UnitedHealth makes Goldman’s coveted hedge fund VIP basket that’s up 15% this year

Goldman Sachs' 'Hedge Fund VIP' basket, comprising the 50 most popular long positions among 981 fundamentally driven hedge funds, has significantly outperformed the S&P 500 year-to-date (15% vs. 8%) and historically by 50 basis points quarterly since 2001. Notably, UnitedHealth was a significant new addition, held by 15 funds in their top 10, and saw a 21% surge last week following disclosures from prominent investors like Warren Buffett, Michael Burry, and David Tepper. Other notable additions included Skechers, Insmed, SharkNinja, and AMD, while the 'Magnificent Seven' and chipmakers like TSMC and Broadcom remained prominent. The basket's composition reflects key institutional conviction plays amidst elevated hedge fund turnover driven by market volatility.

Analysis

Goldman Sachs' 'Hedge Fund VIP' basket, a portfolio of 50 stocks most popular among 981 fundamentally driven hedge funds, is demonstrating significant market outperformance with a 15% year-to-date gain, compared to the S&P 500’s 8% advance. This performance is consistent with its long-term track record of delivering an average of 50 basis points of outperformance each quarter since 2001. A key development in the latest quarter was the inclusion of UnitedHealth (UNH), which now features as a top-10 holding for 15 different funds, indicating strong institutional conviction in the previously 'beaten-down' insurer. This sentiment was amplified by disclosures of significant stakes from prominent investors like Warren Buffett, Michael Burry, and David Tepper, which directly catalyzed a 21% surge in UNH shares last week. While the 'Magnificent Seven' and major chipmakers such as Taiwan Semiconductor and Broadcom continue to anchor the top of the list, the addition of UNH alongside names like Skechers and AMD occurred amidst the highest hedge fund position turnover since 2021, signaling active and decisive capital reallocation in response to market volatility.

Key Decisions for Investors

• Given the VIP basket's consistent historical outperformance, investors should consider its composition as a high-conviction signal and a potential source for alpha-generating ideas.
• The strong institutional buying and accumulation in UnitedHealth by prominent investors like Warren Buffett suggests a bullish consensus, warranting a re-evaluation of the stock for a potential long position.
• While the sentiment for UNH is positive, investors should note the stock has already rallied 21% and that the VIP basket remains heavily concentrated in mega-cap technology and semiconductor names.
• The high portfolio turnover among hedge funds signals an active and potentially volatile market, suggesting investors should remain vigilant for further high-conviction rotations into different sectors or stocks.