Skip to content

Stock Crowding Risk is Back

I caught this Bloomberg piece, this morning, about how money managers (hedge funds and mutual funds); have concentrated their holdings into a fairly common core group of stocks, since the selloff in December.

To strategists led by David Kostin, the concentration is a sign of conviction among stock pickers. And the bets are paying off: industrial and tech stocks have led the market’s rebound in the first two months of 2019. But anyone who watched crowded stocks bear the brunt of selling in the October-December carnage has seen the risk of unwinding.

The article mentions Alphabet, Electronic Arts, PayPal, T-Mobile and UnitedHealth Group. I don't know more than Goldman Sachs (they put that list together), but UNH has been sold hard, this year. I do believe that a lot of fund have been getting out of banks (Citigroup, Bank of America, JP Morgan) and into PayPal, Square, Tencent and even Apple.

One thing that I don't see any hedge fund articles covering, is the home builders. Even on a big down day, like Monday, this group is doing well.

-- Scrib