Owning overcrowded trades that are most popular among hedge funds could be risky for individual investors in the event of a herd-like stampede by systematic traders, according to Morgan Stanley, which looked at stocks to avoid.
Despite their popularity and performance, none of the megacap tech stocks made the list of overcrowded stocks.
That's because their enormous share count makes hedge funds' ownership less significant.
Morgan Stanley found that hedge funds were most overweight in consumer discretionary, industrial and health care stocks last quarter, while they were most bearish on technology and consumer staples companies.
Janus Henderson , The New York Times , Planet Fitness and Wayfair were also on the list of crowded trades.
Persons:
Morgan Stanley, Russell, Howard Hughes, Janus Henderson, — CNBC's Michael Bloom
Organizations:
Avis Budget Group, Howard Hughes Holdings, The New York Times
Locations:
The