20 Stocks Hedge Funds Love

When it comes to hedge funds, I often think of Winston Churchill's famous 1939 quote about Britain's then-ally against Germany: "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma."

But occasionally, a little ray of light is shined on what hedge funds are doing, courtesy of our good friends over at Goldman Sachs (please read that with a hint of sarcasm).

Every quarter, Goldman chief U.S. equity strategist David Kostin compiles a list of the 50 stocks that "matter the most" to hedge funds. The list is based on his analysis of 558 hedge funds with $429 billion in equity assets that own between 10 and 200 individual stock positions.

While the list is slightly dated -- the positions were current at the end of September -- it nevertheless provides an interesting peek behind one of Wall Street's most impenetrable curtains. And it also reveals how many of these seemingly sophisticated institutions invest in the very same stocks that we here at The Motley Fool recommend: large multinational corporations with consistent streams of income.

Rank	Company	Funds With Stock as Top 10 Holding
1	Apple (Nasdaq: AAPL  )	105
2	Google	58
3	Microsoft	50
4	JPMorgan Chase	31
5	Pfizer (NYSE: PFE  )	29
6	Qualcomm (Nasdaq: QCOM  )	29
7	General Motors	28
8	LyondellBasell Industries	24
9	Liberty Interactive	22
10	Baidu (Nasdaq: BIDU  )	21
11	Amazon.com	20
12	Anadarko Petroleum	20
13	Las Vegas Sands (NYSE: LVS  )	20
14	Visa (NYSE: V  )	19
15	Wells Fargo	19
16	Cisco Systems (Nasdaq: CSCO  )	18
17	ExxonMobil	18
18	Citigroup	17
19	Charter Communications	17
20	CIT Group	17

Source: Zero Hedge, citing Lionshare via FactSet, IDC, and Goldman Sachs Global ECS Research.

Foolish bottom line
While there's no use in trying to invest like a hedge fund -- and who'd want to in light of the abysmal track record that many of them have had over the last few years? -- it doesn't hurt to know what they're up to. If you are on the hunt for a great stock recommendation, however, you should check out our most recent free report: "The Motley Fool's Top Stock for 2012." It details a little-known company that we believe could be the next "Costco of Latin America." To access this free report before the rest of the market catches on, click here now.