CRITERION: For the next hot share opportunity, it pays to follow the fast money

An IG markets survey highlights the most traded stocks – and there are plenty of surprises
Traders are willing to put on the likes of AI superstar Nvidia, but still prefer the home-comfort stocks
The volatility of the ‘meme’ stocks highlights the need for deft timing

When it comes to share valuations a small cohort of active traders calls the shots – a bit like the ‘silent majority’ that politicians bang on about when it suits them.

By knowing what stocks the wheelers and dealers are trading actively, investors can draw useful insights on the way shares behave and ‘the next big thing’ in terms of market themes.

Contracts for difference provider IG Markets provides some answers in a survey of 3,250 investor clients – mainly active traders – 550 from Australia and the others from the UK, Germany, Japan and Singapore.

“They are looking to get in and get out and they are going where the sectors or the stocks are hot,” says IG’s market analyst Tony Sycamore.

“They float like a butterfly and sting like a bee. They see opportunities and are in and out.”

So what’s taking their fancy?

For Australian clients the Nasdaq-listed AI stunner Nvidia remains the clear favourite, accounting for just under 6 per cent of IG’s ordinary share trades in the month of June.

This was followed by Nasdaq peers EV maker Tesla (3 per cent) and then Gamestop (2 per cent).

Tesla is a perennial trading fave, but Gamestop’s inclusion raises eyebrows. Shares in the supposedly obsolescent video games seller were meant to have had their 15 minutes of fame three years ago, when they soared on the back of an orchestrated ‘short squeeze’ campaign.

It seems like traders still like playing games with this stock.

Also a surprise, fourth placed is the ASX-listed drone detection play DroneShield (ASX:DRO) (2 per cent), which gained favour in the early days of the grinding Ukrainian conflict.

With a relatively modest $860 million market cap, Droneshield continues to garner a disproportionate attention.

Down-in-the-dumps lithium producer Pilbara Minerals (ASX:PLS) snares fifth spot, as traders decide whether the battery material has seen its best days or is merely quiescent.

Sixth placed is iron pure play Fortescue Metals Group (ASX:FMG), which has become a proxy for Chinese growth – or lack thereof.

Revived buy-now-pay-later provider Zip Co (ASX:ZIP) rounds out the ASX representation in ninth place.

Sycamore says he’s constantly surprised at how stocks hitherto obscure stocks bob up on the radar, only to drift off again.

One example is Nvidia Nasdaq-listed quasi peer Super Micro Computer, which provides computer servers for the AI revolution.

Super micro shares have soared 2300 per cent over the last five years and 56 per cent over the last 12 months but have dived 56 per cent over the last six months.

Similarly, shares in the ASX-listed, AI-exposed Appen (ASX:APX) have been going “absolutely nuts” – up 220 per cent year to date despite losing a major services contract with Google and a potential suitor withdrawing its indicative offer.

Sycamore adds there’s still momentum in the uranium sector, while the big miners generally have found favour as Beijing applies the smelling salts to its moribund economy.

On that note, many of IG’s clients are indeed traders and the smart ones got into Hong Kong’s Hang Seng index before it spiked 30 per cent between mid-September and early October.

The survey also shows that active traders might like an offshore flutter, deep down they prefer the comforts of home as much as a 70-year-old retiree.

Enticed by the dividend franking system, IG’s Australian respondents are allocating an average 56 per cent of their portfolio to the local market, compared with 32 per cent for the US.

“It doesn’t make a heap of sense,” Sycamore says.

“We know the ASX 200 is 2 per cent of the world’s stock market which means 98 per cent of the opportunity is offshore.”

To borrow from John O’Grady – a.k.a Nino Culotta – we’re a weird mob.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.