In this article, we discuss the 5 defensive stocks that are favorites among hedge funds. If you want to read our comprehensive analysis of these stocks and the current market situation, go directly to 10 Favorite Defensive Stocks of Hedge Funds.
5. CVS Health Corporation (NYSE:CVS)
Number Of Hedge Fund Holders: 72
CVS Health Corporation (NYSE:CVS) is an American healthcare company that operates a network of retail pharmacies and clinics across the United States. The brands that operate under the company include CVS Pharmacy, CVS Caremark, MinuteClinic, and Omnicare.
Earlier this April, Tigress Financial analyst Ivan Feinseth raised the price target on CVS Health Corporation (NYSE:CVS) to $125 from $122 and reiterated a Buy rating on the shares. The analyst says that the company’s primary care focus strategy combined with an “extensive” retail store and service network will continue to drive long-term shareholder value creation.
For the first quarter, CVS Health Corporation (NYSE:CVS) posted earnings per share of $2.22, beating market estimates by $0.08. The company also reported $76.8 billion in revenue for the quarter, outperforming analysts’ forecasts by $1.53 billion.
According to Insider Monkey’s Q1 2022 database, 72 hedge funds held stakes worth $1.56 billion in CVS Health Corporation (NYSE:CVS). This is compared to 71 funds that owned positions in the company in the previous quarter. Harris Associates was the biggest shareholder of CVS Health Corporation (NYSE:CVS) at the end of the first quarter, with a stake worth $421 million.
Here is what ClearBridge Investments had to say about CVS Health Corporation (NYSE:CVS) in its Q4 2021 investor letter:
“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of CVS Health, which is well-positioned to help define the future of health care in terms of costs, quality and convenience.”
4. Exxon Mobil Corporation (NYSE:XOM)
Number Of Hedge Fund Holders: 83
Exxon Mobil Corporation (NYSE:XOM), stylized as ExxonMobil, is an American multinational oil and gas corporation that is involved in the production, transportation and sale of crude oil, natural gas, petroleum products and other petrochemicals around the globe. One of the best defensive stocks to own on account of its 39 years of consistent dividend increases, Exxon Mobil Corporation (NYSE:XOM) has gained 64.6% since the beginning of 2022, while the stock delivered a 68.3% return to shareholders in the previous year.
On June 7, Evercore ISI analyst Stephen Richardson upgraded Exxon Mobil Corporation (NYSE:XOM) to Outperform from In Line with a price target of $120, up from $88. He sees long-term earnings growth to be driven by upstream upgrading as well as cost reductions and forecasts Exxon Mobil Corporation (NYSE:XOM) to have an industry-leading ROCE target of 15% by 2025 and 17% by 2027. The analyst also stated that he sees the path to doubling earnings as likely “achievable.”
Exxon Mobil Corporation (NYSE:XOM) reported that its earnings per share for the fiscal first quarter of 2022 came to $2.07 on April 29, falling short of EPS estimates by $0.16. In contrast, the company’s quarterly revenues came in at $90.5 billion, an increase of 53.01% on a year-over-year basis, outperforming revenue estimates by $6.93 billion.
83 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) at the end of the first quarter of 2022, with aggregate stakes worth $8.55 billion. Rajiv Jain’s GQG Partners is the most prominent investor in Exxon Mobil Corporation (NYSE:XOM) with stakes worth approximately $4.27 billion in the company.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in the firm’s fourth-quarter 2021 investor letter. Here is what the firm had to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
3. Johnson & Johnson (NYSE:JNJ)
Number Of Hedge Fund Holders: 83
One of the largest healthcare companies in the world, Johnson & Johnson (NYSE:JNJ) is a New Jersey-based corporation that develops medical devices, pharmaceuticals, and consumer packaged goods. Its top products include Tylenol, Stelara, and Invega, among other medical devices.
Another dividend king stock on this list, Johnson & Johnson (NYSE:JNJ) has increased its dividend yield for 59 years in a row, and offers a 2.60% yield as of June 9.
