Hedge Funds’ 50 Favorite Stocks

Hedge funds overall have been lackluster performers in this bull market. In 2014, for example, they’re up just 1% so far compared with 7.5% for the Standard & Poor’s 500, according to Goldman Sachs. Goldman analyzed performance from 775 hedge funds with $1.9 trillion under management.

The reality is that the S&P 500 has been one of the world’s best-performing categories over the last five-plus years. Yet hedge funds often employ sophisticated, complex strategies in an effort to deliver outsized performance. This also may be an attempt to justify their ridiculous fees, such as the infamous “2 and 20″–2% annual management charge plus 20% of the profits.

Stick to stock picking? How boring! But hedge funds’ performance would actually improve significantly if they did just that.

Goldman Sachs periodically compiles a list of 50 stocks that "matter most" to hedge funds. These are the stocks that are most frequently among the top-10 holdings of hedge-fund portfolios. Since 2001, the lists of these 50 stocks have outperformed the S&P 500 on a quarterly basis 66% of the time, according to Goldman.

Here are the top 50 stocks in hedge funds as of the end of the second quarter:

HCA Holdings Inc.

Company	Ticker	Subsector	Market Value ($billions)	Funds   Top 10	Return %YTD
Actavis Plc	ACT	Pharmaceuticals	57	67	28
Apple Inc.	AAPL	Technology Hardware	591	57	24
Facebook Inc.	FB	Internet Software &am! p; Services	189	43	35
Allergan Inc.	AGN	Pharmaceuticals	47	41	43
American Airlines Group	AAL	Airlines	28	41	56
General Motors	GM	Automobile Manufacturers	54	41	-16
Time Warner Cable	TWC	Cable & Satellite	41	41	11
American Intl Group	AIG	Multi-line Insurance	78	40	6
Microsoft Corp.	MSFT	Systems Software	370	38	21
Hertz Global Holdings	HTZ	Trucking	13	33	5
Charter Communications	CHTR	Cable & Satellite	17	32	14
Micron Technology	MU	Semiconductors	34	32	45
Williams Companies	WMB	Oil & Gas Storage & Transportation	43	29	53
Cheniere Energy	LNG	Oil & Gas Storage & Transportation	17	28	70
Citigroup Inc.	C	Diversified Banks	148	28	-6
Delta Air Lines	DAL	Airlines	33	27	41
HCA	Health Care Facilities	30	26	42
Anadarko Petroleum	APC	Oil & Gas Exploration & Production	55	25	37
CBS Corp.	CBS	Broadcasting	31	25	-6
Ally Financial Inc.	ALLY	Consumer Finance	12	24	-0.3
Google Inc.	GOOGL	Internet Software & Services	394	23	4
Air Products and Chemicals	APD	Industrial Gases	28	22	20
NorthStar Realty Finance	NRF	Mortgage REITs	3	22	45
Bank of America	BAC	Diversified Banks	160	21	-2
eBay Inc.	EBAY	Internet Software & Services	67	21	-4
Liberty Global	LBTYK	Cable & Satellite	33	21	0
Priceline Group	PCLN	Internet Retail	67	21	9
Valeant Pharma. International	VRX	Pharmaceuticals	37	21	-4
Baidu Inc.	BIDU	Internet Software & Services	77	20	23
DIRECTV	DTV	! Cable &am! p; Satellite	42	20	22
DISH Network Corp.	DISH	Cable & Satellite	30	20	12
Dollar General	DG	General Merchandise Stores	17	20	-5
Equinix Inc.	EQIX	Internet Software & Services	11	19	22
MasterCard Inc.	MA	Data Processing & Outsourced Services	88	19	-10
Walgreen Co.	WAG	Drug Retail	59	19	9
American Realty Capital Properties	ARCP	Diversified REITs	12	18	7
Gilead Sciences	GILD	Biotechnology	153	18	32
Liberty Interactive	LINTA	Catalog Retail	14	18	-3
Monsanto Co.	MON	Fertilizers & Agricultural Chemicals	62	18	3
Twenty-First Century Fox	FOXA	Movies & Entertainment	80	18	2
Visteon Corp.	VC	Auto Parts & Equipment	4	18	20
Amazon.com Inc.	AMZN	Internet Retail	154	17	-16
Berkshire Hathaway	BRK.	Multi-Sector Holdings	331	17	13
SunEdison Inc.	SUNE	Semiconductor Equipment	6	17	64
Comcast Corp.	CMCSA	Cable & Satellite	142	16	6
JPMorgan Chase	JPM	Diversified Banks	215	16	-1
Macquarie Infrastructure LLC	MIC	Airport Services	4	16	38
Crown Castle Intl	CCI	Specialized REITs	26	15	8
Hess Corp.	HES	Integrated Oil & Gas	31	15	20
Lamar Advertising	LAMR	Advertising	5	15	-1