In this article, we discuss the 10 best Roth IRA stocks hedge funds are buying.
Roth IRA accounts have been making headlines across the finance world over the past few weeks after non-profit news platform ProPublica released a report detailing how billionaire investor Peter Thiel had transformed a less than $2,000 Roth IRA investment into a $5 billion tax-free retirement plan. The report also highlighted other important figures on Wall Street that had used the benefits offered by Roth IRA accounts, including titans like Ted Weschler, Warren Buffett, and Randall Smith, among others.
Roth IRA accounts intend to incentivize savings by offering the average citizen tax-free growth and withdrawals during retirement provided certain conditions are met after the account is opened and savings deposited. These accounts have been around for more than two decades and offer modest growth in savings, as an average Roth IRA account offers annual returns of 7-10%. If investors can commit to a handsome amount in savings every month, these accounts offer the best possible retirement savings plan for Americans.
Some of the popular Roth IRA stocks that hedge funds are piling into these days include Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS), among others. These firms weathered the pandemic and are well-poised to take advantage of the post-pandemic economic recovery. The long-term outlook on the earnings of these firms is also positive, with most analysts bullish on the stocks. They offer solid growth potential as well, incentivizing savings through Roth IRA accounts.
According to a report by the Tax Policy Centre, close to 44 million households in the United States owned an IRA in 2017, highlighting the popularity of these accounts in the country. Of these, Roth IRAs were the second most popular account choice, with at least 19% of all households in the nation owning such an account. The pandemic-related problems have served to highlight the importance of savings and more people in the US are now lining up open Roth IRAs. Hedge funds are also jumping on the bandwagon.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 best Roth IRA stocks hedge funds are buying.
Our Methodology
The stocks in this list are usually recommended by market experts and analysts for Roth IRA. These stocks are also very popular among the 866 hedge funds tracked by Insider Monkey as of the first quarter of 2021. We ranked these stocks based on the number of hedge funds having stakes in them, from smallest to largest.
Best Roth IRA Stocks Hedge Funds are Buying
10. Shopify Inc. (NYSE: SHOP)
Number of Hedge Fund Holders: 91
Shopify Inc. (NYSE: SHOP) is placed tenth on our list of 10 best Roth IRA stocks hedge funds are buying. The stock has offered investors returns exceeding 44% over the course of the past twelve months. Shopify Inc. (NYSE: SHOP) owns and operates an ecommerce platform. The firm recently announced the purchase of Primer, a platform that uses augmented reality technology to market home design services. The share price of the online retailer jumped by close to 1% after the announcement was made.
On June 30, investment advisory Loop Capital maintained a Buy rating on Shopify Inc. (NYSE: SHOP) stock and raised the price target to $1,600 from $1,400, highlighting that the revenue sharing model change would attract more partners to the ecommerce firm.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Shopify Inc. (NYSE: SHOP) with 1.7 million shares worth more than $1.8 billion.
Just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS), Shopify Inc. (NYSE: SHOP) is one of the best Roth IRA stocks hedge funds are buying.
In its Q4 2020 investor letter, RGA Investment Advisors, an asset management firm, highlighted a few stocks and Shopify Inc. (NYSE: SHOP) was one of them. Here is what the fund said:
“While we are pleased with the results of these specific purchases, we made a huge mistake of omission at that time. This mistake will likely be one of the biggest we ever make in our careers. Specifically, we did deep work on Shopify and loved everything about the business qualitatively. Unfortunately, we ultimately found ourselves unable to get comfortable with the numbers.
We built our model up from the key performance indicators (KPIs) that drive revenues. Our last save of the model dated 8/3/2016 looked as follows: (Page 2). These numbers seemed right from everything we understood about the company. While we tend not to rely on sell-side consensus estimates before finishing our own workup of the business, we do give them a look once we feel comfortable with how we have approached our analysis as it is often helpful to get a sense of what the average participant in the market expects the business to do. With Shopify, the sell-side consensus was so far from where our numbers were shaking out, it seemed almost impossible that we were basing our analysis on the same underlying information. Our natural next step was thus to take the sell-side consensus data and work backwards to figure out the implied expectations on each of the key revenue drivers. Here is what the sell-side consensus looked like as at the time: (Page 2).
Shopify’s actual revenues for 2016-2018 ended up being $389m, $673m and $1,073m. In other words, not only were we justifiably far more optimistic than the consensus estimate, but we also were far too conservative in terms of how the company actually performed.
