5 Best Stocks to Buy in 2024 According to Billionaire D.E. Shaw

Published December 27, 2023 at 8:33 pm EST Updated December 29, 2023 at 6:36 am EST

Below is the list of D.E. Shaw’s top 5 stock picks. For detailed analysis and discussion about D.E. Shaw’s performance and investment philosophy, please see 15 Best Stocks to Buy in 2024 According to Billionaire D.E. Shaw.

5. Booking Holdings Inc. (NASDAQ:BKNG)

Value of D.E. Shaw’s 13F Position: $814 million

Number of Hedge Fund Shareholders: 84

As of the end of the third quarter, D.E. Shaw owned a massive $814 billion stake in Booking Holdings Inc. (NASDAQ:BKNG). His firm has benefited from its stake because the company’s stock has risen 82% in the last year. Booking Holdings increased revenue by 21% to $7.3 billion in the third quarter, while adjusted EBITDA increased by 24% to $3.28 billion.

In the third quarter investor letter, L1 Capital, an investment management firm, explained why Booking Holdings is worth considering. Here is what the firm stated:

“Following significant under-performance, some high-quality businesses in these sectors are now becoming more attractive from a valuation perspective – in our language they are now getting warmer on our Bench of potential investments.

Our ‘all-weather’ portfolio centred around our unique definition of ‘quality’ delivered strong performance in the September quarter. Three companies positively contributed over 0.5% (in Australian dollars) to the Fund’s returns for the quarter (Booking Holdings Inc. (NASDAQ:BKNG), Intuit and Natural Resource Partners, in alphabetical order), and another three companies almost reached this level of positive contribution. No companies detracted from the Portfolio’s returns by 0.5% or more.

As part of our travels during the quarter (see page 6) we had the opportunity to meet with management of both Booking Holdings and Intuit. We continue to view both companies as exceptionally well managed.

Booking Holdings, the world’s leading online travel agency, continues to benefit from a strong global travel environment with particular strength in Europe, Booking Holdings’ core market. Fears of peak ‘revenge travel’ following COVID-19 lockdowns have been misplaced in our view. We assess current travel volumes to be only slightly elevated compared to pre-COVID-19 trends, with some regions, particularly outbound travel from China, still relatively depressed. Anyone who has travelled anywhere recently will be nodding when we say hotel rates have increased meaningfully in recent times. Accommodation providers are generally doing quite well, but the increased hotel rates have been necessary to offset inflation in costs such as employee salaries and additional cleaning services. As Booking Holdings ‘clips the ticket’ of accommodation spend, the company has benefitted from increased average daily hotel rates. Importantly, Booking Holdings continues to invest in its business, improving the reach, quality and range of services it provides, resulting in gains in market share and an extension of its industry leadership position. Booking Holdings is now more fairly valued by the market, but still provides attractive base case risk-adjusted returns and remains one of the larger investments in the Fund.”

4. Amazon.com, Inc. (NASDAQ:AMZN)

Value of D.E. Shaw’s 13F Position: $909 million

Number of Hedge Fund Shareholders: 289

Billionaire D.E. Shaw increased his stake in Amazon.com, Inc. (NASDAQ:AMZN) by 117% in the third quarter to capitalize on the upward trend. Because of strong financial growth, shares of the online retailer have increased by nearly 80% in the last year. The company exceeded revenue and earnings expectations in the third quarter, and the company expects fourth-quarter operating income to be in the $7 billion to $11 billion range. Sales are expected to range between $160 billion and $167 billion.

White Brook Capital Partners, an investment management firm, highlighted its confidence in Amazon in its third-quarter investor letter. Here is what the firm stated:

“The magnificent seven, that underpin the S&P 500 performance, which includes Amazon.com, Inc., now comprise almost 30% of the market capitalization of the S&P500. At least three of the seven stocks have heightened downside risk and suffer from already high penetration, weakening end markets, competitive risk, and lofty valuation. They have been remarkably resilient to increased interest rates and the potential for slowing growth.”