Earlier this May, SVB Leerink analyst David Risinger assumed coverage of Johnson & Johnson (NYSE:JNJ) with an Outperform rating and $200 price target. According to the analyst, the healthcare giant should outperform due to its ability to deliver consistent earnings growth and execute value-enhancing M&A.
As of Q1 2022, 83 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Johnson & Johnson (NYSE:JNJ). Of these, Arrowstreet Capital reported holding 6.65 million shares worth $1.17 billion in Johnson & Johnson (NYSE: JNJ).
2. JPMorgan Chase & Co. (NYSE:JPM)
Number Of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational investment bank and financial services holding company headquartered in New York City. Having increased its dividends consecutively for the past 12 years, the company currently pays a quarterly dividend of $1.00 per share, in line with the previous, raising it by 11.1% in 2021. As of June 9, the stock’s dividend yield was recorded at 3.19%.
On May 24, Societe Generale analyst Andrew Lim upgraded JPMorgan Chase & Co. (NYSE:JPM) to Buy from Hold with a price target of $150, up from $145. In a note to investors, the analyst states that the company at its investor day delivered positive guidance on net interest income, credit quality and investment bank trading revenues, thus painting a more optimistic image of JPMorgan Chase & Co. (NYSE:JPM)’s excess capital generation from 2023.
According to Insider Monkey’s Q1 2022 database, 110 hedge funds were bullish on JPMorgan Chase & Co. (NYSE:JPM), up from 107 in the previous quarter. These stakes held an aggregate value of over $5.05 billion. Billionaire Ken Fisher’s Fisher Asset Management was the biggest shareholder of JPMorgan Chase & Co. (NYSE:JPM) in the first quarter of 2022, with 7.76 million shares valued at $1.05 billion,
ClearBridge Investments mentioned a few stocks in its Q4 2021 investor letter, and JPMorgan Chase & Co. (NYSE:JPM) was one of them. Here is what the fund said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
1. Apple Inc. (NASDAQ:AAPL)
Number Of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is an American multinational technology company that specializes in consumer electronics, software, and online services. One of the few stocks that can claim to be pandemic winners, shares of Apple Inc. (NASDAQ:AAPL) rose in value by a staggering 360% between December 2018 and December 2021. Due to an extremely loyal fanbase, and a highly impressive 92% customer retention rate, Apple Inc. (NASDAQ:AAPL) can weather a market downturn amid inflationary pressures.
On June 7, Morgan Stanley analyst Katy Huberty kept an ‘Overweight’ rating on Apple Inc. (NASDAQ:AAPL) shares and a price target of $195. The global tech giant recently introduced a number of software and hardware upgrades to its product lineup at its keynote Worldwide Developers Conference, including updates to the iOS 16 software, a new M2 chip and upgraded versions of the MacBook Air and MacBook Pro laptops. With regards to these reveals, the analyst notes that the company’s most attractive feature is its focus on in-house hardware and software innovation.
Apple Inc. (NASDAQ:AAPL) released its better-than-expected earnings report for the fiscal second quarter of 2022 on April 28. The company reported earnings per share of $1.52, beating market estimates by $0.09. The tech giant also generated quarterly revenues that amounted to $97.28 billion, an increase of 8.59% on a year-over-year basis, crossing the market forecasts by $3.29 billion.
The investor sentiment around the stock has largely been positive, making Apple Inc. (NASDAQ:AAPL) one of the best defensive stocks out there. At the end of the first quarter of 2022, 131 hedge funds in the database of Insider Monkey held stakes worth $182 billion in Apple Inc. (NASDAQ:AAPL). Of these, Warren Buffett’s Berkshire Hathaway held the largest stake in the company, with a position worth $155.56 billion.
ClearBridge Investments, an investment management firm, mentioned Apple Inc. (NASDAQ:AAPL) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
You can also take a look at 10 Best Shipping Stocks that Pay Dividends and 10 Best Dividend Stocks to Buy for Long Term Gains.
