Will looking under the hedge fund hood reveal investment gems - or are you driving by looking in the rear view mirror?

The 13Fs are arriving and it is that time again - time to look under the hood and see what all the top hedge funds are up to. This post is particularly timely as my truck just blew a gasket and I am now carless.

(For background on this approach, check out the following links - Show Me Your Hand - Betting on the Smart Money & How to Really Trade Like Warren Buffett.)

Below is a table of updated performance figures for the two strategies we track, followed by individual fund holdings and commentary. In our previous backtests, we found that the strategies outperformed the stock indexes by 6-12% per year since 2000 with similar volatility. Is the outperformence a statistical artifact based on survivor bias, or will the strategies hold up out-of-sample?

As you can see, both strategies are outperforming the indexes by quite a wide margin.

Hedge Fund Consensus - Top holdings owned by 15 value hedge funds, ranked by # of funds with the same position. The biggest winners last quarter were Schwab (SCHW) and Google (GOOG) at 33% and 24%, respectively. The biggest losers were Crocs (CROX) and Comcast (CMCSK) at approximately -23%.

Hedge Fund Best Ideas - Top two holdings from each of 10 value hedge funds listed below. The biggest winners were Mastercard (MA) at 38% Apple (AAPL) at 32%.