The stock market has seen a dramatic shift in investor sentiment towards technology stocks, with some notable exceptions. According to a recent report from Jefferies, both Apple Inc. and Tesla Inc. are the most under-owned stocks among institutional investors.
After experiencing a significant 19% decline in 2022, the S&P 500 index has managed to bounce back strongly this year, with a remarkable 15% gain so far. This resurgence has largely been driven by the performance of tech stocks, as evidenced by the Nasdaq Composite's impressive 30% year-to-date growth, which stands in stark contrast to its 33% loss last year. However, the Nasdaq's recent dip over the past two weeks, the worst it has seen since December, can be partly attributed to the increase in bond yields.
Leading the pack among the under-owned stocks is Apple, boasting an impressive 36% increase in value so far this year. Close behind is Tesla, the electric vehicle (EV) giant, with an even more astounding 89% gain. Both companies have not only rebounded but have also surpassed their losses from 2022. Another noteworthy mention on Jefferies' list is Warren Buffett's Berkshire Hathaway, which landed in fifth place.
In addition to U.S. long-only funds, Jefferies also analyzed the most under-owned stocks among global hedge funds. Unsurprisingly, Apple and Tesla held the top spots once again, followed by Ford and Exxon.
The fluctuating fortunes of technology stocks remind us of both their potential for rapid growth and their vulnerability to market shifts. It will be interesting to observe how these trends evolve in the coming months and whether these under-owned stocks will regain favor among investors.
Top Over-Owned Stocks
U.S. Long-Only Funds
Among U.S. long-only funds, the stocks that are most over-owned include:
This year, Meta Platforms has seen an impressive surge of 150%, while Alphabet has gained 47%, and Netflix has experienced a 43% increase.
Global Hedge Funds
Looking at global hedge funds, the top three over-owned stocks are:
Notably, Nvidia stands out in this group with a remarkable gain of 200% this year, fueled by the growing demand for artificial intelligence-related investments.
The Crowded Trade
According to Bank of America's August global fund managers' report, an interesting trend emerges. Tech stocks have become the most crowded trades for the fifth consecutive month. This indicates that many investors might be growing wary and considering cashing in on their profits.
Least Bearish Position in Over a Year
The same report reveals that fund managers are currently the least bearish they have been in over a year. This can serve as a contrarian indicator for investors.
Also read: Here are the stocks to buy and the ones to sell if interest rates stay high, says Jefferies
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