2018 was the year hedge funds were supposed to finally outperform the S&P. Alas, as the latest Goldman Sachs hedge fund trend monitor - a survey of 848 hedge funds with $2.3 trillion of gross equity positions ($1.6 trillion long and $702 billion short) as of March 31, 2018 - that was not meant to be, and while the hedge fund hotel basket of most popular stock is just marginally outperforming the S&P YTD, both the equity hedge fund index, the composite hedge fund index, and the global macro hedge fund index are all trailing the S&P500. Again. Yet amid this chronic underperformance, we should note that less than three weeks after we reported that the Goldman Hedge Fund VIP basket was getting slammed in late April, mostly as a result of a hit to the tech sector and FAANGs, it has since recently recovered, largely thanks to the previously discussed wholesale short squeeze, mostly among tech, healthcare and energy names. Also of note: strong fundamental results did not result in strong performance: the average outperformance of stocks beating earnings estimates was less than half the typical amount. As a result, funds apparently trimmed their top positions. And so, in late April, Goldman's VIP basket of the most popular hedge fund long positions (ticker: GSTHHVIP) underperformed a basket of stocks with the highest short interest (GSTHVISP) by nearly 400 bp, lagging for six days in a row. In the last few weeks, as noted above, these favorite positions have recovered. As discussed previously, during these sharp rotations in the past month, a major short squeeze was taking place, however that failed to dent the conviction of the smart money, and "hedge fund crowding" in the most popular positions rose slightly in 1Q and remains elevated relative to history. As a result, as shown in the chart below, the average hedge fund holds 68% of its long portfolio in its top 10 positions, the highest level in two years and slightly below the record “density” of 69% in 1H 2016. Similarly, the share of S&P 500 market cap accounted for by the 10 largest index constituents has risen in recent years and now sits at 22%, modestly above the historical average but the highest share this cycle. That about covers the macro picture. What about at the micro, single-stock level? Here, too, there were some notable shifts. First, as Goldman points out, during 1Q, Facebook was the stock with the largest increase in popularity, with hedge funds viewing the stock’s volatility as a buying opportunity. As a result, 53 funds built a new position and 60 funds added to existing positions in FB, while 53 funds trimmed or dropped the stock completely during the quarter. Furthermore, at the start of 2018, Facebook ranked as #2 in Goldman VIP basket of most popular hedge fund positions. The list below shows the names with the largest net increase in fund popularity. And while the #1 stock was Amazon, it also experienced the largest drop in popularity among all stocks during 1Q. This quarter, Facebook and Amazon again appear as the top two VIP stocks, but with their relative positions flipped. AAPL, GOOGL, and NFLX also appeared among the stocks with the largest declines in popularity, even though tech stocks remain the sole "leaders" of the broader market. Which brings us to the 50 stocks that matter the most to hedge funds, i.e. the Goldman Hedge Fund VIP list, also known as the "Hedge Fund Hotel California." Finally, for those who are convinced that it's only a matter of time before a massive squeeze sends the most shorted names soaring, here is the list of the 50 stocks representing the largest short positions among hedge funds.