Mega-cap tech stocks continue to dominate hedge fund equity investment portfolios

Mega-cap tech stocks continue to dominate hedge funds' top 20 equity positions, according to a MarketWatch report analyzing recent data from 332 money managers with over $1 billion in assets under management. The analysis, based on recent public filings, shows that the 'Magnificent Seven' tech giants hold the top six spots in hedge fund portfolios. Amazon leads as the most widely held stock, closely followed by Microsoft, Apple, Meta Platforms, and Alphabet’s Class A shares.

Nvidia, which has seen its share price soar nearly 170% year-to-date, takes the sixth position, surpassing fellow chipmaker Broadcom. Interestingly, new entrants like Spotify Technology, Thermo Fisher Scientific, GE Vernova, and Adobe have recently joined the ranks of the most commonly held stocks by hedge funds.

Despite the prominence of tech stocks in these portfolios, hedge funds are underweight in the sector compared to the broader S&P 500 index, which is increasingly dominated by leading tech companies. Currently, tech stocks make up 16% of hedge funds' portfolios, while they represent 30% of the S&P 500 index by market value.

Alphabet’s Class C shares rank seventh in the top 20, followed by Visa and Taiwan Semiconductor Manufacturing Co. Eli Lilly, buoyed by excitement over its GLP-1 weight loss drug, holds the 11th spot. UnitedHealth Group ranks 12th, ahead of Uber Technologies and Mastercard. Spotify’s shares surged in July, driven by record profits from a sharp rise in subscriber numbers, helping the company secure a place in the top 20.

Rounding out the list, Salesforce CRM, Berkshire Hathaway, and Adobe occupy the 18th, 19th, and 20th positions respectively, according to the analysis.