- Goldman's "Hedge Fund VIP" list is outperforming the S&P 500 so far this year.
- The bank's list consists of the 50 stocks that "appear most often among the top 10 holdings of fundamentally driven hedge fund portfolios" for the December quarter.
- Popular technology stocks such as Amazon, Facebook and Alphabet are among the top names in the basket.
Goldman Sachs says the stocks most owned by hedge funds are outperforming the market.
The bank's hedge fund VIP (very important positions) list consists of the 50 stocks that "appear most often among the top 10 holdings of fundamentally driven hedge fund portfolios" for the December quarter. Goldman analyzed the positions of 808 hedge funds with total long and short stock holdings of $2.1 trillion.
"Our Hedge Fund VIP basket of most popular long positions has returned 4% YTD [through Feb. 20], outperforming the S&P 500 during the recent correction in contrast to its typical drawdown behavior," strategist Ben Snider wrote in a note to clients Thursday. "From an implementation standpoint, the hedge fund VIP list represents a tool for investors seeking to 'follow the smart money' based on 13F filings."
Four times a year, hedge funds file their long positions with the SEC in so-called 13F filings, and the information is released to the public 45 days after each quarter ends.
Snider noted that technology and consumer stocks represented the largest sector weightings in hedge fund portfolios. Popular technology companies such as Amazon AMZN , Facebook FB and Alphabet GOOGL are among the top names in the basket.
The firm's basket of the top holdings of hedge funds is up 4 percent this year through Feb. 20 versus the S&P 500 's 2 percent gain, according to Goldman Sachs. The VIP list outperformed the benchmark by 4.5 percentage points last year, according to the strategist.
The VIP list has beaten the market's performance in 64 percent of quarters and by 59 basis points on average per quarter since 2001. Turnover for the basket was below normal, with 13 new stocks in the December quarter compared with the historical average turnover of 16.
Here are the top 10 stocks on Goldman's hedge fund VIP list.
— CNBC's Sally Shin contributed to this report.
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