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One stock is conspicuously absent from Goldman Sachs’ top 5 hedge fund favorites

Apple is the odd man out in this hedge fund top-five list.

It’s the most valuable company in the world with a market cap nearing $1 trillion, its stock soared more than 50% in 2017 and it turned in blockbuster earnings for its fiscal fourth quarter. But that still wasn’t impressive enough for some hedge funds.

Apple Inc. AAPL, +1.05% for all its brand power and the x-factor of its iPhones, failed to make the top 5 stocks popular with hedge funds, according to Goldman Sachs, in a report Wednesday. It came in at number seven, between Time Warner Inc. TWX, +0.50% and Bank of America Corp. BAC, -0.26%

Bigger image of the table

Hedge funds have made a killing by investing heavily in the information technology sector so far in this year, with returns of 10%, posting their best year since 2013.

“Our Hedge Fund VIP list of the most popular long positions, whose top five stocks are Facebook, Amazon, Alibaba, Alphabet, and Microsoft, has outperformed the S&P 500 by 770 basis points year to date—25% versus 17%,” said Ben Snider, an equity strategist at Goldman Sachs, in his closely followed Hedge Fund Trend Monitor report.

Snider and his team compiled the report based on data from 804 hedge funds with $2.1 trillion of gross equity positions of which $1.4 trillion were long and $704 billion were short. Long positions are bets that an asset price will rise while shorts are counting on prices falling.

Read: This is the most hated, and the most loved, stock among hedge funds

“The average hedge fund carries 68% of its long portfolio in its top 10 positions, just below the record high reached in early 2016. Portfolio position turnover fell to a new record low last quarter, at just 13% for the largest fund positions,” said the strategist.

Aside from the heavy focus on tech, asset managers also preferred large caps over value stocks.

The top 50 stocks listed in the table above are grouped together in Goldman Sachs’ VIP basket, which has outperformed the S&P 500 in 65% of quarters since 2001 and generates an average quarterly return of over 62 basis points, according to Snider.


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