Insider Monkey tracks nearly 400 long/short equity hedge funds. A small proportion of these fund managers had amazing stock picks that returned an average of at least 30% during the first quarter. King Street Capital’s Brian Higgins was the best performing fund manager in the first quarter (see the list of best hedge fund managers).We should note that we only took into account a hedge fund’s large-cap stock picks. We excluded options and convertible bond positions.
The S&P 500 index returned less than 13% during the first quarter including the dividends. So, how did these fund managers manage to beat the market by at least 17 percentage points. Below you can find the list of top stock picks of these best performing fund managers:
A decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More
Sears (SHLD) was a top pick for Eddie Lampert, Bruce Berkowitz, and Francis Chou. The stock returned 108% during the first quarter.
Netflix, Inc. (NFLX) gained 66% during the first quarter. Technology hedge fund manager John Hurley was among the few who were still bullish about
Priceline (PCLN) and Salesforce.com (CRM) are two other technology stocks with more than 50% returns. John Hurley is the only top performing hedge fund manager with positions in these two stocks.
Gap Inc (GPS) returned 41% during the first quarter. Eddie Lampert had nearly $600 million invested in the stock. Francis Chou also had a small position in the company.
The rest of our list is dominated by financial stocks. Warren Buffett says that he attempts to be fearful when others are greedy and to be greedy only when others are fearful. Buffett was among the fund managers who added or initiated new positions in mega-cap banks like Wells Fargo (WFC), JP Morgan (JPM), Citigroup Inc.(C), Goldman Sachs Group, Inc (GS), and American International Group (AIG). Wells Fargo gained 24% and the rest of the stocks gained at least 32% during the quarter. Bruce Berkowitz had more than $2 billion invested in AIG. We never liked AIG but we have been recommending mega-cap banks as long-term investments during the darkest days of last summer.