Goldman’s list of hedge fund favorite stocks is beating the market. Here’s what’s in it

Published Thu, Aug 24 20232:37 PM EDTUpdated Thu, Aug 24 20232:59 PM EDT

A group of hedge funds' favorite stocks trounced the broader market, thanks to the strength of mega-cap tech, according to Goldman Sachs. The Wall Street bank analyzed the holdings of 744 hedge funds with $2.4 trillion of gross equity positions at the start of the third quarter, based on regulatory filings. It then compiled a basket of the most popular long positions, dubbed Goldman's Hedge Fund VIP basket, comprising 50 stocks that most frequently appear among the largest 10 holdings of hedge funds. The VIP basket has returned 22% this year as of mid-August, outperforming the S & P 500 , which was up 15% during the same period. The basket also has a track record of beating the market as it has outperformed the S & P 500 in 58% of quarters since 2001 with an average quarterly excess return of 40 basis points. Goldman said the Hedge Fund VIP list represents a tool for investors seeking to "follow the smart money" based on 13F filings. The largest tech stocks — Amazon , Microsoft , Google parent Alphabet and Meta Platforms — remain the most popular hedge fund long positions at the end of June. Big artificial intelligence winner Nvidia was the fifth-most popular stock among hedge funds. The chipmaker's stock climbed to a record high after the company reported a beat on the top and bottom lines . The strong performance was driven by its data center business, which includes the A100 and H100 AI chips needed to build and run AI application. Nvidia also offered strong guidance amid a surge in demand for chips, suggesting sales in the current quarter will grow 170% from the year-earlier period. The stock is up more than 200% this year. Uber was also widely held by hedge funds last quarter. Earlier this month, the ride-sharing company reported second-quarter results that missed analysts' expectations for revenue but offered rosy guidance. The company achieved two major milestones during the quarter: its first quarter of free cash flow over $1 billion and its first GAAP operating profit. Activision Blizzard , Apple , Horizon Therapeutics and Visa were also in the VIP basket, according to Goldman. — CNBC's Michael Bloom contributed reporting.