5 Best Low Volatility Stocks to Buy According to Hedge Funds

In this article, we discuss the 5 best low volatility stocks to buy according to hedge funds. To read the detailed analysis of the current market conditions, go directly to the 13 Best Low Volatility Stocks to Buy According to Hedge Funds.

5. UnitedHealth Group Incorporated (NYSE:UNH)

5-yr Monthly Beta: 0.56

Number of Hedge Fund Holders: 113

UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates through UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The stock’s 5-year monthly beta is 0.56.

On April 16, UnitedHealth Group Incorporated (NYSE:UNH) announced its quarter-one earnings result. The company reported non-GAAP EPS of $6.91, which surpassed the estimates by $0.29. The revenue grew 8.6% year-over-year to $99.79 billion and topped the market estimates by $490 million.

In the fourth quarter of 2023, 113 hedge funds had stakes in UnitedHealth Group Incorporated (NYSE:UNH), with total positions worth $11.198 billion. This is compared to 104 funds with positions worth $10.95 billion in the preceding quarter. As of December 31, 2023, GQG Partners is the most significant shareholder in the company with a stake worth $1.8 billion.

ClearBridge Investments stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its first quarter 2024 investor letter:

“Given our view that the overall market looks expensive, mostly due to mega cap valuations, the low likelihood that technology can continue to deliver well above market returns and an expected slowdown in economic growth, risk management has guided our recent positioning activity. We have been consistently trimming from the select bucket and redeploying into undervalued stable and cyclical names, while also being cognizant of position sizing to maintain the latitude to add to names when prices become attractive.

We were also active in adding to stable bucket investments PayPal and UnitedHealth Group Incorporated (NYSE:UNH) where negative near-term sentiment led to more attractive risk/reward profiles. We added to electronic payments provider PayPal as we have growing confidence that new CEO Alex Chriss’s strategic focus areas can improve the company’s performance, particularly in the key branded business. We added to our UnitedHealth position after shares were pressured due to fears over competition among managed care providers and rising medical loss ratios in the industry. We believe the company will be able to “re-price” for higher medical costs, making this pressure transitory and we see competitive concerns as overblown.”

4. Alibaba Group Holding Limited (NYSE:BABA)

5-yr Monthly Beta: 0.46

Number of Hedge Fund Holders: 116

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese company that provides services and products focused mainly on e-commerce, retail, Internet, and technology. The stock has a 5-year monthly beta of 0.46.

On April 2, Alibaba Group Holding Limited (NYSE:BABA) announced that it bought back 524 million ordinary shares for a total of $4.8 billion in the U.S. and Hong Kong markets during the quarter ended that on March 31. Under its share repurchase program, for the fiscal year that ended on March 31, the company repurchased 1.249 billion ordinary shares (156 million American Depository Shares) for $12.5 billion.

116 hedge funds held positions in Alibaba Group Holding Limited (NYSE:BABA), with total positions worth $3.587 billion in the fourth quarter of 2023. This is compared to 110 funds with positions worth $3.36 billion in the third quarter. As of Q4 of 2023, Appaloosa Management LP is the most prominent shareholder in the company with a position worth $337.168 million.

Artisan Partners stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its fourth quarter 2023 investor letter:

“Pretty much all of our holdings rose during the quarter. Only one stock declined by more than a couple of percent—Alibaba Group Holding Limited (NYSE:BABA), which was down 9% for the quarter and 12% for the year. This investment continues to be a disappointment. We estimate the shares are trading at around 5X EBITA—a valuation normally reserved for a company with evaporating profits. While it’s true Alibaba is underperforming its peers in the market, the fact is it remains the market leader in its core businesses, and the business is still growing. In the most recent quarter, revenues grew 9% and profits grew 26%.It’s not evaporating.

The management seems to be making meaningful changes designed to enhance shareholder value, including structural changes to improve profitability and restore its competitive position. It is monetizing non-core assets and making improvements in capital allocation. A lot of good things are happening that are not yet recognized in the share price. There are reasons—primarily geopolitical—for this, but at the current valuation, we could easily see the shares double and they would still be cheap.”

3. Berkshire Hathaway Inc. (NYSE:BRK-B)

5-yr Monthly Beta: 0.89

Number of Hedge Fund Holders: 117

Berkshire Hathaway Inc. (NYSE:BRK-B) is a conglomerate that is involved in operating various kinds of businesses, including insurance, freight rail transportation, and utility. Berkshire Hathaway Inc. (NYSE:BRK-B) has a 5-year monthly beta of 0.89.

