2023-04-04 07:10:00 ET
Summary
- The most popular blue chips among hedge funds is a potentially useful source of investing ideas, if you also factor in valuation.
- Here are the 10 most popular blue-chips among hedge funds, owned by 10% to 28% of them, based on 13-F regulatory filings.
- Seven of these are historically undervalued and potentially reasonable to table-pounding great buys.
- Of those seven, six are non-speculative, with businesses firing on all cylinders and strong balance sheets that can survive and thrive through the recession.
- If you're looking to invest alongside Wall Street's richest and most powerful names, these six world-beater blue-chips are potentially reasonable and prudent long-term buys right now.
This article was published on Dividend Kings on Monday, April 3rd.
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There are many ways to get investing ideas, including following along with some of the largest institutional investors in the world.
Hedge funds and other institutions, including Berkshire Hathaway Inc. ( BRK.B ), file 13-F filings that let us know what they own, with a 3-month lag.
Mirroring hedge funds is not a smart idea since we don't know why they bought a company or their fund goals or risk-profiles.
- hedge funds can sell their entire position for any reason without warning.
However, cross-referencing the most popular hedge fund ideas with the Dividend King's safety and quality scores and valuation ratings is a reasonable way to get an idea of what world-beater blue-chips might be worth buying today.
Yahoo Finance periodically scans 943 hedge funds for their largest holdings, and comes up with lists of the 10 most popular companies owned by some of the biggest funds on earth.
Let's take a look at what 10 blue-chips are most popular with hedge funds today, and why six of them are potentially great long-term buys today.
- these are the companies owned by 10% to 28% of hedge funds that file 13-F forms.
10th Most Popular Blue Chip: S&P Global Inc. ( SPGI )
Further Reading
Summary Of Why Hedge Funds Own It
S&P Global has substantial scale and a strong brand, giving it competitive advantages over smaller competitors.
It has long-term growth potential if the broader market increases in the long term, as that could lead to more demand for the company's services, assuming it maintains its market share." - Yahoo Finance.
Summary Facts
- How Many Hedge Funds Own It: 97
- DK quality rating: 99% very low risk 13/13 Ultra SWAN (sleep-well-at-night) dividend aristocrat
- Fair value: $333.30
- Current price: $344.77
- Historical discount: -3%
- DK rating: hold
- Yield: 1.0%
- Long-term growth consensus: 13.0%
- Long-term total return potential: 14.0%.
9th Most Popular Blue Chip: The Walt Disney Company ( DIS )
Further Reading
Summary Of Why Hedge Funds Own It
In an increasingly digital world, The Walt Disney Company has growing digital assets with a leading streaming service in Disney+ and also a majority stake in Hulu. In terms of Disney+, the company recently increased the price by 38% in December in the ad supported streaming product with 94% of subscribers staying with the service after the price increase. With growth and price increases, management has said they expect Disney+ to be profitable sometime in fiscal 2024." - Yahoo Finance.
Summary Facts
- How Many Hedge Funds Own It: 99
- DK quality rating: 80% risk 12/13 Super SWAN (sleep-well-at-night)
- Fair value: $106.44
- Current price: $100.13
- Historical discount: 6%
- DK rating: potential reasonable buy
- Yield: 0%
- Long-term growth consensus: 19.8%
- Long-term total return potential: 19.8%.
8th Most Popular Blue Chip: JPMorgan Chase & Co. ( JPM )
Further Reading
Summary Of Why Hedge Funds Own It
The largest bank in the United States. Although shares of the stock have declined recently given the failure of Silicon Valley Bank, JPMorgan Chase has arguably gained more business as a result with more deposits moving from regional banks to JPMorgan Chase & Co. (NYSE:JPM). While it might have near term downside if there are more bank failures, America's largest bank by assets has substantial long term earnings power." - Yahoo Finance.
Summary Facts
- How Many Hedge Funds Own It: 100
- DK quality rating: 72% low risk 10/13 Blue-chip quality bank
- Fair value: $158.94
- Current price: $130.31
- Historical discount: 18%
- DK rating: potential reasonable buy
- Yield: 3.1%
- Long-term growth consensus: 7.8%
- Long-term total return potential: 10.9%.
7th Most Popular Blue Chip: Bank of America Corporation ( BAC )
Further Reading
Summary Of Why Hedge Funds Own It
Like JPMorgan Chase, Bank of America Corporation has substantial scale with total assets of $2.41 trillion, ranking second in the United States. Like other banks, Bank of America faces near-term downside if the financial sector weakens further. With its substantial market share, Bank of America has attractive earnings power in the long term." - Yahoo Finance
Summary Facts
- How Many Hedge Funds Own It: 100
- DK quality rating: 84% very low risk 11/13 SWAN (sleep-well-at-night) quality bank
- Fair value: $45.62
- Current price: $28.60
- Historical discount: 37%
- DK rating: potential very strong buy
- Yield: 3.1%
- Long-term growth consensus: 9.1%
- Long-term total return potential: 12.2%
6th Most Popular Blue Chip: Salesforce, Inc. ( CRM )
Further Reading
Summary Of Why Hedge Funds Own It
For full year ended January 31, 2023, Salesforce had $31.4 billion in revenue, up 18% year over year, and operating cash flow of $7.1 billion, up 19% year over year. Of the total revenue, subscription and support revenue were $29.02 billion, up 18% year over year, giving the company relatively more predictability in terms of sales." - Yahoo Finance.
Summary Facts
- How Many Hedge Funds Own It: 117
- DK quality rating: 99% very low risk 12/13 Super SWAN (sleep-well-at-night) software company
- Fair value: $237.52
- Current price: $199.78
- Historical discount: 16%
- DK rating: potential good buy
- Yield: 0%
- Long-term growth consensus: 18.6%
- Long-term total return potential: 18.6%.
5th Most Popular Blue Chip: Apple Inc. ( AAPL )
Further Reading
Summary Of Why Hedge Funds Own It
Although it isn’t as popular with hedge funds in our database as some of other big tech stocks, Apple nevertheless has substantial competitive advantages given its strong brand, financial strength, profitability, and substantial user base that could allow it to do well in the long term if it maintains its market share. In the middle of March, Bloomberg reported Apple is delaying some bonuses and also expanding cost reduction efforts." - Yahoo Finance.
Summary Facts
- How Many Hedge Funds Own It: 135
- DK quality rating: 92% medium-risk 13/13 Ultra SWAN (sleep-well-at-night)
- Fair value: $160.39
- Current price: $164.90
- Historical discount: -3%
- DK rating: hold
- Yield: 0.6%
- Long-term growth consensus: 9.7%
- Long-term total return potential: 10.3%.
For further details see:
Hedge Funds Love These 6 Blue Chips, And So Will You