Many individual investors are feeling less confident in light of uncertainties in Greece and China. But the smartest of the "smart money" -- hedge funds -- are weeding out the noise and making their picks.
“Hedge funds in general are really looking to position themselves as distancing themselves from systemic risk, in trying to isolate good idiosyncratic risk,” said Ethan Powell, a portfolio manager and chief product strategist at Highland Capital Management, which manages $21 billion.
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Here are some stocks hedge funds favor for the rest of 2015, according to Powell:
Citigroup, AIG
Financials are expected to benefit from an eventual Fed rate hike but Powell highlighted Citigroup (C) and AIG (AIG) as particularly attractive. “In both the cases, (they have) good, low entry points, relative to where the hedge funds think the intrinsic value is and good high quality companies,” he said.
Baidu
Baidu (BIDU) is a stock hedge funds like right now for its China play, said Powell. The Chinese web services company is “taking advantage of the government intervention over there to attract risk assets to the equity markets,” he said. “Baidu can really take advantage not only as a growth play but also that technical tailwind as well."
AT&T, DirecTV
The merger of AT&T (T) and DirecTV (DTV) is still pending on U.S. regulatory approval. But Powell says hedge funds are looking beyond the deal making. “It has good exposure to wireless spectrum, which from a supply demand perspective has a very discreet, good supply demand dynamics, which is difficult to find in this market,” he said.
AbbVie, Allergan
A deal play is what has Abbvie (ABBV) and Allergan (AGN) as standouts for hedge funds. Powell said the two are good for investors “looking for a nearterm, event driven catalyst either through acquisition or some sort of a merger play.”
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