These are the top 5 stocks owned by Hedge Funds

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In a recent note from Wednesday, strategists at Jefferies said that hedge funds entered 2024 with a more cautious approach, reducing their overall risk exposure to below the long-term average at 166%.

Specifically, these funds have adjusted their investments toward the so-called Secular Growth sectors as they move into 2024, yet they remain overweight (OW) by 7% in these areas, which account for half of their portfolio.

Despite decreasing their stake in Secular Growth, investors have increased their investments in what Jefferies refers to as the 'Sweet 16' (akin to the 'Magnificent 7'), with their allocation in these specific stocks reaching 36%, the highest since July, and standing 3.3% overweight compared to the S&P 500.

“The big cut in Secular Growth's weight took place in Health Care, as the group was trimmed by over 10% from the previous month, but was OW by 4%. Comm Services was trimmed once again, with the weight now at 12.2% vs. its recent peak of 19.0%,” analysts said in the note.

The tech sector saw its weight in hedge fund portfolios increase to 25.4% from 19.7% just a month prior. However, even with this increase, the sector is still underweight (UW) by more than 3% relative to the S&P 500.

The investments from Secular Growth were mainly shifted to Cyclicals, increasing their weight in the latter to