According to our database, 117 hedge funds had investments in Berkshire Hathaway Inc. (NYSE:BRK-B) in the fourth quarter of 2023, with positions worth $15.103 billion.

Artisan Select Equity Fund stated the following regarding Berkshire Hathaway Inc. (NYSE:BRK-B) in its fourth quarter 2023 investor letter:

“Our top seven holdings are American Express (the world’s leading premium closed loop credit card network operator), Samsung Electronics (the leading global manufacturer of memory semiconductors), Berkshire Hathaway Inc. (NYSE:BRK-B) (the holding company run by Warren Buffett), Elevance (a leading US health insurer), Danone (global food and nutrition), Heidelberg Materials (global cement and aggregates) and Alphabet (global Internet search)Our top seven are certainly not as dominant or as profitable collectively as their Magnificent Seven counterparts. But they are durable, attractive businesses with good growth prospects. Berkshire has enormous financial firepower that it can deploy to create earnings future earnings streams and cashflow.”

2. Visa Inc. (NYSE:V)

5-yr Monthly Beta: 0.95

Number of Hedge Fund Holders: 162

Visa Inc. (NYSE:V) offers digital payment solutions, including credit, debit, prepaid cards, click-to-pay services, and others. The company offers its services in over 200 countries and territories and has carried out more than 283 billion payment transactions in 2023. The stock’s 5-year monthly beta is 0.95.

In the fourth quarter of 2023, 162 hedge funds held positions in Visa Inc. (NYSE:V) worth $26.52 billion. As of Q4 of 2023, TCI Fund Management is the most dominant shareholder in the company and has a position worth $4.373 billion.

On April 3, Visa Inc. (NYSE:V) announced the launch of its new service, Subscription Manager. A part of the Digital Enablement product suite, the service will enable financial institutions to provide cardholders with an effective way to track their subscriptions via their banking apps.

Lakehouse Capital stated the following regarding Visa Inc. (NYSE:V) in its October 2023 investor letter:

“Visa Inc. (NYSE:V) reported a strong result with net revenue increasing 11% year-on-year to $8.6 billion and non-GAAP earnings per share increasing by 21% to $2.33. As has been the case for many years now, the scalable nature of the business allows for revenue growth to outpace its costs, which places the company in a good position to navigate through this inflationary period. The network continues to grow, with credentials and merchant locations up 7% and 17%, respectively. Cross-border travel-related spend also maintained its robust growth, increasing 26% year-on-year while Visa Direct reported 7.5 billion transactions, up 19% yearon-year, progressing on penetrating categories such as cross-border remittances. Altogether, we’re pleased with how the business is tracking and remain positive on Visa’s outlook.”

1. Microsoft Corporation (NASDAQ:MSFT)

5-yr Monthly Beta: 0.88

Number of Hedge Fund Holders: 302

Microsoft Corporation (NASDAQ:MSFT) is a developer of software, services, devices, and solutions. It operates through the Productivity and Business Processes, Intelligent Cloud, and More Personal Computing segments. It has a 5-year monthly beta of 0.8.

On April 12, BMO Capital raised the price target on Microsoft Corporation (NASDAQ:MSFT) to $465 from $455 and maintained an Outperform rating on the shares. The firm is increasingly convinced about the company’s sustainable growth potential and highlighted its position in the gaming market.

The company is the top stock on our list of best low volatility stocks to buy according to hedge funds. 302 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT), with positions worth $87.3 billion in Q4 of 2023. With 38.21 million shares worth $14.37 billion, the Bill & Melinda Gates Foundation Trust is the top investor of the company, as of December 31, 2023.

Diamond Hill Capital stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:

“Other top Q4 contributors included Meta and Microsoft Corporation (NASDAQ:MSFT). Social media platform Meta’s digital ad revenues increased during the quarter, while it continued cutting costs — a combination which generated better-than-expected revenues and profits. Shares of software and information technology services provider Microsoft rose as its Azure cloud business continues growing and the company continues capitalizing on its attractive recurring revenue-based model to drive growth.”

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Disclosure: None. You can also look at the 30 Largest Stock Exchanges in the World and the 12 Best Dividend Stocks with High Upside Potential.

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