These are the trades that are most heavily invested in by the largest hedge funds.

Morgan Stanley has warned that individual investors might face challenges when buying stocks favored by hedge funds due to the risks of high valuations and increased volatility. The firm analyzed the 70 largest hedge funds by assets under management and pinpointed Russell 1000 stocks with the highest percentage of public float owned by these funds, based on the latest 13F filings. According to Morgan Stanley strategists, “Crowded trades carry the risk of overvaluation and heightened volatility, making it harder to attract new investors. Conversely, avoiding these crowded stocks can offer opportunities to find undervalued investments with strong fundamentals.” Avis Budget Group, a car rental company, topped the list of stocks heavily owned by hedge funds, with over half of its float held by professional traders. Other notable names included aerospace and defense firm Loar Holdings and real estate company Howard Hughes. Additionally, Janus Henderson, The New York Times, Planet Fitness, and Wayfair were popular among hedge funds in the last quarter. The strategists emphasized that the concept of crowdedness is relative and should be used as a starting point for generating investment ideas, advising investors to conduct further research before making decisions. — Reporting by Michael Bloom of CNBC contributed to this summary.