Hedge funds top 2014 gains with these stocks

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

Returns for hedge funds in the first five months of the year have already surpassed the gain for all of 2014, a new report shows.

After lagging this bull market for six years, hedge funds are turning the tide in 2015, posting a gain of 5.4 percent through May compared with a return of 4.6 percent in all of 2014, according to Prequin, a research firm covering the alternative asset industry.

The S&P 500 was up 2.4 percent in the first five of months of 2015.

Excess returns by hedge fund managers are the result of this year's investment approach, which has been centered on stock selection rather than broad plays on macroeconomic events.

"Stocks selection is becoming more meaningful," said Ethan Powell, chief product strategist at Highland Capital Management, a $21 billion asset manager based in Dallas.

He noted that asset classes have been more correlated in the past, but that's starting change.

So what are the stocks helping hedge funds outperform this year?