Hedge fund trades have just been revealed for the last quarter, with the release of 13F forms filed with the SEC. Based on the latest trades of top hedge funds, Goldman Sachs has compiled a list of 50 “Hedge Fund VIP Stocks”. These are the stocks that appear most often in the top 10 holdings of over 800 fundamentally-driven hedge funds in the December quarter.
The best part about this list: these stocks are easily outperforming the market. “Our Hedge Fund VIP basket of most popular long positions has returned 4% YTD [through Feb. 20], outperforming the S&P 500 during the recent correction in contrast to its typical drawdown behavior,” says Goldman strategist Ben Snider. In the same time period, the S&P 500 returned only 2%.
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At TipRanks we let investors track the ‘Smart Money’ all year round. From our database of over 5,000 stocks, TipRanks’ powerful stock screener lets investors pinpoint top stocks that match their investment criteria. The screener includes multiple filters, like positive hedge fund signal and Strong Buy best analyst consensus.
Bearing that in mind, let’s now take a closer look at Goldman Sachs’ top 5 hedge fund VIP stocks. Using our big data analytics, we can also track the stock’s overall outlook from the Street. This gives us a better idea of whether these stocks make compelling investment opportunities:
1: Amazon (NASDAQ:AMZN)
Total returns year-to-date: 29%, no. of funds with stock in top 10 holdings: 80
The No.1 e-commerce stock, AMZN has a Strong Buy analyst consensus and upside potential of over 10%. RBC Capital’s Mark Mahaney says ‘everything is clicking’ for Amazon right now. He sees multiple new revenue growth opportunities for Amazon from its AWS cloud service to further international expansion. The conclusion: “AMZN’s growth outlook is arguably the strongest out of all the major ‘net platforms.” Mahaney ramped up his price target from $1,200 to $1,700 on February 2. You can click on the screenshot below for further insights.
2: Facebook (NASDAQ:FB)
Total returns year-to-date: 5.9%, no. of funds with stock in top 10 holdings: 70
This social media giant has a Strong Buy analyst consensus and 25.5% upside potential. Following another strong quarter with robust top-line growth, five-star MKM Partners analyst Rob Sanderson says the current valuation is now “highly attractive”. Shares have pulled back as investors “debate the impact of an expected decline in engagement, revenue growth deceleration and an elevated spending outlook.” Sanderson has a buy rating on FB and bullish $240 price target (32% upside).
3: Time Warner (NYSE:TWX)
Total returns year-to-date: 4.2%, no. of funds with stock in top 10 holdings: 65
Cable TV company Time Warner is the odd one out in this list. The stock has a cautiously optimistic Moderate Buy analyst consensus rating (and 12% upside potential). Analysts are cautious due to the pending AT&T takeover deal worth $85 billion. On February 6, four-star B. Riley FBR analyst Barton Crockett assigned a Hold rating to TWX with a $101 price target. He is still confident that the pending merger with Time Warner will be completed. But he adds that should the deal be nixed, the downside risk is limited by TWX’s relatively low valuation.
4: Alphabet (NASDAQ:GOOGL)
Total returns year-to-date: 8.6%, no. of funds with stock in top 10 holdings: 54
Google has one of the most bullish ratings on the Street with 24 buy ratings and only 3 hold ratings in the last three months. Predicted upside comes in strong at 17.07%. Google has just received a sharp boost on the news that Google rival Apple is actually a Google Cloud customer. And for the first time, GOOGL CEO Sundar Pichai has disclosed that Google Cloud makes about $1 billion quarterly.
Meanwhile, Baird analyst Colin Sebastian added Alphabet as a Fresh Pick (with a $1,300 price target) as he believes shares have under-performed the large cap internet group overall. Note that Sebastian is one of TipRanks’ Top 15 analysts out of over 4,700 tracked analysts for his precise stock picking ability.
5: Alibaba (NYSE:BABA)
Total returns year-to-date: 12.6%, no. of funds with stock in top 10 holdings: 41
Chinese e-commerce giant BABA has a Strong Buy analyst consensus rating with 22% upside potential. This isn’t surprising as BABA reported very strong results for the last quarter. On February 2, top Oppenheimer analyst Jason Helfstein reiterated his Buy rating and $220 price target. He says: “Our positive thesis is based on the company’s unrivaled dominant position in its core business, its pioneer ecosystem that creates a long-standing barrier to entry, and numerous drivers including enhancing monetization and stable GMV growth outlook.”