Raj Rajaratnam’s trial is set to begin today. He made $200 million in 2007, barely missing the list of “highest paid hedge fund managers." Don’t feel sorry for him though. He made the list in 2000. Art Samberg topped Wall Street’s Highest Earners list with $150 million. Art Samberg is another hedge fund manager who has been charged with insider trading. He was lucky though. Pequot and Samberg agreed to settle the SEC’s charges without admitting or denying anything.
Hedge fund managers are the smartest investors around. They leave less to chance than most investors. They go great lengths to get an “edge” over ordinary investors. Insider Monkey follows corporate insiders because they have access to material, non-public information and they sometimes trade based on it. We also follow hedge fund managers because they have the resources to do extensive research on public companies and they have access to experts who can guide them. We believe we are more likely to beat the market by imitating insiders and hedge funds than trading against them. Based on the transactions of nearly 700 hedge funds, we compiled the list of top 10 stocks hedge funds were buying like crazy during the fourth quarter:
1. General Motors (NYSE:GM): Hedge funds snatched 6% of GM’s outstanding shares and amassed a $3.4 billion position. There were 112 hedge funds with GM positions at the end of December. John Griffin’s Blue Rigde, William Ackman’s Pershing Square, George Soros, David Tepper’s Appaloosa, Roberto Mignone’s Bridger Management, Richard Perry’s Perry Capital and Leon Cooperman’s Omega Advisors are among the several high profile hedge funds with GM positions.
2. Citigroup (NYSE:C): Citigroup is hedge funds’ most favorite mega-cap bank. Hedge funds, 190 of them, own 8% of outstanding Citigroup shares. During the fourth quarter, they spent $2.8 billion on Citigroup shares. Steven Mandel’s Lone Pine, Bruce Berkowitz’s Fairholme, Lee Ainslie’s Maverick Capital, George Soros, Bill Miller’s Legg Mason Capital Management, Bill Ackman’s Pershing Square, David Tepper’s Appaloosa, Daniel Loeb’s Third Point, Andreas Halvorsen’s Viking Global, Richard Perry’s Perry Capital, Joseph DiMenna’s Zweig-DiMenna, Leon Cooperman’s Omega Advisors, Brevan Howard and John Paulson’s Paulson & Co are among the prominent investors who are bullish about Citigroup.
3. LyondellBasell (NYSE:LYB): LyondellBasell is very popular among hedge funds. Since its market cap is much smaller than giant banks or tech companies, hedge funds amassed a 13% share in LYB. There were 99 hedge funds with LYB positions at the end of December and they spent a net $2.5 billion on LYB during the fourth quarter. Notable hedge funds with LYB holdings: Daniel Loeb’s Third Point, Tom Steyer’s Farallon Capital, David Einhorn’s Greenlight Capital and Andreas Halvorsen’s Viking Global are among the hedge funds with LYB positions.
4. JP Morgan (NYSE:JPM): Hedge funds, 164 of them, own 4% of JPM’s outstanding shares. During the fourth quarter, they spent $1.8 billion to place their bullish bets. Steven Mandel, John Griffin, Bill Miller and Lee Ainslie are among the high profile hedge fund managers invested in JPM.
5. Google (NASDAQ:GOOG): There are 164 hedge funds with a combined $6.5 billion investment in Google. They spent $1.6 billion during the fourth quarter. Lee Ainslie’s Maverick, Roberto Mignone’s Bridger Management, Jim Simons’ Renaissance, Andreas Halvorsen’s Viking and Jonathan Auerbach’s Hound Partners are among the hedge funds that are bullish about Google.
6. Genzyme (GENZ): There are 91 hedge funds invested in Genzyme. They spent an additional $1.2 billion during the fourth quarter. Genzyme is a merger arbitrage play.
7. Hewlett Packard (NYSE:HPQ): Hedge funds spent around $1 billion to acquire HPQ shares during the fourth quarter. Bill Miller, Lee Ainslie, David Tepper, Jim Simons and Leon Cooperman are among the prominent investors with large HPQ holdings.
8. Cisco (NASDAQ:CSCO): Cisco is another battered down stock hedge funds poured $1 billion in during the last quarter of 2010. John Burbank, David Tepper and Leon Cooperman think CSCO is undervalued.
9. Williams Cos Inc (NYSE:WMB): This is one of Steven Cohen’s favorite stocks in 2011. There are 74 other hedge fund managers who agree with Steven Cohen. They spent $1 billion during fourth quarter to buy WMB shares. Now, hedge funds own 14% of outstanding shares.
10. Teva Pharmaceutical (NASDAQ:TEVA): This is another stock hedge funds spent $1 billion on during the fourth quarter. John Griffin, Lee Ainslie, George Soros and Jim Simons are all bullish about TEVA.
Disclosure: I am long C.