (in an otherwise tight labor market), as we’ve witnessed in recent weeks -- while still producing adequate shareholder returns. Recent tax changes are also likely to encourage firms to repatriate wealth they have been holding overseas, in some cases, for decades. This may cause a one-time increase in tax revenues from these repatriated funds. A large portion of these repatriated funds should make their way back into the U.S. economy through increased dividend distributions, share repurchases and/or cash-financed acquisitions.
From all appearances, the increase in stock prices witnessed since November 2016 appears to be related to changes in expectations about an improved economy, less burdened with regulation, and lower overall tax rates. Interestingly though, it does not appear that the stock market has distinguished between stocks with high (which would benefit most) versus low (which would benefit least) effective tax rates.
Jim Cusser Adjunct Associate Professor of Political Science at Johnson County Community College
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
Tax reform -- great, as long as it is permanent, as it looks now. Important is that corporations and individuals can rely on the updated measures -- as opposed to short-term “boosts” that are typically saved and not invested/spent -- the economic “multiplier” and all that.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
Always, always the politicians take credit for the good, and blame the bad on their predecessors. Really, it takes about 9 months for monetary policy to kick in, and fiscal sometimes longer, except when we are dealing with regulations and the importation of offshore capital. Offshore importations in a quick injection now, and regulations will help with earnings to presumably pump future earnings. Oil is a “tax” in that it is fairly inescapable and that may become a headwind. Clinton and Bush (the first) rode atop. Reaganomics for two terms -- that was deregulated beginning under Carter, actually, with the airlines, and then Reagan revolution. If Trump gets credit, it is because of the “animal spirits” that get released with deregulations, more than limited-term tax incentives. The animals feel that there really is something different about this tax reform -- akin to the microeconomic incentives of Reaganomics.
Is the current stock market prone for a correction or is there still room for growth?
Sure, we are due to a correction. Shiller’s adjusted P/E calculations were at the 98th percentile until a day ago. Fundamental valuation eventually wins out over irrational exuberance.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
As far as individuals -- diversification, know your tolerances, live below your means and invest the rest, keep the expenses down, and try not to outguess and time the markets. I was at the Kansas City Fed luncheon today, where they told me that the individual savings rate has recently plummeted with the rise in the market, down to about 2 percent. This will be a correction in the economy in the wrong direction. Hope the newfound volatility changes this.
Donald Cummings Founder and CEO of Blue Haven Capital
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
Tax reform in the short run will benefit stock prices -- consumers tend to spend the extra money that they get, and that will result in increased spending, which will help the economy. As the deficit most likely grows, the economy will suffer in the longer term.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
I really think that the market has advanced on optimism about the economy, rather than advancing on the economy itself. A subtle difference, but a real difference. However, in either case, it is attributable to Trump and his administration.
Is the current stock market prone for a correction or is there still room for growth?
I'm wary of the market and I'm keeping stock/bond ratios at the client's wished-for ratios. I'm keeping short to short/intermediate in bonds, and yes, we do expect some backup at some point.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
Lower your costs (it will go right to your bottom line), reduce your trading, hold the ratios you are comfortable with. When we get a backup, rebalance back into the ratio you are trying to hold. It will force you to sell high and buy low, and in the long run, you'll most likely outperform the market timers.
F. John Deyeso III President and Financial Planner at Financial Filosophy
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
If years of economics classes have taught me anything, the short term is unpredictable, and the long term moves towards equilibrium. In the short term, it’s unpredictable, but tax reform is a past event. The market has already priced into stocks, the new corporate tax rates.
Therefore, stock prices in the short term probably focus on some other event, like inflation, interest rates, or the next crisis du jour. In the long run, stock prices are a forward-looking indicator, and I would have factored in higher earnings from lower taxes already. New expectations have already been set.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
The stock market is driven by current and future earnings. The U.S. economy is largely driven by consumer spending. The current administration has done nothing to invoke more consumer spending; therefore, the recent run-up in stocks has far more to do with the consumption patterns of American households and overall confidence with regards to job security, than anything linked to the current administration.
