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Insider Monkey follows 250 hedge funds and prominent investors. We aren't only one who does that though. Investment banks such as Goldman Sachs and Credit Suisse also do the same thing. Credit Suisse's Quantitative Equity Research Department made some calculations and determined the 15 stocks that hedge funds are more bullish about. This selection isn't based on largest positions or number of hedge funds in each stock. Apple (NASDAQ:AAPL) isn't among these 15 stocks. It was the top stock in Goldman's list with nearly 200 hedge funds with AAPL positions.

Credit Suisse's picks and their recent performance are as follows:

Company

Ticker

Return

AUTONATION INC DEL

AN

20.2%

ANADARKO PETROLEUM

APC

3.8%

AIRGAS INC

ARG

11.7%

AUTOZONE INC

AZO

3.6%

CITIGROUP INC

C

-3.0%

COCA COLA ENTERPRISES

CCE

14.0%

C I G N A CORP

CI

27.8%

GENERAL DYNAMICS CORP

GD

3.9%

GENZYME CORP

GENZ

7.1%

MCAFEE INC (Acquired by Intel)

INTC

3.5%

MOTOROLA SOLUTIONS

MSI

-23.2%

SPRINT NEXTEL CORP

S

22.5%

VIACOM

VIA.B

29.6%

WELLPOINT INC

WLP

35.6%

WILLIAMS COS

WMB

34.7%

Average

12.80%

Credit Suisse's methodology returned 12.8% since the end of 2010, vs. 9% for SPY. Hedge funds' favorite stock picks beat the market by nearly 1 percentage point per month. The best performers in this list are Wellpoint, Williams, and Viacom. Wellpoint is owned by 94 hedge funds which hold 11% of its outstanding shares. David Tepper's Appaloosa Management, Jeff Altman's Owl Creek, Larry Robbins' Glenview, and Lee Ainslie's Maverick have large WLP holdings.

Williams is Steve Cohen's one of top three picks for 2011. Michael Lowenstein and Michael Karsch had large WMB positions at the end of December as well. Phenomenal hedge fund manager Dan Loeb also had nearly $100 million in WMB. Williams has a market cap of nearly $20 billion and recently increased its dividend yield to 2.4%. The dividend hike isn't the reason why hedge funds are buying WMB though. Williams announced that it will spin off its exploration and production business in early 2012. The stock currently trades at $33 but hedge funds think it is worth $40-45.

Viacom is a very popular stock among top hedge funds as well. Chase Coleman's Tiger Global, Larry Robbins' Glenview, John Burbank's Passport Capital, and Tom Steyer's Farallon had large investments in VIA at the end of December. Eric Mindich made the most out of Viacom's %30 increase. He had $555 million in Viacom stock and $79 million in Viacom call options at the end of December.

We believe imitating hedge funds' top stock picks can generate alpha on the average and beat index investing. Investors should follow a portfolio approach and buy all of these stocks to benefit from hedge funds' wisdom. A portfolio of 15 to 30 stocks will also provide adequate stock and sectorr diversification.

If we had to pick two of these companies to invest, we would have picked WMB and VIA-B. We expect these two companies to outperform the market over then next 12 months. This is not an investment recommendation though. Investors should do their due diligence and consult with an investment advisor before making investment decisions.

Source: Hedge Funds' Favorite Stock Picks