3. NVIDIA Corporation (NASDAQ:NVDA)

Value of D.E. Shaw’s 13F Position: $1.4 billion

Number of Hedge Fund Shareholders: 182

NVIDIA Corporation (NASDAQ:NVDA) remained one of the hottest stocks in 2023 due to its penetration in AI markets. Its semiconductors power AI products in data centres and other applications. The company has also benefited from high demand, as its third-quarter revenue increased by more than 200%. The company expects fourth-quarter revenue to be between $20 billion, higher than the $17.9 billion expected by analysts.

NVIDIA is also popular among hedge funds. According to Insider Monkey data, NVIDIA was in 182 hedge fund portfolios at the end of the third quarter.

2. Apple Inc. (NASDAQ:AAPL)

Value of D.E. Shaw’s 13F Position: $1.63 billion

Number of Hedge Fund Shareholders: 137

D.E. Shaw increased his stake in Apple Inc. (NASDAQ:AAPL) by 7% during the third quarter, to $1.6 billion at the end of the third quarter. Apple’s stock has risen 46% in the last year, thanks to strong financial results and a promising earnings outlook. Apple exceeded revenue and earnings expectations for the third quarter, and Wall Street expects earnings to rise steadily in the coming years.

Hayden Capital, a value-oriented investment firm, mentioned a few stocks, including Apple, in its third-quarter investor letter. Here is what the firm siad:

“Even Berkshire Hathaway’s most famous investment of the last decade – Apple Inc. – was based on a similar set up. When Berkshire invested in 2016, Apple’s subscription revenues were just starting to cross ~10% of total revenues. Today, that figure is ~25%.

While operating income has grown +90% from 2016 to 2023, the valuation multiple itself has expanded by ~300%, from ~6x EV/EBIT to ~24x EV/EBIT today.

Investors have evolved their perception of Apple’s products – from that of a “fad” hardware company at risk of competition, to that of a “consumer staple”, a necessary part of a household’s budget…” (Click here to read the full text).

1. Microsoft Corporation (NASDAQ:MSFT)

Value of D.E. Shaw’s 13F Position: $2.4 billion

Number of Hedge Fund Shareholders: 309

Microsoft Corporation (NASDAQ:MSFT) made headlines in 2023 as a result of its exposure to the AI market and partnership with OpenAI, the developer of a ChatGPT platform. Furthermore, its solid financial growth has contributed to a 57% increase in its share price in the last twelve months. Microsoft (MSFT) earned $2.99 per share on $56.52 billion in revenue in the September quarter.

White Brook Capital Partners, an investment management firm, mentioned a few stocks, including Microsoft, in its third-quarter inverter letter. Here is what the firm stated:

“The magnificent seven, that underpin the S&P 500 performance, which includes Microsoft Corporation, now comprise almost 30% of the market capitalization of the S&P500. At least three of the seven stocks have heightened downside risk and suffer from already high penetration, weakening end markets, competitive risk, and lofty valuation. They have been remarkably resilient to increased interest rates and the potential for slowing growth. Small and midcap stocks, on the other hand, have been systemically penalized by fears of recession and continue to price that eventuality even as significantly better outcomes have become more probable. Today, it’s relatively easy to find attractive investments in this segment.”

You can also take a look at the

13 Most Promising Tech Stocks According to Analysts and 10 Best Space Stocks to Buy According to Wall Street Analyst s.

NASDAQ:AAPL NASDAQ:AMZN NASDAQ:BKNG NASDAQ:MSFT NASDAQ:NVDA Apple Inc (NASDAQ:AAPL)Amazon.com Inc. (NASDAQ:AMZN)NVIDIA Corporation (NASDAQ:NVDA)Booking Holdings Inc. (NASDAQ:BKNG)Microsoft Corporation (NASDAQ:MSFT)13 Most Promising Tech Stocks According to Analysts 10 Best Space Stocks to Buy According to Wall Street Analysts Show more...Show less