Hedge funds shifted focus from the Magnificent Seven to other stocks in the first quarter.
Goldman Sachs identified 20 stocks with increased hedge fund interest in that period.
Stocks with rising hedge fund interest often outperform sector peers, the bank said.
As hedge funds trimmed their Magnificent Seven positions in the first quarter, they increasingly turned their attention toward some other stocks.
In Goldman Sachs’ Hedge Fund Trend Monitor published May 20, the firm highlighted 20 stocks that an increasing number of hedge funds added to their holdings in that period.
That heightened interest could be a sign that the stocks are primed for strong returns in the months ahead, the bank said.
“Historically, stocks with the largest increase in the number of hedge fund investors (‘Rising Stars’) have typically gone on to outperform sector peers during the quarters following their rise in popularity,” said the note, authored by a team of strategists led by Ben Snider, a managing director.
The utilities, financials, and consumer discretionary sectors each had five stocks on the list. Two have AI exposure: Sempra and Kinder Morgan. The average market cap of the 20 stocks on the list is $17 billion.
We’ve listed the stocks below, along with their net gain in the number of funds that own them.
Knight-Swift Transportation (20).
Lithia Motors (19).
Yum Brands (17).
Sempra (16).
US Bancorp (16).
NiSource (15).
Essential Utilities (15).
SLM (15).
Kinder Morgan (15).
Tapestry (14).
Alliant Energy (14).
BlackRock (14).
Zions Bancorporation (14).
First American Financial (14).
Floor & Decor Holdings (14).
Darling Ingredients (13).
Edison International (13).
Wyndham Hotels & Resorts (13).
Expand Energy (13).
Labcorp (12).
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