A key, contrarian data point smart fund managers look at is how "crowded" a stock is in terms of institutional ownership. Credit Suisse steered clients away from a list of these most over-owned names in a report at the end of last week.
The firm aggregated all the positions from 1,350 actively managed funds, using Lipper, Morningstar and eVestment institutional ownership data. It then compared the position size versus the average weighting in actively managed funds to create its rankings.
The Credit Suisse "darlings of active managers" lists consist of the "most crowded names by size category, includes core, growth and value style funds, in terms of the number of funds that own the name," strategist Lori Calvasina wrote in the note clients Friday.
"We recommend against owning too many of these names due to: (1) less opportunity for differentiation, (2) underperformance over the life of our study and heightened risk of underperformance if news flow turns negative, and (3) ongoing outflows from actively managed funds as the shift into passive continues."
In similar fashion, Bank of America Merrill Lynch's Savita Subramanian has said it's more difficult for crowded stocks to move higher since everyone is already in the trade. When sentiment shifts there may be more downside risk as investors flee for the exits at once, she said.
Here are nine "most crowded" stocks over-owned by fund managers, according to Credit Suisse.