Apple, Google, Microsoft: Hedge Funds' Favorite Companies

First Rule To Starting A Hedge Fund

Want to start a hedge fund? Here's a tip to get you started: Just buy shares of Apple, and you'll immediately be just like hundreds of your soon-to-be competitors.

Apple is the biggest public company in America -- so big that it distorts the profitability of the entire S&P 500 stock index, and so big that it makes up about 16 percent of the Nasdaq 100 index of the biggest tech stocks.

Given that, it's probably not surprising that Apple is also the stock hedge funds love to own the most, according to a new study by Goldman Sachs (helpfully presented to the world by Zero Hedge).

At the end of 2011, Apple was in the portfolios of a record 216 different hedge funds, the report finds.

Apple's size and popularity mean that hedge funds, along with much of the rest of the stock market, depend heavily on the company's continued health.

"As Apple goes, so goes the entire hedge fund space," Zero Hedge writes.

That may be a bit hyperbolic -- there are thousands of hedge funds out there -- but it's not much of an exaggeration either.

It's also a reminder that the so-called "smart money," these hedge funds filled with brainiacs from MIT, often aren't doing anything different than you or I could dream up. We already own Apple in our retirement accounts, because just about every stock mutual fund in the Western Hemisphere owns it.

Rounding out the top three hedge-fund playthings was Google, owned by 172 funds, and Microsoft, owned by 157 funds.

Again, these are companies you probably already own yourself, whether you know it or not.

Those tech giants were followed by a couple of members of the too-big-to-fail set, JPMorgan Chase and Citigroup. Another big bank, Bank of America, placed seventh on the list.

These bets have been mostly rip-roaring wins for hedge funds so far, Goldman notes.

Apple's stock is up 27 percent so far this year, crossing $515 a share on Thursday. It has a market capitalization of nearly $480 billion, making it far and away the biggest U.S. public company. Exxon Mobil is second at $411 billion.

Apple, for the record, is also worth more than one billion iPads, according to the Tumblr site Things Apple Is Worth More Than.

The other big hedge fund bets have worked out well, too. Microsoft is up 22 percent so far this year. JPMorgan Chase is up nearly 16 percent. Citigroup is up 24 percent.

And in surely the biggest surprise of all, Bank of America is up 44 percent.

Only Google can't claim any stock market victories of late, falling 6 percent so far this year.

But Apple and the rest more than make up for that small loss, at least until the day they stop working.

Popular in the Community

Close

What's Hot