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Hedge funds flip-flop on Verizon, Visa, Gilead

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Hedge funds have done an about-face on a group of crowded stock bets.

Investment managers had bet against Verizon and Walgreen, but both positions are now popular long bets for hedge funds, according to a new review of 777 portfolios by Goldman Sachs using data as of March 31.

Verizon fell 3.19 percent from January to March, but is up 1.2 percent as of May 23. Walgreen gained nearly 15 percent in the first quarter and is up about 22 percent as of Friday.

Similarly, managers flip-flopped on Express Scripts, Gilead Sciences and Visa. All three stocks were popular "long bets" on their value increasing; they are now among the 50 top shorts, according to Goldman Sachs.

Visa fell about 3 percent in the first quarter and is down 4.8 percent for the full year. Express Scripts gained 6.9 percent over the first three months of the year but is down 0.14 percent so far in 2014. Hedge funds have also switched Gilead to a negative bet despite the company gaining 7.78 percent this year.

Goldman Sachs Hedge Fund "VIP" stocks

Top longs YTD return Top shorts YTD return
Google-6%Gilead Sciences8%
General Motors-16%IBM1%
AIG3%Exxon Mobil1%
Time Warner Cable1%Intel1%
American Airlines53%Visa-5%
Citigroup-11%Walt Disney5%
Microsoft8%Johnson & Johnson11%
Hertz-1%Wal-Mart Stores-1%

Read MoreHedge funds burned by most popular stocks

Goldman Sachs said that quarterly turnover—the portion of holdings that are bought or sold—across all hedge fund positions rose slightly to 29 percent from record lows after dropping for three consecutive quarters. But managers are still sticking with their favorites: Turnover of the largest quartile of holdings remained at an all-time low of 15 percent, according to the analysis.

The most important industry sectors for new hedge fund investment were trucking, financial services and specialty stores. Managers also dumped stocks in leisure facilities, auto parts and car manufacturers more than any other sectors.

Generally, the largest allocations by hedge funds were in consumer discretionary, energy, information technology and financials.

Hedge funds underperform S&P 500 YTD

Read MoreActive funds losing big. Here's why

It's been a difficult year for many in the industry. The average hedge fund has lost 0.2 percent through May 16, according to Goldman Sachs. Stock-focused funds have fared worse, losing 2 percent.

—By CNBC's Lawrence Delevingne.