Is the current stock market prone for a correction or is there still room for growth?
Like I said previously, the short term is unpredictable, and the answer to the question depends on timeframe. In the next month, the market, and any market, is prone to correction. Bad weather, oil prices, unforeseen geopolitical events -- all could push the market. In the long term, markets rise. The problem stems from the fact that they do not rise in a straight line.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
The individual investor should stay away from timing the markets or trying to predict which sectors will outperform. Stay broadly diversified, with a well-balanced mix of stocks and bonds globally.
The key for the investor rests in knowing why they are investing, how much they need to invest, and what return is needed to achieve their goal. All the rest proves to be noise. For the individual without a plan, outlining a clear understanding of where you are going, all roads will lead you there.
Rick Johnston Associate Professor of Accounting in the Collat School of Business at the University of Alabama at Birmingham
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
I believe the short-term effect of tax reform is already reflected in stock prices. The market is forward looking, so stock prices began to build in expectations of tax reform after the election.
There could be incremental effects, depending on what corporations with large amounts of cash to repatriate do with those funds. In the longer run, the tax cut is pro-growth, because it increases the return profile of new investments by reducing a significant cost of business.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
As noted above, the expectation of tax reform already impacted stock prices. A second factor is probably a general pro-business tilt of the administration. If nothing else, businesses likely expect the government to negatively impact them less going forward, and possibly positively impact them by reducing regulations. This potentially increases growth opportunities and reduces costs. These effects are also positive for stocks.
Is the current stock market prone for a correction or is there still room for growth?
U.S. stock valuations are relatively rich. A risk factor is increasing interest rates. Funds have been cheap for quite a while, and that is now coming to an end. So, there will be headwinds for stock appreciation.
Unemployment is low and the tax cuts are a source of stimulus, so inflation is a growing concern which could speed up interest rate increases.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
The most important thing for an individual investor is to maximize the benefit of tax benefited savings. So, if you are in a 401K, contribute the most you can. If your company has a match, do your best to maximize the match.
The second piece of advice would be to ensure you have a well-diversified portfolio. Personally, I prefer low-cost index funds. But make sure you are diversified internationally, as well as by asset class. So, if to date you have focused on U.S. stocks given their rich valuation, you might want to direct future contributions to international stocks and/or real estate, etc. You could think about reducing your weight of U.S. stocks by selling some, but I would not recommend anything drastic if you have a long horizon.
Yiming Qian Associate Professor of Finance and Henry B. Tippie Research Fellow at the University of Iowa
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
We already saw that the stock market responded to the corporate tax reform positively in the short run. In the long run, it depends on whether the benefits of the bill exceed or fall short of expectations.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
The economy recovery started under the Obama administration, and the yearly S&P 500 returns have been in double digits since 2009 (with the exception of 2011 and 2015). But the expectation that the Trump administration is pro-business and the corporate tax reform helped.
Is the current stock market prone for a correction or is there still room for growth?
It’s always dangerous business trying to predict stock price movements. But the fundamentals of the economy remain good.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
Buy a broad-based index fund, and hold it for the long run.
Stacy Francis President and CEO of Francis Financial
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
The lower personal tax brackets may provide benefits ranging between 1 percent and 4 percent to many individuals. The top corporate tax rate was lowered to 21 percent. We expect that that these changes will have a net positive impact on stocks in the short run. Long term, we do expect that the stock market will reset and we are already seeing more volatility in 2018 that we did in all of 2017. However, the Tax Cuts and Jobs Act gives us a little more time to enjoy the bull market until we see the expected bear market reappear.
s the current stock market prone for a correction or is there still room for growth?
There is still more room for growth. Despite significant gains for developed international (24.21 percent for 2017) and emerging market stocks (37.28 percent for 2017), they are still trading as very good valuations.
