Image source:

Hedge funds have underperformed the market in recent quarters. The HFRI Fund Weighted Composite Index, a broad measure of hedge fund returns, has fallen just over 4% in the last 12 months. In comparison, the S&P 500 has risen nearly 1.5%. Still, investors remain intrigued by hedge funds and the stocks they hold. Although hedge funds in general may underperform, top hedge fund picks often offer strong returns.

Last month, quarterly 13F filings revealed the holdings of hedge funds as of the end of the first quarter. Investment bank Goldman Sachs (via Forbes) analyzed the filings of more than 800 different hedge funds, creating a list of the most popular stocks. Here are the five most commonly held stocks by these hedge funds as of the end of March.

75 hedge funds have Facebook in their top 10

Social network Facebook (NASDAQ:FB) is a favorite among hedge fund managers. 75 different funds counted it as a top 10 holding at the end of the first quarter. 113 other funds had it in their portfolio. On average, among those funds that did have it as a top 10 position, it accounted for roughly 7% of the funds' capital. Facebook's hedge fund popularity has risen, somewhat, in recent months -- it was the second-most commonly held hedge fund stock at the end of last year. Hedge fund legends Steve Cohen, Ole Andreas Halvorsen, and Stephen Mandel were notable investors.

Overall, it's been a solid year for Facebook investors. Year-to-date, shares have risen nearly 9%. Facebook has turned in a string of solid earnings reports, and enthusiasm surrounding its recent acquisitions of WhatsApp and Oculus, has continued to build. 

Google's parent company is a popular investment

Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), the holding company that owns search giant Google, is the second-most popular stock among the hedge funds Goldman tracks, up from the third-most common at the end of last year. 64 different funds made it a top 10 position at the end of the first quarter, and it accounted for about 6%, on average, of those funds' capital. 103 other funds owned it in some capacity. Halvorsen and Cohen owned Alphabet at the end of the first quarter, as did Leon Cooperman and David Tepper.

Year-to-date, Alphabet has underperformed the market, falling almost 6%. Notably, the company's April earnings report proved disappointing, as Alphabet's results fell below analyst's expectations. Still, Google continues to grow, and its foray into artificial intelligence and the smart home could eventually reward shareholders. 

Allergen is a notable exception

Four of the top five most commonly held stocks among the hedge funds Goldman tracks are technology companies. Allergen (NYSE:AGN) is the third most commonly held, and the only non-technology firm on the list. 63 hedge funds had it among their top 10 positions as of the end of the first quarter, with an average portfolio allocation of about 6%. 113 other funds owned Allergen in some capacity. Allergen's relative popularity has declined, somewhat, in recent months -- at the end of last year, it was the most commonly held stock. Notably, it was hedge fund manager John Paulson's single-largest holding. Dan Loeb and Paul Singer were also invested in the company.

Funds that dumped Allergan may have made a smart move, as shares of the company have tumbled more than 22% in 2016. Allergan had been set to merge with drug giant Pfizer, but the companies called off the merger after the U.S. Treasury adopted a rule that would've limited the tax advantages Pfizer was set to gain by merging with Irish-based Allergan.

Amazon's popularity with hedge funds is rising

Amazon (NASDAQ:AMZN) was the fourth-most commonly held stock among the hedge funds Goldman tracks, up from the fifth-most popular at the end of last year. 58 hedge funds made it a top 10 holding at the end of March. On average, those funds dedicated about 7% of their capital to Amazon. 83 other funds owned Amazon in some capacity. Chase Coleman's Tiger Global was among them.

Amazon is the second-best performing stock on this list, behind only Facebook. Shares of the Internet retailer have risen more than 5.8% this year. The company benefited from a strong earnings report in April, and rising interest in its hardware, including its Fire tablets and the Amazon Echo. 

Apple rounds out the top 5

Apple (NASDAQ:AAPL) was the second-worst performing stock, as shares have fallen about 7.50% this year. iPhone sales appear to have finally peaked, and Apple's other products haven't been able to pick up the slack. Last quarter, Apple's revenue declined 13% on an annual basis as iPhone unit shipments fell 16%.

But among hedge funds, it remained a favorite in the first quarter. 53 different hedge funds made it a top 10 holding; 84 owned it in some capacity. Among those funds that counted it among their 10 largest positions, Apple accounted for an average of 7% of their capital. Notable funds included David Einhorn's Greenlight Capital and Chase Coleman's Tiger Global.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.