Hedge funds are the all-star teams on Wall Street. They command the highest fees and attract many of the best investing minds.
Looking at what the 50 biggest hedge funds are buying and selling is akin to looking at what the Ivy League universities are doing. They're trendsetters.
This doesn't mean they always get it right. Even the top investors have their blunder years (Paulson & Co. certainly had a lackluster 2014, enough to knock founder John Paulson out of the top 25 highest paid hedge fund manager list).
But it's useful to see what they're up to. The world gets a peak four times a year when hedge funds have to file their 13F reports to the Securities and Exchange Commission with details of their stock purchases and sales.
Apple (AAPL) remains the largest bet among the top 50 hedge funds, according to an analysis by FactSet. That's hardly a surprise. Plenty of regular joe's are betting on Apple stock, too.
Related: Apple stock is making regular Americans rich
What's more interesting is looking at investments that hedge funds buy more of or get rid of. Here are 6 stocks that hedge funds added heavily to in the first three months of this year:
1. Qualcomm
Wireless tech company Qualcomm (QCOM) has been a solid bet for many years as mobile phones took off and their products were everywhere. But the stock plateaued in the past year and dipped sharply in January after the company scaled back its financial projections for 2015. The stock is still down about 7% year-to-date.
Activist hedge fund managers have started to take notice. They still see potential if the company makes changes. Barry Rosenstein of Jana Partners, for example, wants the company to spin off its chip unit from its licensing business.
Related: America's 10 fastest-growing big companies
2. Valeant Pharmaceuticals
Pharma has been a hot sector overall in the market, but Canadian company Valeant (VRX) has led the pack. It's up nearly 60% so far this year thanks largely to its big acquisitions (it bought Salix for $10 billion in February) and the backing of hedge fund king Bill Ackman.
Ackman has gone as far as calling Valeant the "next Berkshire Hathaway," a reference to Warren Buffett's company and how "perpetually undervalued" both companies are. Valeant has made over 100 acquisitions in seven years, which helps explain why its revenues have doubled in the past three years.
3. Energy
Smart investors look to buy low and sell high. As oil prices plummeted at the end of last year and into January, many investors looked around for bargain buys that would be great moneymakers when energy prices go back up.
Top hedge funds increased their bets in Williams Partners (WPZ), Energy Transfer Partners (ETP), Kinder Morgan (KMI) and Enterprise Products Partners (EPD). They also took a new stake in Columbia Pipeline Partners (CPPL). All of these companies are considered energy infrastructure plays. They mostly make pipelines, and transport gas and process it instead of doing the actual drilling.
4. JD.com
Everyone wants a bite out of China's rising middle class. While Alibaba was the talk of the investing world in 2014 with its record-breaking IPO, rival e-commerce site JD.com (JD) is this year's darling. It's up over 45%.
While Alibaba (BABA)made the list of top 10 stocks that hedge funds sold in the first quarter, JD.com was on the list of the top 10 stocks that saw the biggest position increases. A lot of that has to do with strong earnings and the perception that JD.com doesn't have as many problems with counterfeit goods as Alibaba. It also doesn't hurt that the stock is the biggest position of hedge fund Tiger Global, which quadrupled its holding earlier this year.
5. Visa
Most stores accept both Visa and MasterCard, but hedge funds have a clear choice of which stock they prefer. MasterCard (MA) was among the stocks that hedge funds sold the most of in the first quarter, while they added to Visa (V).
It's an interesting trade. Mastercard is actually up slightly more than Visa this year, although they are almost neck-in-neck. The two are facing more competition from PayPal and Apple Pay.
6. McDonald's
The notorious fast food restaurant has been upfront about its Supersized problems. Hedge funds likely took more interest in McDonald's (MCD)after it fired its CEO in January and brought in a new one. New CEO CEO Steve Easterbrook has already vowed to upgrade the chain's food (think sirloin burgers and artisanal sandwiches).
There's still a long way to go, especially with workers calling for better wages and Millennials flocking to Chipotle and Shake Shack, but some hedge funds are betting on a turnaround.
