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The Best Stocks to Buy According to Top Hedge Funds

Knowing the best stocks to buy, and when to buy them, can be a daunting task.

But looking at the moves of the largest hedge funds enables investors to gain insight into what the big boys are doing.

FactSet Research Systems Inc. (NYSE: FDS), a financial research firm that provides analysis of the markets' biggest players, recently released its quarterly report on the stock positions held by the 50 largest hedge funds.

While the top held stock, Apple Inc. (Nasdaq: AAPL), had its exposure in the overall funds reduced by 1.8 million shares, the list of most added stocks might surprise you.

Best Stocks to Buy: Where Hedge Funds are Investing

In the third quarter, overall the top 50 hedge funds increased their exposure to stocks by 3%.

Here's a rundown of the top ten stocks that the top hedge funds were buying last quarter, listed in order by the amount of market value added to the funds.

  • American International Group Inc. (NYSE: AIG): The embattled insurer led the way, with 92.2 million shares added as AIG stock rose 2.98%, for an increased market value of $3.02 billion.
  • Procter & Gamble Co. (NYSE: PG): Top hedge funds added 21.8 million shares of the consumer products conglomerate as PG stock gained 13.35%, for an increased market value of $1.51 billion.
  • Capital One Financial Corp. (NYSE: COF): 18.6 million shares were added to top hedge funds' "wallets" as COF stock rose 4.13%, for an increased market value of $1.06 billion.
  • Kraft Foods Inc. had 19.4 million shares added, totaling $825 million, before it split into Kraft Foods Group Inc. (NYSE: KRFT) and Mondelez International Inc. (Nasdaq: MDLZ).
  • Nexen Inc. (NYSE: NXY): Top hedge funds added 30.7 million shares of this global energy company as NXY gained 49.0%, for an increased market value of $778 million.
  • Time Warner Inc. (NYSE: TWX): 16.3 million shares of the media and entertainment company were added as TWX stock rose 17.01%, for an increased market value of $739 million.

  • Burger King Worldwide Inc. (NYSE: BKW): The home of the Whopper began trading again in June. During the third quarter top hedge funds added 45.7 million shares of BKW stock, yet it lost 8.71%, for an increased market value of $637 million.
  • Citigroup Inc. (NYSE: C): Top hedge funds added 18.7 million shares of Citigroup as Citi stock gained 19.16%, for an increased market value of $612 million.
  • General Electric Co. (NYSE: GE): GE, the only remaining company of the 12 original members of the Dow Jones Industrial Average to still be on the index, had 23.2 million shares added to hedge funds' holdings. GE stock rose 10.83% in the third quarter, for an increased market value of $527 million.
  • Verisign Inc. (Nasdaq: VRSN): 10.5 million shares were added to this provider of Internet infrastructure services as VRSN stock gained 12.24%, for an increased market value of $510 million.

Note: The amount of increased market value was calculated by taking the total amount of shares added for each stock, the amount bought minus the amount sold, multiplied by the final price of each stock at the end of the third quarter.

Investors: Nexen is just one of the best stocks to buy that was already highlighted in our premium investing service, Private Briefing. To find out more about hunting down the best stocks before they hit Wall Street's radar, click here.

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  • Join the conversation. Click here to jump to comments…

    1. willie m abraham | December 20, 2012

      I wanted to know best return stock going to. 2013

    2. tony chesta | December 21, 2012

      Will probably triple by 2014…AAR.UN on the tsx

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