With significant macroeconomic events ranging from elections to central bank moves stirring the market, the biggest investors on Wall Street have been shifting their portfolios and playing offense heading into 2025. The hedge fund community, as a whole, nailed the election trade by piling into cyclical stocks that were thought to benefit from the rotation that took place after President-elect Donald Trump swept to victory last month, according to Goldman Sachs. The investment bank released its findings after analyzing the holdings of 697 hedge funds with $3 trillion in gross equity positions. Specifically, professional traders raised their exposure to financial stocks to the largest overweight in at least 15 years, according to Goldman’s data. That’s proven a winning trade as bank stocks have rallied dramatically since Election Day, partly on hopes that the new administration will roll back a series of government regulations. Stocks in the financial sector that saw the largest increase in the number of hedge fund owners in the third quarter included insurers Everest Group and W R Berkley Corp. , stock exchange operator Intercontinental Exchange as well as financial firms Raymond James Financial and Rithm Capital , according to Goldman. Daniel Sundheim’s D1 Capital added positions in Bank of America in the third quarter, making it one of the fund’s top holdings. Ole Andreas Halvorsen’s Viking Global owned US Bancorp , Visa and Progressive as its biggest holdings. Billionaire investor Stanley Druckenmiller built a sizable position in regional banks and made clinical genetic testing company Natera his biggest position last quarter — two bets that have been rallying since Trump’s election.. Utility plays Power producers were another group of stocks that gained popularity among stock-picking hedge funds anticipating Trump’s return to the White House. The energy names may benefit from the president-elect’s promised rollback of environmental regulations and his encouragement of the crypto industry and its enormous energy demands. VerityData looked at the top 10 holdings of “fundamental” hedge funds, or managers that disclosed 10 to 300 holdings worth $100 million or more. It found that Constellation Energy saw the biggest increase in hedge fund high-conviction ownership, including buying from Coatue Management and Lone Pine Capital. CEG YTD mountain Constellation Energy Energy names Vistra and Talen Energy also gained newfound love among these professional traders. Lone Pine Capital and Third Point held Vistra among their top positions at the end of September. Bet on China Big investors also returned to the Chinese market as stocks there continued to rally, according to Goldman. Hedge funds initially started piling into the developing market in September, after the government signaled a flood of stimulus measures in a bid to revive growth and avoid continued stagnation in the world’s second-largest economy. David Tepper of Appaloosa Management, who told CNBC he was buying “everything” related to China because of the latest government support, more than doubled his position in Temu parent PDD Holdings in the third quarter. Now, a quarter of hedge funds own at least one China ADR, the most since 2021, according to Goldman. Michael Burry, best known for calling the subprime mortgage crisis before the Global Financial Crisis in 2008, raised his stakes in JD.com, Alibaba and Baidu, while adding what appeared to be a hedge on his sizable bet on Chinese internet stocks. Other big moves Warren Buffett’s Berkshire Hathaway built a new $550 million stake in Domino’s Pizza last quarter. The pizza chain is in keeping with other, long-standing processed food investments by the sprawling Omaha-based conglomerate, and also fits into Berkshire’s value investment philosophy. Baupost’s Seth Klarman took a $195 million stake in discount store chain Dollar General last quarter, making it his eighth-largest holding. The retailer, which caters to more rural areas, has struggled this year and benn forced to slash its sales and profit forecasts. David Einhorn, who believes the stock market is the priciest he’s ever seen in his career, recently took a medium-sized position in agricultural equipment maker CNH Industrial.
