We follow hedge fund managers because they're the smartest investors around. They leave less to chance than most investors. They go great lengths to get an “edge” over ordinary investors. Hedge fund managers also 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 the top 12 technology stocks hedge funds were buying like crazy during the most recent fourth quarter:
- Apple Inc (AAPL): Nearly 200 hundred hedge funds own 4% of the outstanding shares. Hedge fund stars like David Einhorn, John Griffin, Stephen Mandel, Chase Coleman and John Burbank all own AAPL in their portfolio.
- Microsoft Co (MSFT): Microsoft was owned by 161 hedge funds at the end of last year. Barry Rosenstein’s Jana Partners, David Einhorn’s Greenlight Capital, Craig Effron’s Scoggin Capital, and Brevan Howard are some of other hedge funds bullish about Microsoft. Whitney Tilson was extremely bulish about Microsoft too. He predicted that Microsoft will reach $35 by the end of 2011.
- Google Inc. (GOOG): A whopping 156 hedge funds owned Google at the end of last year. 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.
- Cisco (CSCO): Cisco is another battered down stock hedge funds poured in $1 Billion during the last quarter of 2010. John Burbank, David Tepper, and Leon Cooperman think CSCO is undervalued. Unfortunately for these investors Cisco has been declining recently.
- Hewlett-Packard (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. HPQ had a great start to 2011, but it has performed terribly during the past 3 weeks. AAPL has outperformed HPQ by 10 percentage points during the past 3 months.
- Qualcomm Inc (QCOM): Hedge funds kept their holdings consistent with 4% of QCOM shares. Hedge fund managers who are bullish about QCOM include Bill Miller, Stephen Mandel and George Soros. Lee Ainsley added $300 Million to his Qualcomm position in the fourth quarter.
- Oracle Corp (ORCL): More than 100 hedge funds own Oracle. They decreased their position from 2% of the company's total shares to 1%. ORCL is one of Thomas Steyer's 20 largest holdings. It's also one of Ray Dalio‘s and Bridgewater Associates’ top 30 stock holdings (excluding ETFs).
- Intel Corp (INTC): As of the most recent quarter, this is one of Jim Simons and Renaissance Institutional Equities Fund’s 30 largest holdings. David Tepper is also a fan of Intel. Ninety-two hedge funds kept their 1% position in Intel the same in the fourth quarter. During the past couple of weeks Semiconductor HOLDRs (SMH) went down about 8%, but the decline in Intel was limited to 4%. Yet SMH outperformed INTC by more than 6 percentage points during the past 3 months.
- Emc Corp (EMC): At the end of 2010, EMC was one of Andreas Halvorsen’s largest 25 positions. Hedge funds kept their interest in the company the same at 3% of total outstanding shares. Hedge funds picked the right stock this time. During the past 3 months EMC returned around 17%, whereas other data storage companies lost ground. Western Digital (WDC) was flat, Seagate (STX) lost 8%, and NetApp (NTAP) lost more than 10%.
- Yahoo (YHOO): Seventy-seven hedge funds kept their position at 5% of the company's outstanding shares last quarter. The stock returned about 5% so far in 2011, nothing spectacular. YHOO is one of the stocks Dan Loeb added to his portfolio recently.
- International Business Machines (IBM): Just 1% of the company is owned by 75 hedge funds. IBM is one of Bill Miller's top stock holdings.
- Micron Technology (MU): MU is one of the David Tepper and Appaloosa’s Bullish new stock picks last quarter. Hedge funds own 4% of the company's outstanding shares. This is another great pick for the hedge funds. Micron returned more than 20% so far in 2011, whereas RMBS lost 5% and Sandisk (SNDK) lost more than 10%. Netlogic (NETL) would have been another good pick. It also returned more than 20% in 2011.