The U.S. stock market had a robust year as well, turning in a 21.13 percent gain in 2017. This was the ninth consecutive year of positive returns for the index -- tying the historic 1990s bull market and capping a truly remarkable run from the depths of the 2008 financial crisis. By any number of metrics, U.S. stocks appear overvalued, with a lot of optimism baked into current prices. While earnings will probably see a boost in the short term under the new tax plan, over the long term, we expect the incremental margin benefit from lower taxes to diminish. We do not expect U.S. stocks to perform nearly as well over the five-year time horizon.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
A disciplined investor looks beyond the concerns of today, to the long-term growth potential of markets. The goal is to have a diversified portfolio and to stick with it. Investors underperform the market on their own. This occurs because some investors sell at the exact wrong time (after a market crash) and buy more stocks at the exact wrong time (when stocks are preforming very well).
Eric Gabor Founder of Eagle Grove Advisors
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
My crystal ball stopped working in 2008 -- any financial planner telling you otherwise is lying to you.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
To a limited extent -- the stock market largely functions independently of who sits in the highest office.
Is the current stock market prone for a correction or is there still room for growth?
I think we just hit correction territory.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
Have a portfolio so that you are comfortable with the risks, and stay clear of knee-jerk reactions. Investing is a long-term game and anyone making daily moves is probably better served going to Vegas.
Khaled Elkhal Associate Professor of Finance at the University of Southern Indiana
How will the recent tax reform, specifically corporate tax reform, impact stock prices in the short and long run?
The recent corporate tax reform is a temporary gift to big businesses that will eventually backfire in the medium and long term, in the form of higher national debt, raising the cost of borrowing for everyone. While the tax reform, along with further expected deregulations, were manifested in the recent performance of the stock market, their effects cannot be sustained in the long term. I predict the stock market performance to revert back to average historical levels, or below, in the long term.
To what extent does President Trump’s administration deserve credit for recent stock market performance?
The recent stock market performance was influenced by the hype created by pro-administration media outlets. This high performance was not justified, resulting in stock prices being overvalued, which ultimately led to the correction we've experienced this week. Investors should not panic, as this correction was bound to happen. Instead, investors should focus on the long-term performance and should not be preoccupied with short-term volatility.
Is the current stock market prone for a correction or is there still room for growth?
As I mentioned above, we should not expect the recent tax reform to lead to extraordinary stock market performance in the medium and long term. We should expect historical average returns, or below, in the future.
What tips do you have for an individual investor? What sectors are expected to grow the most in the coming years?
My recommendations to investors is to focus on long-term goals, and to not try to time the market. In the long term, stock market prices should eventually rise. In order to ride the stock market, one should invest in index mutual funds that come with low expense ratios, and avoid most actively managed mutual funds that may not necessarily outperform in the long run.
MethodologyThis report is based on information from the latest public disclosures (Form 13F-HR for Q4 2017 and SC amendments from Jan. 1 to Feb. 14) for over 400 of the largest U.S. hedge funds. Data refer only to equities (i.e. not American Depository Receipts, Global Depository Receipts, Notes, Bonds or any other type of tradable securities).
To construct the “Most Popular Stocks” list, we looked at each of the over 400 funds’ positions, added up the positions for the same stock and rank-ordered the stocks by their total holdings value.
To calculate the “Sector Breakdown” of the positions held by the tracked hedge funds, we added up all the positions of the hedge funds from the same sector and then divided by the total amount of the hedge funds’ positions.
For the “Most bought/sold stocks”, we added up all the sold transactions and all the buy transactions for a given stock in the last quarter and rank-ordered based on total activity.
Report Disclaimer: The information on this web page is provided as general and impersonalized investment information and is not a recommendation or solicitation to buy or sell any security. Please obtain additional appropriate professional advice as needed in making any investment decisions. Past performance does not guarantee future results.
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