Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 60 percentage points since the end of August 2012.
These stocks returned a cumulative of 118% vs. a 57.6% gain for the S&P 500 Index (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are): 5. Noble Corporation plc (NYSE:NE), 4. BP p.l.c. (NYSE:BP), 3. ConocoPhillips (NYSE:COP), 2. Chevron Corporation (NYSE:CVX) and 1. Macquarie Infrastructure Corporation (NYSE:MIC).
Source: InsiderMonkey
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