The nature of our job as securities analysts is to take calculated risks, in an uncertain world where the “true” answer is inherently unknowable before the fact. We operate in what many call an “efficient market” and subscribe to the belief that for the most part, markets are generally pretty efficient and it requires differentiated analysis to find a return above what the market can offer. So why did we pass on Shopify despite 1) deeply believing in the qualitative elements of the business; and, 2) seeing a meaningful gap between what we expected and the consensus expected? The answer is unfortunate but simple: we lacked confidence in ourselves. It was the first time we truly experienced such a stark divergence between our expectation and the consensus and the result was the inclination was to pound ourselves over the head with how dumb we must be, rather than the other way around. We also learned that the truly great companies use their strong business advantages, smart management and execution to raise the bar every step along the way. Obviously this is a cycle which cannot continue ad infinitum, but especially in instances where our qualitative work identifies the inherent strengths in the business and the numbers shake out to be quite fair, the consistent “raising of the bar” can be a potent driver for the stock.
Please do not judge us too harshly for our mistake on Shopify, for we have from the very beginning made one commitment above all else to both our clients and ourselves: that we will be better today than we were yesterday, and better tomorrow than we are today. While this mistake was quite costly, it ended up being a key confidence and process builder.”
9. Bank of America Corporation (NYSE: BAC)
Number of Hedge Fund Holders: 97
Bank of America Corporation (NYSE: BAC) is a North Carolina-based financial services firm. It is placed ninth on our list of 10 best Roth IRA stocks hedge funds are buying. The company’s shares have offered investors returns exceeding 56% over the course of the past year. On July 16, news platform CoinDesk reported that the bank, the second largest in the US, had allowed some clients to trade in Bitcoin, the most popular cryptocurrency. The policy shift marks a key milestone for the crypto industry that is reeling from price volatility.
On July 6, investment advisory Keefe Bruyette initiated coverage of Bank of America Corporation (NYSE: BAC) stock with a Market Perform rating and a price target of $40, underling that the outlook on large-cap banks was positive despite price volatility in macro trade.
At the end of the first quarter of 2021, 97 hedge funds in the database of Insider Monkey held stakes worth $45 billion in Bank of America Corporation (NYSE: BAC), down from 99 in the previous quarter worth $35 billion.
Alongside Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS), Bank of America Corporation (NYSE: BAC) is one of the best Roth IRA stocks hedge funds are buying.
8. Adobe Inc. (NASDAQ: ADBE)
Number of hedge fund holders: 107
Adobe Inc. (NASDAQ: ADBE) stock has returned 32% to investors over the past year. It is ranked eighth on our list of 10 best Roth IRA stocks hedge funds are buying. Adobe Inc. (NASDAQ: ADBE) markets software for several creative professionals, including animators, digital artists, and photographers. The firm posted earnings for the second fiscal quarter on June 17, reporting earnings per share of $3.03, beating market estimates by $0.21. The revenue over the period was $3.8 billion, up 22% year-on-year.
On June 18, investment advisory JP Morgan maintained an Overweight rating on Adobe Inc. (NASDAQ: ADBE) stock and raised the price target to $660 from $595, noting the positive earrings results for the firm in the second quarter and the strength of products.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Adobe Inc. (NASDAQ: ADBE) with 5.9 million shares worth more than $2.8 billion.
In addition to Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS), Adobe Inc. (NASDAQ: ADBE) is one of the best Roth IRA stocks hedge funds are buying.
Here is what Polen Capital has to say about Adobe Inc. (NASDAQ: ADBE) in its Q1 2021 investor letter:
“Adobe and Autodesk are both prime examples of the rotation that occurred during the quarter. Both are dominant businesses in their respective markets, which are experiencing structural tailwinds. Despite each business’s position of strength, the stocks of cyclicals and businesses with higher leverage and lower profitability were more favored this past quarter. In stark contrast, Adobe and Autodesk both have low leverage, high levels of profitability, high recurring revenues that mitigate cyclicality, and are both capital-light business models—all attributes we appreciate as investors. Adobe and Autodesk were also two of the top three performers within the Portfolio during 2020.”
7. Berkshire Hathaway Inc. (NYSE: BRK-A)
Number of Hedge Fund Holders: 111
Berkshire Hathaway Inc. (NYSE: BRK-A) is placed seventh on our list of 10 best Roth IRA stocks hedge funds are buying. The company’s shares have returned 43% to investors over the past twelve months. The firm operates as a holding company with interests in the insurance, commodities, and finance businesses. Berkshire Hathaway Inc. (NYSE: BRK-A) has recently ignited speculation around the purchase of chocolate-maker Hershey after a plane belonging to the chocolate firm was spotted in Omaha, the headquarters of Warren Buffett, the chief of the holding company.
On June 8, news publication The Wall Street Journal reported that Berkshire Hathaway Inc. (NYSE: BRK-A) had agreed to purchase a stake worth $500 million in Nu Pagamentos SA, a Brazilian fintech firm as part of a plan to expand reach in the sector.
