YWR: How Consensus is your Hedge Fund?
Disclosure: These are personal views and market commentary only. Not investment recommendations. For that seek professional help!
This chat with Chris got me thinking.
A check of TCI’s holdings shows Chris blasted all his MSFT back in June. MSFT has a great business going, so I’m surprised he sold it.
And he took GE up to a 12% position instead.
And still owns Airbus, and Safran….
Wow. 30% of a $40 billion fund in Aerospace.
When Chris Hohn puts 30% of his fund into airplanes, we should take note. And we will. But that’s for a future YWR.
Chris got me wondering ‘what are the top most consensus hedge fund stocks?’ Is he right? Is MSFT one of them?
So we did some YWR Big Data analysis.
YWR Hedge Fund Holdings Analysis
We analysed FactSet data on the top 20 positions for all 310 global hedge funds with disclosed public equity investments over $1 billion. It is $2 trillion in positions.
To be clear this is FactSet data on publicly held equity positions by hedge funds. It doesn’t tell us what these funds are doing with futures, options overlays or shorts.
Even so, some things are clear.
A link to the data for all 310 funds is at the bottom , but here are the highlights.
The Top 21 Most Consensus Stocks
Yes, MSFT is super consensus. Actually, the MOST consensus stock. Of the 310 funds we analysed 1/3 (107 funds) had MSFT as a Top 20 position.
And it’s the Top 21 because Alphabet has 2 different share classes and hedge funds own both. If you add both share classes together 97 funds own Alphabet. So pretty close to MSFT as the most consensus stock.
Amazon (89 funds), Meta (74), Nvidia (68) Visa (38), Apple (33).
All great. All super consensus.
I’m surprised Uber, Kenvue, and Seagen (acquired by Pfizer) are top holdings. Alibaba is more popular than I realised.
And on second thought I’d say it’s surprising only 33 funds have a top 20 position in Apple. It’s just slightly more popular than Uber (31). Apple is the biggest company in the world, so effectively, hedge funds are underweight. It is their least favourite of the big tech stocks. Let’s file that away somewhere in the potential pain trade category.
Also no TSLA, BRK, JPM, or XOM.
More potential pain trades.
Only 2 international stocks.
And no GE.
Consensus Capital Partners
And who wins the most consensus hedge fund award? Which fund has the biggest overlap of their Top 20, with the Top 21 most popular for hedge funds in general.
Turns out Quantinno Capital isn’t really a hedge fund. ($2.3bn advisor in NYC).
Which means 1st place is a tie between Millennium ($112 billion) and Adage in Boston ($47bn) Both have ten of their Top 20 positions are in our Top 21 consensus list.
Coatue, D.E. Shaw, Numeric and Appaloosa all have leading positions in 9 of the top 20 consensus stocks.
Below are the top 30 most consensus funds sorted by AUM (publicly disclosed equity assets). I don’t know why DWS is classified as as hedge fund.
The average AUM of the most consensus hedge funds is $26.5 billion. It’s all the household names.
Also super NYC concentrated.
And who is at the opposite end of this list? Which funds don’t own any Top 20 positions from our most consensus 21 stocks list?
Below are the top 30 NON-CONSENSUS funds with no top 20 positions on the consensus list. The average AUM of Non-Consensus Funds is $3 billion.
We can see that non-consensus funds are 1/9th the size and more diversified geographically. A fund in Singapore, Rio, Baltimore, Paris, Sydney. There is life outside NYC.
And what do Non-consenus funds like? What is on their Top 40 list?
I had to make it a Top 40 because they all own different positions. Nothing is consensus for them, except maybe Rohm bonds and JP Morgan. A lot more financials in the non-consensus list. More energy too.
Below is the link to the entire dataset if you want to see every fund’s Top 20 positions.
And in case you’re wondering, Chris’s score was 2 (Alphabet and Visa). Not bad.
Until the weekend.