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25 Largest Hedge Funds In 2019 and Their Surprising Top Stock Pick

Insider Monkey Staff

What are the largest hedge funds in 2019? A lot of investors erroneously see hedge fund size as an indicator of investment success. High returns is a necessary factor in attracting assets but in our experience marketing skills are much bigger factors. Hedge funds like Pershing Square and Greenlight Capital generated poor returns for extended periods of time whereas more successful but unknown hedge funds that we know of failed after a short stretch of poor performances. Investors can definitely fooled by marketing and public relations tricks.

One common characteristic of the biggest and successful hedge funds is that they had much higher returns when they were much smaller. Most large hedge fund managers (except Warren Buffett) wouldn’t acknowledge the fact that there is a negative relationship between fund size and fund returns. Our analysis shows that hedge funds in general generate more outperformance in the small-cap space than the large-cap space, yet they are forced to invest in large-cap stocks as their assets under management swell. So, all biggest hedge funds experience a style drift towards large-cap stocks, even the hedge fund managers who failed to generate meaningful alpha in the large-cap space. Nothing is sweeter than collecting 2% management fees and raking in hundreds of millions of dollar by secretly investing in the S&P 500 stocks. Most pension fund managers are dumb enough to hand hedge funds hundreds of billions of dollars in assets for inferior returns.

In this article, we compiled the list of the biggest equity hedge funds in 2019 based on the size of their 13F portfolios. There are hedge funds that invest in bonds, derivatives, currencies, or some obscure assets around the world. There is no way for us to benefit from these hedge funds' wisdom without paying them an arm and a leg in fees. We also don't care whether Bridgewater Associates raised $50 billion or more from investors just to buy Treasury bills or some other type of bonds. What we really care about is hedge funds' stock picks because they have to reveal their entire US portfolio in publicly traded companies once every three months.

This gives us the opportunity to see their portfolio movements and estimate their stock picking skills. This is especially true for hedge fund managers who trade infrequently and hold on to a position for several years.

In this article we expect to see that most of the biggest positions of the largest hedge funds are large cap stocks like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Facebook Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG) which are among the top 30 most popular stocks among hedge funds. That's true to a certain degree, but we came across another large cap stock that is more popular than Apple, Facebook, Amazon, and Google. We will reveal the name of this stock at the end of the article. We also expect to see a few surprising stock picks by the largest hedge funds.

So, keep in mind that the hedge funds we listed in this article will be large and decent hedge funds but, they won’t necessarily be the best hedge funds to follow. Every quarter we publish a list of the 40 best performing hedge funds, and you will notice that only a few of them are very large hedge funds and none of them are among the 10 largest hedge funds in the world. Anyway, here is the rundown of the 25 largest hedge funds in 2019:

25. Orbis Investment Management

Founded By: William Gray

13F Portfolio Value: $13.9 Billion

Top Stock Pick: Netease.com (NTES)

24.  Generation Investment Management

Founded By: David Blood and Al Gore

13F Portfolio Value: $14.5 Billion

Top Stock Pick: Alphabet Inc (NASDAQ:GOOG)

480px-Al_Gore,_Vice_President_of_the_United_States,_official_portrait_1994

23. Select Equity Group

Robert Joseph Caruso

13F Portfolio Size: $14.7 billion

Top Stock Pick: Martin Marietta Materials (MLM)

Abrams Bison Investor Letters

22. Baker Bros. Advisors

Founded By: Julian Baker and Felix Baker

13F Portfolio Size: $14.7 billion

Top Stock Pick: Seattle Genetics Inc (SGEN)

[caption id="attachment_338175" align="aligncenter" width="500"] Felix Baker of Baker Bros.[/caption]

Felix Baker - Baker Bros.

21. Elliott Management

Founded By: Paul Singer

13F Portfolio Size: $14.9 billion

Top Stock Pick: Arconic Inc (ARNC)

[caption id="attachment_26345" align="aligncenter" width="489"] Paul Singer of Elliott Management[/caption]

Paul Singer ELLIOTT MANAGEMENT

20. PEAK6 Capital Management

Founded By: Matthew Hulsizer

13F Portfolio Size: $15 billion

Top Stock Pick: Amazon.com Inc (NASDAQ:AMZN)

[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]

Matthew Hulsizer PEAK6 Capital

19. Balyasny Asset Management

Founded By: Dmitry Balyasny

13F Portfolio Size: $15.6 billion

Top Stock Pick: United Technologies (UTX)

[caption id="attachment_256989" align="aligncenter" width="450"] Dmitry Balyasny of Balyasny Asset Managemnet[/caption]

Dmitry Balyasny of Balyasny Asset Managemnet

18. Lone Pine Capital

Founded By: Stephen Mandel

13F Portfolio Size: $16.1 billion

Top Stock Pick: Adobe Systems (NASDAQ:ADBE)

[caption id="attachment_29562" align="aligncenter" width="483"] Stephen Mandel of Lone Pine Capital[/caption]

Lone Pine Capital 2015 Q2 Investor Letter

17. Tiger Global Management

Founded By: Chase Coleman

13F Portfolio Size: $18.5 billion

Top Stock Pick: Microsoft Corp (NASDAQ:MSFT)

