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Hedge funds usually devote significant resources to researching stocks. Sometimes they even trade on material non-public information. Yes, such trades are prohibited, and some of the managers who do so were caught, but there are still a certain number of hedge funds that make trades in the grey area. We are not saying that hedge funds are 100 percent accurate in picking stocks. But if many hedge funds are bullish about one stock simultaneously, it is likely that this stock is currently trading below its intrinsic value.

Below we compiled a list of technology stocks that hedge funds are most bullish about. The data is gathered from Goldman Sachs’ VIP list from its report on hedge funds. This is based on 13F filings that show hedge funds’ positions as of September 30.

Ticker

Company

YTD

Number of HFs

% of Equity Cap Owned by HFs

AAPL

Apple Inc.

13

105

4

GOOG

Google Inc.

-4

58

4

MSFT

Microsoft Corporation

-10

50

2

QCOM

QUALCOMM Incorporated

7

29

4

BIDU

Baidu, Inc.

24

21

7

CSCO

Cisco Systems, Inc.

-13

18

2

AMT

American Tower Corp.

7

16

7

ORCL

Oracle Corporation

-7

16

1

YHOO

Yahoo! Inc.

-10

16

11

CCI

Crown Castle International Corp.

-10

14

23

EMC

EMC Corporation

-4

13

3

IBM

International Business Machines

23

13

1

Apple Inc (NASDAQ:AAPL) is the most popular stocks among hedge funds at the end of the third quarter. There were 105 hedge funds bullish about AAPL. For instance, Ken Griffin’s Citadel Investment Group had over $900 million invested in AAPL shares. D. E. Shaw, Rob Citrone, Stephen Mandel, Chase Coleman and many other famous hedge fund managers were also bullish about AAPL. As of September 30, four percent of the equity of Apple was owned by hedge funds. AAPL has a market cap of $365B, a P/E ratio of 14.2, and returned about 13% so far this year.

Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) were also very popular among hedge funds. There are 58 hedge funds bullish about GOOG and 50 hedge funds are bullish about MSFT. Ken Fisher was bullish about both stocks. His Fisher Asset Management had $363 million invested in GOOG and $444 million invested in MSFT at the end of the third quarter.

Twenty-three percent of Crown Castle International Corp (NYSE:CCI)’s equity was owned by hedge funds at the end of the third quarter, the biggest percentage among the stocks listed above. CCI was owned by 14 hedge funds, including John H. Scully’s SPO Advisory Corp, Stephen Mandel’s Lone Pine Capital, and Larry Robins’ Glenview Capital. CCI has a market cap of $12.4B, a P/E ratio of 88.82, and was down about 10% so far this year.

The best performing stock this year on the list above is Baidu Inc (NASDAQ:BIDU), which returned 24% since the beginning of this year. BIDU was held by 21 hedge funds and 7% of its outstanding shares were owned by hedge funds at the end of September. Ken Fisher’s Fisher Asset Management had more than $450 million invested in BIDU. John Thaler’s JAT Capital Management and Andreas Halvorsen’s Viking Global also both had over $300 million invested in this stock.

Other technology stocks that are popular among hedge funds include Qualcomm Incorporated (NASDAQ:QCOM), Cisco Systems Inc (NASDAQ:CSCO), American Tower Corp (NYSE:AMT), Oracle Corporation (NYSE:ORCL), Yahoo Inc (NASDAQ:YHOO), EMC Corporation (NYSE:EMC), and International Business Machines Corp (NYSE:IBM). We like technology stocks and believe that they are undervalued as a sector. For instance, Apple is expected to grow by more than 20% annually, yet its forward PE ratio is only 11.

Source: 12 Most Popular Tech Stocks Among Hedge Funds