At the end of the first quarter of 2021, 111 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Berkshire Hathaway Inc. (NYSE: BRK-A), up from 110 in the preceding quarter worth $20 billion.
Berkshire Hathaway Inc. (NYSE: BRK-A) is one of the best Roth IRA stocks hedge funds are buying, just like Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS).
In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. (NYSE: BRK-A) was one of them. Here is what the fund said:
“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”
6. Apple Inc. (NASDAQ: AAPL)
Number of Hedge Fund Holders: 127
Apple Inc. (NASDAQ: AAPL) stock has returned 44% to investors in the past year. It is ranked sixth on our list of 10 best Roth IRA stocks hedge funds are buying. The company is based in California and has interests in a wide range of technology-related businesses, including the making and selling of premium electronic devices. On July 14, investment bank JP Morgan noted that the outlook for the future sales of Apple Inc. (NASDAQ: AAPL) products were strong and the company was in line to outperform investor expectations in the long run.
On July 19, investment advisory Deutsche Bank maintained a Buy rating on Apple Inc. (NASDAQ: AAPL) stock with a price target of $165, noting that the share price had room to climb higher considering strong business momentum.
At the end of the first quarter of 2021, 127 hedge funds in the database of Insider Monkey held stakes worth $130 billion in Apple Inc. (NASDAQ: AAPL), down from 146 in the preceding quarter worth $142 billion.
Apple Inc. (NASDAQ: AAPL) is one of the best Roth IRA stocks hedge funds are buying, alongside Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS).
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ: AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
5. The Walt Disney Company (NYSE: DIS)
Number of Hedge Fund Holders: 134
The Walt Disney Company (NYSE: DIS) is a California-based mass media and entertainment firm. It is placed fifth on our list of 10 best Roth IRA stocks hedge funds are buying. The company’s shares have offered investors returns exceeding 46% over the course of the past twelve months. On July 13, investment bank Morgan Stanley reiterated an Overweight rating on the stock and underlined that the firm was building content assets to take advantage of the new streaming business with platforms like Disney+.
On June 14, investment advisory Tigress Financial maintained a Buy rating on The Walt Disney Company (NYSE: DIS) stock with a 12-month price target of $227, underlining that the firm had performed well during the pandemic and was well positioned for post-pandemic recovery.
At the end of the first quarter of 2021, 134 hedge funds in the database of Insider Monkey held stakes worth $12.5 billion in The Walt Disney Company (NYSE: DIS), down from 144 in the preceding quarter worth $16.4 billion.
In its Q4 2020 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE: DIS) was one of them. Here is what the fund said:
“One of the original constituents of the Nifty Fifty holds a place in our portfolio today. When we bought Disney three years ago, we wrote that “we view Disney theme parks in the US, Europe, and China as resistant to online substitution.” We did not reckon on a pandemic, which closed all of them, and sent all of usto our couches. Disney, however, wasready for us, brilliantly illustrating the importance of management foresight and change management. Or, as Louis Pasteur said, “chance favors the prepared mind.
A century after its founding in 1923, Disney is in the middle of a bold shift from its legacy media networks & entertainment model—with cable TV, theme parks, and theater films dominating its earnings—to a direct-to-consumer streaming media model. The keys to Disney’s transition: matchless storytelling, coupled with financial strength. The company reliably creates content that people all over the world are eager to consume. It also hastened spending on original content to attract subscribers to its new streaming platform. These factors have allowed Disney to weather the pandemic having expanded its direct engagement with customers. Such connections yield a rich harvest of insights used to customize offerings on a mass scale, reinforcing that engagement in a virtuous circle and thereby raising the lifetime value of each customer. Subscribers to Disney+ reached 86.8 million one year after launch, compared to the 60 – 90 million management projected to reach in 2024. To be sure, Netflix, Apple, and Amazon remain formidable competitors in new-era streaming entertainment (mind what we said about everyone standing up at once), but there’s fight left in this old dog.”
4. Mastercard Incorporated (NYSE: MA)
Number of Hedge Fund Holders: 151
Mastercard Incorporated (NYSE: MA) is ranked fourth on our list of 10 best Roth IRA stocks hedge funds are buying. The stock has offered investors returns exceeding 18% over the course of the past year. The company is based in New York and provides payments services. On July 13, the firm announced that it had partnered with telecom provider Verizon to expand the reach of contactless shopping, autonomous checkout, and cloud point of sale solutions, using new 5G technology, on the payments network of the former.
On July 15, investment advisory Baird maintained an Outperform rating on Mastercard Incorporated (NYSE: MA) stock and raised the price target to $482 from $454, affirming that it expected the firm to beat market estimates for earnings in the second quarter.
Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE: MA) with 5.8 million shares worth more than $2 billion.
