Owning hedge funds' most crowded trades could be risky in the event of a herd-like stampede from systematic traders, Morgan Stanley said.
Owning overcrowded trades that are most popular among hedge funds could be risky for individual investors in the event of a herd-like stampede by systematic traders, according to Morgan Stanley , which looked at stocks to avoid. The Wall Street firm studied the largest 70 hedge funds based on assets under management, and identified Russell 1000 stocks with the highest percentage of public float owned by them, based on the most recent 13F filings.
Despite their popularity and performance, none of the megacap tech stocks made the list of overcrowded stocks. That's because their enormous share count makes hedge funds' ownership less significant. Morgan Stanley found that hedge funds were most overweight in consumer discretionary, industrial and health care stocks last quarter, while they were most bearish on technology and consumer staples companies.
Stock Markets Avis Budget Group Inc Howard Hughes Holdings Inc Incyte Corp New York Times Co Wayfair Inc Planet Fitness Inc Janus Henderson Group PLC Morgan Stanley Business News
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