Below is the list of the 5 best defensive stocks to buy now, according to Baupost Group co-founder Seth Klarman. For a comprehensive list and Klarman’s portfolio management strategy please see 10 Best Defensive Stocks to Buy Now.
5. Fox Corporation (NASDAQ: FOX)
Number of Hedge Fund Holders: 38
Low valuations and a strong dividend history make news, sports, and entertainment company Fox Corporation (NASDAQ: FOX) a good stock for defensive investors. Despite a share price rally of close to 36% in the last twelve months, its stock is trading at a significant discount based on a price to earnings ratio of 11.43. Furthermore, the company’s dividend yield of 1.26% makes it a good stock to hold for the long term. Seth Klarman has been holding a position in Fox Corporation since 2019. At the end of the first quarter, Baupost Group held 5.68 million shares of Fox valued at around $198 million.
Fox Corporation was in 25 hedge fund portfolios at the end of the first quarter, compared to 17 positions in the previous quarter.
4. Translate Bio, Inc. (NASDAQ: TBIO)
Number of Hedge Fund Holders: 20
The biotechnology company Translate Bio, Inc. (NASDAQ: TBIO) is a member of Seth Klarman’s portfolio since the second quarter of 2018. At the end of the first quarter, Translate Bio represented 2.31% of the Baupost Group’s 13F stock portfolio. With a beta of 0.90, it looks like a good stock for defensive investors who don’t want to take a risk.
The number of long hedge fund bets remained flat in recent months. Translate Bio was in 20 hedge funds’ portfolios at the end of March.
3. Willis Towers Watson Public Limited Company (NASDAQ: WLTW)
Number of Hedge Fund Holders: 66
Seth Klarman initiated a big position in Willis Towers Watson Public Limited Company (NASDAQ: WLTW) during the first quarter by purchasing shares worth $572 million, accounting for 4.47% of the overall portfolio. The share price underperformance of Willis Tower in the last twelve months makes it a good stock to buy. Its stock is trading around 21 times to earnings, with a low beta of 0.82. The company also offers a dividend yield of 1.21% at present.
Willis Towers Watson Public Limited Company has seen an increase in enthusiasm from smart money of late. It was in 66 hedge funds’ portfolios at the end of the first quarter of 2021. The all-time high for this statistic was previously 58. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high.
2. Alphabet Inc. (NASDAQ: GOOG)
Number of Hedge Fund Holders: 159
After showing less volatility during the pandemic year, Alphabet Inc. (NASDAQ: GOOG) stock price performed really well since the beginning of this year. Furthermore, the company’s broad revenue base as well as improving trends for digitalization strengthens prospects for sustainable future revenue growth potential. During the March quarter, Seth Klarman substantially raised his position in Google by 265% to 290,930 shares, representing 4.70% of the entire portfolio.
In the first quarter investor letter, Artisan Partners, a high value-added investment management firm, mentioned a few stocks including Alphabet. Here is what Artisan Partners stated:
“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.”
1. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 83
The technology giant Intel Corporation (NASDAQ: INTC) is one of the best defensive stocks to buy right now due to its low beta of 0.60 along with a low PE ratio of around 11.0. Moreover, the company offers sustainable dividends and steady share price appreciation. After initiating a position in the December quarter of 2020, Seth Klarman increased his stake by 28% during the first quarter. Currently, INTC is the largest stock holding of Baupost Group, accounting for 11.64% of the 13F portfolio.
Money managers were betting on the stock. The number of bullish hedge fund positions moved up by 11 recently. Intel Corporation was in 83 hedge funds’ portfolios at the end of the first quarter of 2021. The all-time high for this statistic was previously 78. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high.
You can also take a peek at 10 Best Beauty Stocks to Invest In and 10 Most Popular Finance Podcasts.