[caption id="attachment_26088" align="aligncenter" width="508"] Chase Coleman of Tiger Global[/caption]

Chase Coleman of Tiger Global

16. OZ Management

Founded By: Daniel S. Och

13F Portfolio Size: $18.8

Top Stock Pick: Altaba Inc (AABA)

[caption id="attachment_278362" align="aligncenter" width="450"] Daniel Och, Founder of OZ Management[/caption]

Och-Ziff Capital Management

15. Point72 Asset Management

Founded By: Steve Cohen

13F Portfolio Size: $19.1 billion

Top Stock Pick: Alibaba Group (BABA)

[caption id="attachment_25717" align="aligncenter" width="440"] Steven Cohen of Point72 Asset Management[/caption]

Steven Cohen of Point72 Asset Management

14. Viking Global

Founded By: Andreas Halvorsen

13F Portfolio Size: $22.3 billion

Top Stock Pick: Adaptive Biotechnologies (ADPT)

[caption id="attachment_26082" align="aligncenter" width="466"] Andreas Halvorsen of Viking Global[/caption]

Andreas Halvorsen

13. Alkeon Capital Management

Founded By: Panayotis "Takis" Sparaggis

13F Portfolio Size: $25.3 billion

Top Stock Pick: Synopsys (SNPS)

Parthenon, Acropolis, Greece

12. Icahn Capital

Founded By: Carl Icahn

13F Portfolio Size: $26.5 billion

Top Stock Pick: Icahn Enterprises (IEP)

[caption id="attachment_25910" align="aligncenter" width="467"] Carl Icahn of Icahn Capital[/caption]

Most Popular Stocks Among Hedge Funds

11. GLG Partners

Founded By: Noam Gottesman

13F Portfolio Size: $27.7 billion

Top Stock Pick: Microsoft Corp (MSFT)

[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman of GLG Partners[/caption]

Noam Gottesman GLG Partners

10. Eagle Capital Management

Founded By: Boykin Curry

13F Portfolio Size: 28.6 billion

Top Stock Pick: Microsoft Corp (MSFT)

[caption id="attachment_30647" align="aligncenter" width="478"] Boykin Curry of Eagle Capital[/caption]

Boykin Curry EAGLE CAPITAL MANAGEMENT

9. Adage Capital Management

Founded By: Phill Gross and Robert Atchinson

13F Portfolio Size: $40.2 billion

Top Stock Pick: Microsoft Corp (MSFT)

[caption id="attachment_340081" align="aligncenter" width="450"] Phill Gross of Adage Capital Management[/caption]

Phill Gross of Adage Capital Management

8. Two Sigma Advisors

Founded By: John Overdeck and David Siegel

13F Portfolio Size: $40.2 billion

Top Stock Pick: Amazon.com Inc (AMZN)

[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]

John Overdeck of Two Sigma

7. Arrowstreet Capital

Founded By: Peter Rathjens, Bruce Clarke and John Campbell

13F Portfolio Size: $44.8 billion

Top Stock Pick: Mastercard Inc (MA)

RJF

6. Millennium Management

Founded By: Israel Englander

13F Portfolio Size: $66.5 billion

Top Stock Pick: Altaba Inc (AABA)

[caption id="attachment_27480" align="aligncenter" width="450"] Israel Englander of Millennium Management[/caption]

Izzy Englander of MILLENNIUM MANAGEMENT

5. D E Shaw

Founded By: David E. Shaw

13F Portfolio Size: $80.2 billion

Top Stock Pick: Alibaba Group (BABA)

[caption id="attachment_365194" align="aligncenter" width="450"] David E. Shaw of D.E. Shaw[/caption]

David E. Shaw of D.E. Shaw

4. AQR Capital Management

Founded By: Cliff Asness

13F Portfolio Size: $89.6 billion

Top Stock Pick: Microsoft Corp (MSFT)

[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]

AQR CAPITAL MANAGEMENT

3. Renaissance Technologies

Founded By: Jim Simons

13F Portfolio Size: $113.6 billion

Top Stock Pick: Verisign Inc (VRSN)

[caption id="attachment_26073" align="aligncenter" width="450"] Jim Simons of RENAISSANCE TECHNOLOGIES[/caption]

RENAISSANCE TECHNOLOGIES

2. Berkshire Hathaway

Managed By: Warren Buffett (yes, Berkshire is a secret hedge fund with no fees)

13F Portfolio Size: $208 billion

Top Stock Pick: Apple Inc (NASDAQ:AAPL)

[caption id="attachment_315178" align="aligncenter" width="450"] Warren Buffett[/caption]

Warren Buffett

1. Citadel Investment Group

Founded By: Ken Griffin

13F Portfolio Size: $218 billion

Top Stock Pick: Facebook Inc. (NASDAQ:FB)

  [caption id="attachment_26340" align="aligncenter" width="467"] Ken Griffin of Citadel Investment Group[/caption]

CITADEL INVESTMENT GROUP

The most popular top stock pick among these largest hedge funds in 2019 is Microsoft. Alibaba Group surprisingly ranked second. Hedge funds got Alibaba exposure either directly through BABA shares or indirectly through AABA shares. The third spot belongs to Amazon.

Disclosure: None. This article is originally published at Insider Monkey.