A hand of high-conviction stock picks from hedge funds and notable investors could be primed to trounce the market in the new year. The financial sector has gained newfound love in the hedge fund community since the election of former President Donald Trump. Professional traders raised their exposure to financial stocks to the largest overweight in at least 15 years, according to Goldman Sachs, which analyzed the holdings of 697 hedge funds with $3 trillion in gross equity positions.
LPL Financial Financial service firm LPL Financial stood out as the most concentrated hedge fund long position in the sector with 16% of equity cap owned by hedge funds at the end of the third quarter, Goldman's data showed. Stephen Mandel’s Lone Pine Capital hiked its bet on LPL Financial last quarter, taking the stake to over $500 million. Dan Loeb's Third Point also recently added a new stake in the stock, worth $112 million. Financial stocks have rallied dramatically since Election Day, partly on hopes that the new administration will roll back a series of government regulations. Shares of LPL Financial have surged 41% in the fourth quarter. Big investors also grew interested in Chinese stocks as of late with a quarter of hedge funds now owning at least one China ADR, the most since 2021, according to Goldman. The enthusiasm was ignited by the Chinese government's signal of wide-ranging stimulus measures in a bid to revive growth and avoid continued stagnation. In November, China unveiled a five-year stimulus package totaling 10 trillion yuan to tackle local government debt problems, while indicating more economic support would follow next year. JD.com Chinese e-commerce giant JD.com became a popular stock among high-profile investors. David Tepper of Appaloosa Management, who told CNBC he was buying 'everything' related to China because of the latest government support, owned the name as one of his top holding