While mutual funds and hedge funds are two very different investment vehicles, they do share some of the same favorite stocks, according to Goldman Sachs. The firm recently analyzed 786 hedge funds with $2.3 trillion of gross equity positions and 548 mutual funds with $2.5 trillion of assets under management at the start of the fourth quarter. The shared favorites include stocks in health care, financials and tech. Two new names were added to the list this quarter. Constellation Energy and Workday replaced Centene and Elevance Health , Goldman U.S. chief equity strategist David Kostin wrote in a note Friday releasing the list. Each stock made Goldman’s Hedge Fund VIP and Mutual Fund Overweight baskets. The median-shared favorite stock trades at a 34% price-to-earnings multiple premium for the next 12 months to the median S & P 500 stock, which is above the long-term average of 18%. Profit growth for the median-shared favorite is expected to be 15% in 2023, compared to 7% for the median S & P 500 stock, Kostin said. The strategy has a history of outperformance. Since 2013, an equal-weighted basket of shared favorites has outpaced the S & P 500 in 58% of the months. The basket has underperformed the S & P 500 by 3 percentage points so far this year, “consistent with other periods of market stress,” Kostin wrote. However, since the market rally in June, it has outperformed the S & P, he said. Constellation Energy has been a big outperformer this year. Shares are more than 73% since its spin-off from Excelon was completed on Feb. 2, through Wednesday’s close. It is also a beneficiary of the Inflation Reduction Act , which includes federal tax credits for clean energy technologies, like existing nuclear plants and hydrogen production. The stock has about 7% upside to the average analyst price target, as of Wednesday’s close, according to FactSet. The other new name added, Workday, makes enterprise cloud applications for finance and human resources. Its stock has lost about 38% year to date. However, the company recently reported earnings that beat estimates. Its adjusted earnings per share for the third quarter was 99 cents on $1.6 billion in revenue. Analysts expected adjusted earnings of 84 cents per share and $1.59 billion in revenue, according to Refinitiv. Workday has about 20% upside to the average analyst price target, per FactSet. Uber Technologies is also among the favorite shared stocks. The ride-sharing platform, which just launched self-driving cars in Las Vegas, has recently been named an internet top pick by firms such as JPMorgan and Bank of America . Shares are down about 36% year to date and have nearly 76% upside to the average price target, as of Wednesday’s close, per FactSet. Wells Fargo ‘s stock rounds out the list. It is down about 12% in 2022. The bank has been seeing a slowdown in its mortgage business and in consumer spending . “We are expecting a fairly weak economy throughout the entire year, and hopeful that it’ll be somewhat mild relative to what it could possibly be,” CEO Charlie Scharf said in a conference Tuesday. FactSet’s average analyst price target implies nearly 27% upside from Wednesday’s close. — CNBC’s Michael Bloom contributed reporting.
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