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LivestreamMenuA half dozen stocks turned up as the “shared favorites” in second-quarter filings for both hedge fund and mutual fund portfolios, according to the latest study by Goldman Sachs. The companies that were the most popular among both types of funds entering the third quarter were: Boeing , Capital One Financial , Mastercard , SpaceX , Thermo Fisher Scientific and Visa . A rolling portfolio of shared favorites has returned 29% year-to-date, according to Ben Snider, Goldman’s chief U.S. equity strategist, outperforming the equal-weighted S & P 500 by 13 percentage points. Capital One, SpaceX and Thermo Fisher Scientific are new additions to the group this quarter. The addition of Capital One in the second quarter, joining Visa and Mastercard, came as hedge funds and mutual funds alike increased their exposure to financial stocks. Both types of funds hedge funds and mutual funds are now overweight financials for only the third time in Goldman’s historical data. “Hedge funds increased their net tilt toward Financials by over [three percentage points] during Q2 to the largest position in the sector since prior to the [Global Financial Crisis.] Mutual funds also increased their tilt to Financials last quarter and now carry their largest overweight since at least 2012,” Snider wrote. The stocks that Goldman screens for are those in the center of a Venn diagram, appearing in both its proprietary Hedge Fund VIP and Mutual Fund Overweight baskets. The “shared favorites” group, which shifts quarterly based on 13F filings to the Securities and Exchange Commission, has a track record of outperformance at the expense of higher volatility. Since 2013, the group has delivered an annualized return of 17% with a standard deviation of 22%. The median shared favorite trades at a price-to-earnings premium of 25 times, compared with the median of 19 times for a typical S & P 500 stock. Goldman’s latest report analyzed roughly $10 trillion of equity positions at the start of the third quarter, covering 991 hedge funds with $5.4 trillion of gross equity positions and 504 large-cap, actively managed mutual funds with $4.6 trillion in equity assets.Read More
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