Corre Group’s recently released Quarterly Crowding Report provides insight into how hedge funds are being over-concentrated in terms of value and ownership.
The first quarter 2013 report analyzed 250 funds encompassing 118,673 securities across 65 countries having total market values of $896.48 billion.
Corre Group provides information with global view and fund-centric focus. Though the analytics firm’s platform has nearly 3,000 hedge funds and investment advisors, this research report is based on the largest 250 hedge funds.
In its top 50 securities by total value invested, search engine Google Inc (NASDAQ:GOOG), insurance major American International Group Inc (NYSE:AIG) and iPod and iPhone designer Apple Inc. (NASDAQ:AAPL) occupy the top three slots. The bottom three slots are held by PepsiCo, Inc. (NYSE:PEP), Monsanto Company (NYSE:MON) and Marathon Petroleum Corp (NYSE:MPC).
The entertainment and communications company Virgin Media Inc. (NASDAQ:VMED) occupies the eighth position among the top 50 securities by total value invested with a total value of $5.16 billion. The entertainment company has had a tremendous run over the past year, rising over 125 percent in the last twelve months and over 30 percent during the first quarter.
Virgin Media Inc. (NASDAQ:VMED) saw a very large increase in hedge fund ownership across all metrics adopted by Corre Group viz.: total value invested (showing an increase of $3.46 billion), percentage of shares owned by hedge funds (now at 39 percent, up from 17 percent earlier), and the total number of hedge funds owners, with over 62 funds reposed faith in the company as against 40 earlier.
Among the top 10 most overlapped funds, 3G Capital Management, Inc, Coatue Management LLC and Silver Point Capital LP occupy the top three spots with an overlap percentage of 69.47, 66.80 and 64.47 respectively.
Corre Group’s recent report also contains the securities that have the largest percentage of their outstanding shares owned by the 250 largest hedge funds in its universe. The prominent home builder, Beazer Homes USA, Inc. (NYSE:BZH), Equinix Inc (NASDAQ:EQIX) and Repros Therapeutics Inc (NASDAQ:RPRX) occupy the top three slots in terms of percentage of shares owned by top hedge funds.
250 Largest Hedge Funds By Assets:
The analytics firm also analyzed the uniqueness of hedge funds by looking at the number of funds that are holding the same security. Insurance major American International Group, Inc finds strong favor with over 118 of 250 hedge funds owning the insurance major, while the search engine Google Inc (NASDAQ:GOOG) finds support from 117 out of 250 hedge funds. Apple Inc. (NASDAQ:AAPL) has found support from 111 of 250 hedge funds occupying the third position among the top 50.
During the first quarter, the 250 largest hedge funds by assets were overweight in Consumer Discretionary, Basic Materials and Financials while they were underweight in Consumer Staples. The following graph provides further insight on the sector trends:
Interestingly the recent report titled ‘Hedge Fund Ownership Report’ published by FactSet Research Systems Inc. (NYSE:FDS) also highlighted top hedge funds’ holdings in prominent Internet search and personal electronic devices companies.