The hedge fund community bought a slew of stocks with conviction during first quarter’s market turmoil, according to Morgan Stanley. The Wall Street firm analyzed hundreds of 13F filings last week to find the most popular stocks hedge funds picked up over the volatile quarter. Money managers with more than $100 million in assets under management are required to disclose long positions with the Securities and Exchange Commission 45 days after a quarter ends. Morgan Stanley looked at the largest 70 hedge funds by equity assets under management, screened stocks under the Russell 1000 universe, and then found stocks that had the biggest percentage increases in share ownership. Hedge funds piled into Victoria’s Secret in the first quarter, buying the dip in the lingerie retailer, which has seen its shares fall 29% this year. The company was spun off from L Brands in 2021, but it has struggled to turn around its business after losing market shares to its peers. Hedge funds also increased their ownership in financial names Western Alliance and Western Union last quarter. Western Alliance, in particular, has been struggling amid concerns about deposit outflows. The impact of higher interest rates led to a run on deposits at Silicon Valley Bank, Signature Bank and First Republic, which were all seized by regulators in the span of a few weeks. Western Alliance has tumbled more than 40% this year, while Western Union is down about 11%. It’s unclear if it was a short-term trade for hedge funds or a conviction bet that the industry would survive the crisis without severe damage. Hedge funds also bought into First Republic Bank in the first quarter before its demise. JPMorgan this month acquired all of First Republic’s deposits and a “substantial majority of assets.” To be sure, it’s possible that some of the hedge funds were covering their short bets in this position. A number of biotech names were also high-conviction bets for hedge funds, including Syneos Health , Horizon Therapeutics and Ginkgo Bioworks.