In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE: MA) was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
3. Alphabet Inc. (NASDAQ: GOOG)
Number of Hedge Fund Holders: 159
Alphabet Inc. (NASDAQ: GOOG) is a California-based technology company that owns the internet search engine Google. It is placed third on our list of 10 best Roth IRA stocks hedge funds are buying. The company’s shares have returned 64% to investors over the past year. On July 15, money manager Wedgewood Partners identified the stock as one of the few firms that had long-term revenue and profitability drivers. The fund told investors in a letter that the firm had the ability to enhance returns by returning net cash to shareholders.
On June 24, investment advisory Stifel maintained a Buy rating on Alphabet Inc. (NASDAQ: GOOG) stock with a price target of $2,700, highlighting that a decision by the tech firm to phase out third party cookies would push out near-term headwinds for ad-tech companies.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in the firm with 2.9 million shares worth more than $6.1 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ: GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
2. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ: AMZN) stock has returned 9.7% to investors over the past year. It is ranked second on our list of 10 best Roth IRA stocks hedge funds are buying. The company operates as a technology company with a focus on internet-based services such as ecommerce and data management support. The owner of the company, Jeff Bezos, is set to take a flight into space on July 20 with his brother onboard a spacecraft developed by Blue Origin, a private space company owned by Bezos.
On July 19, investment advisory Mizuho maintained a Buy rating on Amazon.com, Inc. (NASDAQ: AMZN) stock with a price target of $4,400, noting a positive outlook for the company in the advertising sector for the rest of the fiscal year.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ: AMZN) with 3.3 million shares worth more than $10.5 billion.
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ: AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN): We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment: 1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is in a much different place than when we initially invested. Back in 2014, investors were starting to question whether Amazon’s promise of future earnings potential would actually come to fruition.
Operating income had declined from ~$1.4BN in 2010, to ~$676M in 2012, to just ~$178M by the end of 2014. Expenses were outpacing revenue growth, and investors were questioning whether Amazon’s expenses were truly “investments” as they claimed, or whether it was a structural necessity of the business and thus would never flow to investor’s bottom line.
The critical question was ‘what portion of expenses are truly growth investments vs. structural expenses, and as a result, will Amazon ever be capable of generating significant profits?’
Our analysis indicated that these expenditures truly were the former, and led to the belief that the business’ structural margins would inevitably increase over time. This was our differentiated insight / investment edge.
Fast-forward to today, and our thesis proved correct with operating margins having increased from ~0.2% to ~6%. However due to this success and proving this facet out to investors, Amazon investors have much higher confidence and a better understanding of the company today. I’m not sure we have the same level of differentiated insights, as we did back then.
In addition, I believe the departure of Jeff Bezos and his long-time lieutenants signal a regime change. Perhaps it’s now “Day 1.5” instead of the Day 1 mentality that made Amazon so successful (LINK)… The departures within the past couple years include:
- Jeff Bezos – Founder, CEO, Visionary. Started Amazon in 1994.
- Jeff Blackburn – Joined Amazon in 1998. Oversaw Amazon Marketplace, Advertising,
Amazon Studios, Prime Video, Prime Music, M&A.
- Jeff Wilke – Joined Amazon in 1999. Oversaw Amazon Consumer (ecommerce)
business.
- Steve Kessel – Joined Amazon in 1999. Oversaw Physical Stores, Kindle, and Whole
Foods.
Blackburn, Wilke, and Kessel have each arguably created hundreds of billions of shareholder value. On top of this, Bezos is the visionary and culture-setter behind Amazon. When he and his long-time lieutenants take their hands off the wheel, it is probably time for us to as well.
We sold our remaining shares at an average price of ~$3,240. Based on our initial investment, we made a ~10x return in a little over six years, for a ~45% IRR7. We reinvested the proceeds into our existing portfolio, taking advantage of the prices offered by this latest market draw-down.”
1. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 251
Microsoft Corporation (NASDAQ: MSFT) is placed first on our list of 10 best Roth IRA stocks hedge funds are buying. The company’s shares have returned 30% to investors over the past twelve months. The firm is a technology company focusing on the software sector and operates from Washington. On July 15, investment advisory Jefferies praised the Windows 365 platform of the company, noting that it had the potential to be the next killer product from the software giant that already has many growth catalysts working in its favor.
On July 16, investment advisory Mizuho maintained a Buy rating on Microsoft Corporation (NASDAQ: MSFT) stock and raised the price target to $310 from $285, highlighting firms enabling digitization continued to perform well in the post-pandemic economy.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ: MSFT) with 23.9 million shares worth more than $5.6 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
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Disclose. None. 10 Best Roth IRA Stocks Hedge Funds are Buying is originally published on Insider Monkey.
