Stock picks, long-short strategy to beat the market: Bank of America - Business Insider
Aug 13, 2020 55 secs

Bank of America says there's a pretty simple way to do it based on the choices made by the managers of active hedge funds.

Yes, you can copy their strategies and make money when they do, but you can also bet against them and wait for the laws of markets and gravity to profit when the least-loved stocks start to outperform.

"Buying the 10 most underweight stocks and selling the 10 most overweight stocks by active funds has generated alpha in most years," wrote Savita Subramanian, the head of US equity and quantitative strategy, in a note to clients.

At RBC, Head of US Equity Strategy Lori Calvasina notes that the performance of the stocks hedge funds own the most of has been "choppy" this year, underperforming the market in May, pulling ahead from June and mid-July, slipping again, and most recently trading about even with the market.

With the strategy's credentials laid out, here are the 10 stocks that BofA finds hedge funds are the most exposed to as determined by their reported long exposure minus their estimated short exposure.


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