In this article, we discuss the 4 stocks better than Apple. If you want to read our detailed analysis of these stocks, go directly to the 9 Stocks Better than Apple According to Hedge Funds.
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 190
Alphabet Inc. (NASDAQ:GOOGL) is a California-based company that provides online advertising services but also has interests in other internet-related businesses. The firm is split into Class A and Class C stocks. GOOGL is the Class A stock of the firm. It is ranked fourth on our list of 9 stocks better than Apple according to hedge funds.
On September 13, investment advisory Goldman Sachs initiated coverage of Alphabet Inc. (NASDAQ:GOOGL) stock with a Buy rating and a price target of $3,350, underlining that the internet sector still had opportunities for secular revenue growth.
At the end of the second quarter of 2021, 190 hedge funds in the database of Insider Monkey held stakes worth $26 billion in Alphabet Inc. (NASDAQ:GOOGL), up from 185 in the preceding quarter worth $24 billion.
3. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 238
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company that has interests in computer software, hardware, and other internet-related businesses. It is placed third on our list of 9 stocks better than Apple according to hedge funds.
On September 17, investment advisory Tigress Financial maintained a Buy rating on Microsoft Corporation (NASDAQ:MSFT) stock and raised the price target to $366 from $303, underlining that the cloud sector of the firm was expected to perform strongly in the coming months.
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 24.8 million shares worth more than $6.7 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.”
2. Facebook, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 266
Facebook, Inc. (NASDAQ:FB) is ranked second on our list of 9 stocks better than Apple according to hedge funds. The company is headquartered in California and operates as a technology company that owns and manages social media platforms like Facebook, Instagram, and WhatsApp.
On September 22, investment advisory BMO Capital maintained an Outperform rating on Facebook, Inc. (NASDAQ:FB) stock with a price target of $425. Daniel Salmon, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc. (NASDAQ:FB), up from 257 in the preceding quarter worth $40 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is placed first on our list of 9 stocks better than Apple. The firm is headquartered in Washington and operates as a technology conglomerate with core interests in the ecommerce business.
On September 14, investment advisory Evercore ISI maintained an Outperform rating on Amazon.com, Inc. (NASDAQ:AMZN) stock and raised the price target to $4,700 from $4,200, noting the “underappreciated magnitude” of the fulfilment capacity expansion by the firm.
Out of the hedge funds being tracked by Insider Monkey, Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 3.8 million shares worth more than $13 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 …”read the entire letter here]
You can also take a peek at 15 Best Value Stocks to Invest In and 15 Best Consumer Discretionary Stocks to Buy Now.
