I have written a ton of posts on why hedge funds attract the best talent in the investing field (namely, compensation). Let’s look at a real time example to see if this theory holds up.
Morningstar has been tracking a portfolio they call the “Ultimate Stock Picker’s Portfolio” for a couple years. It is nearly impossible to track since there have been at least three authors over that period (Fuller, Owens, and Warren), and they don’t track the performance as far as I can tell (maybe there is a reason for that?). I took a post from the end of 2008 with the recommended list of 15 Ultimate Stock Picks. They were:
MSFT, WFC, COP, GE, EBAY, CMCSK, HD, PFE, WLP, MMM, DIS, UNH, SNY, COST, and LOW
If you bought that portfolio you would be up about 23% YTD, roughly in-line with the S&P 500.
However, what if you looked to the hedge funds instead for your stock ideas? At the end of 2008 I posted 5 Ideas for 2009 (which I will update in January). The last idea was to track the top stock picks of the Tiger Cubs. The list was:
QCOM, V, MA, AMX, PCLN, TDG, SD, SBAC, AMT, XTO
If you bought that portfolio you would be up about 60%, beating the S&P 500 by about 40%.
If you want to check out the current Tiger Cubs holdings, you can view them here.
