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Secrets of the Smart Money

When the fastest, riskiest money says "no mas" to risk, you might want to take notice.

And that's exactly what Goldman Sachs says the hedge fund community is doing.

“In this market I do think you have to be a stock picker,” says Fast Money resident hedge fund manager Karen Finerman.

In other words rather than bet on a large cyclical comeback -- hedge funds, such as Finerman's Metropolitan Capital, are now sifting through individual names, separating winners from losers.

Goldman points to some new hedge fund favorites. They are:
Wells Fargo
Merck
Amazon
Target
Freeport McMoRan
Source: Goldman Sachs

We highlight this VIP list, because when you take a look at the returns from the March lows, they've outperformed the S&P 500 by 13%.

But just because these stocks are hedge fund favorites doesn't mean they are all Finerman's favorites. "I like Target but I just can't get behind the valuations in Amazon," she reminds.

"It's not a binary world anymore," adds Joe Terranova. "You have to look at individual stocks and find the value in them."

Fast Money executive producer John Melloy wrote about this trend at length in his blog Behind The Money. For much more on secrets of the smart money click here.


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Trader disclosure: On February 24th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kaminsky Owns (EPV); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Pete Najarian Owns (CMC) Call Spread; Pete Najarian Owns (NFLX) Put Spread; Terranova Owns (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT); Terranova Is Long April Crude Oil Futures; Terranova Owns (GLD) March Puts; Terranova Is Long Dec. 2010 Crude Oil Futures; Seymour Owns (X); Kelly Owns (HOV) Calls; Kelly Owns (FXE) Puts
Kelly Owns (HOV) Calls; Kelly Owns (AMZN) Calls; Kelly Owns (FXE) Puts’ Kelly Owns (ELX) Call; Kelly Owns (QLGC) Calls; Finerman's Firm Is Long S&P Puts; Finerman Owns (TM); Finerman's Firm And Finerman Own (CVS); Jon Najarian Owns (CROX), (CROX) Calls

For Tim Seymour:
Seygem Asset Management Owns (FCX) Puts
Seygem Asset Management Owns (POT) Calls

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Brian Kelly:
Kanundrum Capital Owns (C)
Kanundrum Capital Owns (JPM)
Kanundrum Capital Is Short March Copper Futures
Kanundrum Capital Is Short July Copper Futures
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Japanese Yen
Kanundrum Capital Is Short Singapore Dollar
Kanundrum Capital Is Short British Pound
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short U.S. Treasuries
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (GDXJ)
Kanundrum Capital Owns (HOV)
Kanundrum Capital Owns (PHM)
Kanundrum Capital Owns (TOL)
Kanundrum Capital Owns (ELX)
Kanundrum Capital Owns (QLGC)
Kanundrum Capital Owns (VMW)
Kanundrum Capital Owns (EMC)
Kanundrum Capital Owns (EWP)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Is Short (GRMN)
Kanundrum Capital Is Short (FCX)
Kanundrum Capital Is Short (TAO)


CNBC.com with wires