YWR: How Consensus is your Hedge Fund?
It’s time for our monthly check-in to see if the hedge fund industry is doing anything different.
Not really.
Well maybe 1 fund. But we’ll get to that later.
After analysing 328 hedge funds (AUM > $1bn) running $2.4 trillion the positioning is always the same.
There has been slight shift at the top . Google is now the top holding if you combine both share classes with 107 funds owning it a as Top 20 holding.
Next is Amazon at 96 funds (out of 328 funds). 93 have Microsoft in their Top 20.
Nvidia must be causing pain. It’s the 3rd largest company in the S&P 500 at $2.8trn and is +138% YTD!! Yet, only 62 hedge funds have NVDA in their Top 20. That’s up from 55 funds last month. We probably need to see more hedge funds buy in and get that number to closer to 80-90 before Nvidia’s run is over.
Semiconductor Exposure
Between Nvidia, Taiwan Semi, Micron, Broadcom, and AMD hedge funds have never been more exposed to semiconductors.
Praying for the end of the tech bull market.
Active managers at both hedge funds and mutual funds pray every day tech will stop outperforming. Even though tech is their biggest position, they don’t own enough and it makes them look terrible.
The tech underweight is the biggest the portfolio tilt relative to the index.
With this underweight I’m inclined to think tech keeps doing well.
YWR Most Consensus Hedge Fund Awards
When we look at which funds are the most consensus, defined as how closely their Top 20 match the YWR Top 21, it’s always the biggest funds which are the most consensus.
This month we have two new award winning consensus funds. D.E. Shaw and Caxton knocked Millennium down to 5th.
D.E. Shaw has 12 of it’s Top 20 positions in the Top 21 most consensus list.
The box plot distribution below shows you statistically how hard it is to own 12 of the Top 21. Most funds are between 1 and 4.
Bigger <> Consensusness Correlation
Below is the scatterplot and line of best fit showing how many consensus stocks a fund owns (x axis) and the size of the fund (y axis). You see the positive relationship. The bigger you get the more you just give up and buy AMZN, NVDA, META, GOOG, AAPL.
Non-Consensus Top 40
We always like to see what the non-consensus funds are doing. These are funds which have 0 overlap between their Top 20 and the YWR Top 21 most consensus positions.
As we loop through their holdings what shows up the most?
This list is always highly diversified with everyone doing their own thing, but still interesting to see Barclays, a YWR favorite (We need to talk about Barclays) and BP.
I’m surprised more people don’t own Shopify.
This list also made me look at Man Group. I’ve owned it in the past. It scores relatively well in the YWR Global Factor Model at 79th globally. Trades on a P/E of 8x with a 5% dividend yield.
How I learned to love Oaktree Capital.
It’s fund to scan through the YWR hedge fund holdings database and see who is doing what and see if anything triggers a stock idea.
Usually, it’s the smaller funds who do crazy things, like own gold stocks or energy, but this month I noticed Oaktree. It’s an $81bn fund positioned like an upstart.
Look at their top 20. It’s shipping, mining, shale stocks, Brazil, a Cash Dragon, a real estate stock!!! I love these guys.
Feel free to go through the database yourself.
I restrict my data analysis to funds with over $1bn in equity assets, but there is Top 20 data for over 1,000 funds.
The link is below.