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Insider Monkey follows 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 compiled by Goldman Sachs, we present the list of top 10 stocks that hedge funds are buying like crazy:

1. Apple Inc (NASDAQ:AAPL): Sixty three hedge funds had Apple among their top 10 holdings. Hedge funds collectively own 3% of the outstanding shares. The stock returned 5% so far in 2011. Hedge fund stars like David Einhorn, John Griffin, Chase Coleman and Dan Loeb all have AAPL in their portfolios.

2. Microsoft Co (NASDAQ:MSFT): Microsoft was owned by 54 hedge funds as a top 10 holding at the end of March. Hedge funds collectively own 2% of the outstanding shares. The stock lost 10% so far in 2011. Jim Simons' Renaissance, David Tepper's Appaloosa, Leon Cooperman's Omega Advisors, and Tom Steyer's Farallon are some of the hedge funds that are bullish about Microsoft. Whitney Tilson is extremely bulish about Microsoft too. He predicted that Microsoft will reach $35 by the end of 2011.

3. JP Morgan (NYSE:JPM): Forty nine hedge funds had JPM among their top 10 holdings. Hedge funds collectively own 4% of the outstanding shares. The stock returned 5% so far this year. Steve Heinz's Lansdowne, Jonathan Jacobson's Highfields Capital, and Andreas Halvorsen's Viking Global are among the hedge funds with huge JPM positions.

4. Google Inc. (NASDAQ:GOOG): Forty eight hedge funds had GOOG among their top 10 holdings. Hedge funds collectively own 4% of the outstanding shares. The stock lost 11% in 2011. Stuart Peterson's Artis Capital had $624 Million and Philippe Laffont's Coatue had $342 Million in Google.

5. Citigroup (NYSE:C): Forty three hedge funds had Citigroup among their top 10 holdings. Hedge funds collectively own 6% of the outstanding shares. The stock lost 13% so far this year. Bill Ackman's Pershing Square had nearly $650 Million in C. However, the largest stakes belong to John Paulson and Bruce Berkowitz. Each of these two managers had more than $1 Billion in Citigroup.

6. Qualcomm Inc (NASDAQ:QCOM): Thirty one hedge funds had QCOM among their top 10 holdings. Hedge funds collectively own 4% of the outstanding shares. The stock gained 14% so far this year. Lee Ainslie's Maverick and Stephen Mandel's Lone Pine had the largest stake in QCOM among the 300+ funds we are following.

7. Lyondellbasell (LYB): Thirty hedge funds had LYB among their top 10 holdings. Hedge funds collectively own 13% of the outstanding shares. The stock gained 19% so far this year. James Dinan's York, Howard Marks' Oaktree and Dan Loeb's Third Point had large positions in LYB at the end of March.

8. Smurfit-Stone Container (NYSE:SSCC): This was hedge fund's favorite merger arbitrage trade during the first quarter. Twenty eight hedge funds had SSCC among their top 10 holdings. Hedge funds collectively own 65% of the outstanding shares. The stock gained 54% in 2011. Barry Rosenstein's JANA Partners, John Arnold's Centaurus, and John Bader's Halcyon are among the hedge funds with large SSCC holdings.

9. Pfizer (NYSE:PFE): Twenty seven hedge funds had PFE among their top 10 holdings. Hedge funds collectively own 3% of the outstanding shares. The stock gained 23% so far this year. David Einhorn's Greenlight, Frank Brosens' Taconic Capital, and Ken Garschina's Mason Capital are among the hedge funds with large PFE holdings at the end of March.

10. CIT Group (NYSE:CIT): Twenty three hedge funds had CIT among their top 10 holdings. Hedge funds collectively own 24% of CIT's outstanding shares. The stock lost 10% so far this year. Marc Lasry's Avenue Capital and Bruce Berkowitz's Fairholme had large positions in CIT at the end of March.

These 10 stocks had an average return of 7.6% so far in 2011. We expect them to outperform index funds over long investment horizons. Investors should pay attention to these names.

Source: 10 Stocks Hedge Funds Are Buying Like Crazy