The U.S. stock market has experienced significant growth in trading volume over the past five years. According to World Bank data, the total value of stocks traded in the U.S. rose from approximately $36.3 trillion in 2019 to over $44.3 trillion in 2022. As of March 11, 2025, the total consolidated volume reached 19.3 billion shares, with major exchanges like the NYSE and NASDAQ playing a pivotal role in driving this activity.
Correlation Between Trading Volume and Stock Returns
Studies have shown a direct relationship between trading volume and stock returns. Research on the BRVM indicates that stocks with increased volume often see a corresponding change in their return profile. This highlights the appeal of highly active stocks to investors, as they tend to benefit from greater market interest, which can drive short-term price momentum.
Despite strong trading volume, the broader U.S. stock market is currently facing heightened volatility. Major indices have dropped nearly 9% over the past month, erasing late-2024 gains. This downturn is primarily fueled by trade tensions and policy shifts, including newly imposed tariffs on imports from China, Mexico, and Canada, which have raised investor concerns.
The uncertainty surrounding trade policies has led to increased caution among investors and adjustments in financial forecasts. Notably, Goldman Sachs has revised its year-end target for the broader market from 6,500 to 6,200, citing policy instability and tightening financial conditions. The tech-heavy Magnificent Seven stocks have also faced pressure, collectively declining by 14% in the last three weeks.
Hedge Funds Target High-Volume Stocks for Liquidity and Volatility
Amid market uncertainty, hedge funds continue to favor high-volume stocks due to their liquidity and short-term trading potential. Data from leading electronic trading platforms shows that hedge funds’ share of trading volumes in the European government bond (EGB) secondary market surged from 26% in 2018 to 56% in 2023, underscoring their preference for active markets where swift entry and exit strategies can be deployed.
Our Methodology
To identify the 10 most active U.S. stocks to buy according to hedge funds, we used the Finviz stock screener to filter stocks with an average trading volume exceeding 2 million shares. These stocks were then ranked based on hedge fund sentiment data from Insider Monkey, using Q4 2024 13F filings to determine institutional interest. The stocks are ranked according to the number of hedge fund holders.
At Insider Monkey, we track hedge fund investments because our research has shown that imitating top stock picks from leading funds can outperform the market. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 373.4% since May 2014, outpacing its benchmark by 218 percentage points (see details here).
Is Palantir Technologies Inc. (PLTR) the Most Active U.S. Stock to Buy According to Hedge Funds?
Palantir Technologies Inc. (NASDAQ:PLTR)
- Number of Hedge Fund Holders: 64
Palantir Technologies Inc. (NASDAQ:PLTR) is a software company specializing in data analytics and artificial intelligence, serving counterterrorism and enterprise operations.
Palantir recently announced a strategic joint venture with TWG Global to drive AI adoption in financial services, banking, investment management, and insurance. This partnership combines Palantir’s cutting-edge AI infrastructure with TWG’s expertise in business operations, offering a fully integrated, enterprise-wide AI solution. The initiative is led by Palantir CEO Alex Karp and AI expert Drew Cukor, formerly of JPMorgan and the Pentagon’s Project Maven.
Palantir reported impressive Q4 2024 results, posting revenue of $828 million—a 36% year-over-year increase. U.S. revenue surged 52% YoY to $558 million, with commercial revenue climbing 64% YoY to $214 million. The company closed 129 deals worth at least $1 million, including 32 deals exceeding $10 million, signaling continued enterprise adoption. Palantir also generated $460 million in cash from operations and $517 million in free cash flow, reinforcing its strong financial position.
