Each quarter Credit Suisse’s U.S. Equity Strategy team, led by Lori Calvasina, takes a deep dive into the stock level holdings of long-only, actively managed small, SMID, mid & large cap funds to see which stocks officially qualify as the most crowded trades on wall street. While the results obviously vary across the size categories, Tech, Healthcare and Financials seemed to be recurring themes for the most crowded sectors at the end of Q4 2016.
Within the small cap category, 16 of the top 25 names were Tech (mostly semis) or Healthcare companies.
Retailing was particularly popular among the Mid Cap basket with Ross Stores and O’Reilly Automotive taking the lead positions as most crowded. Meanwhile, Tech and Healthcare again represented 10 out of the 25 names.
In the least surprising grouping of all, Microsoft, Apple and Google all topped off the list of most crowded large cap stocks with Facebook and Amazon not far behind. Meanwhile Merck and Pfizer ranked near the top of the list in the healthcare sector and JP Morgan and Wells Fargo topped off the most crowded names among large cap financials.
Finally, the SMID category was, once gain, dominated by Healthcare and Tech names which accounted for half of the grouping’s most crowded trades.
And while not terrible shocking, we were amused to find that the most crowded trades underperformed their benchmarks in every single size category in 2016.
And, with a few exceptions, the names pretty much underperformed every quarter and every month out of the year as well.
Taking a look at the longer-term, Credit Suisse also points out that the crowded trades have consistently underperformed for the past 5 years.
And scouring the quarterly 13Fs of the most prominent hedge funds seemed like such a great idea…we knew it was a bad idea to track Paulson…oh well, back to the drawing board.