Owning overcrowded trades that are most popular among hedge funds could be risky for individual investors in the event of a herd-like stampede by systematic traders, according to Morgan Stanley, which looked at stocks to avoid. The Wall Street firm studied the largest 70 hedge funds based on assets under management, and identified Russell 1000 stocks with the highest percentage of public float owned by them, based on the most recent 13F filings. “Crowded trades come with the risk of overvaluation and increased volatility as it may be more difficult to attract the marginal investor, while avoiding overcrowded stocks can provide investors with an opportunity to capture unrecognized value when paired with strong fundamentals,” Morgan Stanley strategists said in a note. Despite their popularity and performance, none of the megacap tech stocks made the list of overcrowded stocks. That’s because their enormous share count makes hedge funds’ ownership less significant. Morgan Stanley found that hedge funds were most overweight in consumer discretionary, industrial and health care stocks last quarter, while they were most bearish on technology and consumer staples companies. Car rental agency Avis Budget Group was the most crowded stock among hedge funds, with more than half of its float owned by the fast money crowd. Real estate owner and developer Howard Hughes Holdings and health-care company Incyte were also popular names last quarter. Janus Henderson , The New York Times , Planet Fitness and Wayfair were also on the list of crowded trades. — CNBC’s Michael Bloom contributed reporting.