Big-money investors are piling into these 10 'rising suns'

  • Investors looking for stable growth stocks can get ideas from the holdings of equity funds that are focused on large-cap investing and only long stocks.
  • Each quarter, RBC analyzes hundreds of long-only large-cap fund holdings to see what stocks they are buying the most.
  • RBC calls these stocks "rising suns," because they have a tendency to climb gradually after being bought. 
  • In the third quarter, healthcare names were popular among large-cap funds.

Investors looking for stable growth stocks can get ideas from the holdings of equity funds that are focused on large-cap investing and only long stocks.

Usually, large-cap stocks have less variability and volatility than small-cap stocks, and long positions are less risky than short positions as the latter's potential loss is unlimited. 

Each quarter, RBC analyzes hundreds of long-only large-cap fund holdings to see what stocks they are buying the most. RBC calls these stocks "rising suns," because the firm says they usually climb gradually after being bought.

In the third quarter, healthcare stocks were a popular addition, probably related to rising confidence in the sector after Democrats won the House in the 2018 mid-term election.

Nearly all of these risings stars had better return rates than the S&P 500; however, just half are outperforming the benchmark in the current quarter.

Below are the 10 "rising suns" that have seen the most new positions added by large-cap funds in the third quarter. They are ranked in ascending order based on the changes in the number of funds that own the stock on a quarterly basis:

10. Simon Property GroupMI

Ticker: SPG

Changes in the number of funds that own the stock: 17

Percentage owned by large-cap funds: 23%

3Q18 relative return to S&P 500: 11.4%

 

Source: RBC



9. NvidiaMI

Ticker: NVDA

Changes in the number of funds that own the stock: 17

Percentage owned by large-cap funds: 23%

3Q18 relative return to S&P 500: 11.4%

 

Source: RBC



8. Norfolk SouthernMI

Ticker: NSC

Changes in the number of funds that own the stock: 17

Percentage owned by large-cap funds: 16%

3Q18 relative return to S&P 500: 12.4%

Source: RBC



7. MedtronicMI

Ticker: MDT

Changes in the number of funds that own the stock: 17

Percentage owned by large-cap funds: 29%

3Q18 relative return to S&P 500: 7.7%

 

Source: RBC



6. IlluminaMI

Ticker: ILMN

Changes in the number of funds that own the stock: 18

Percentage owned by large-cap funds: 13%

3Q18 relative return to S&P 500: 24.2%

 

Source: RBC



See the rest of the story at Business Insider

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