In this article, we discuss the 5 important stock picks of major hedge funds in 2021. If you want to read our detailed analysis of these stocks, go directly to the 15 Important Stock Picks of Major Hedge Funds in 2021.
5. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 106
Gain in Share Price Over Past Year as of January 4: 34.9%
The market shift towards value stocks has helped Berkshire Hathaway Inc. (NYSE:BRK-B) outperform the S&P 500 this year. Hedge funds have long been of the view that Berkshire Hathaway Inc. (NYSE:BRK-B) should be a core holding in large portfolios. At the end of the third quarter of 2021, 106 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Berkshire Hathaway Inc. (NYSE:BRK-B).
Berkshire Hathaway Inc. (NYSE:BRK-B) stock is expected to continue on an accelerated growth trajectory this year as inflation concerns persist. One of the reasons why Berkshire Hathaway Inc. (NYSE:BRK-B) is the ultimate value stock is the diversity of its business. Berkshire Hathaway Inc. (NYSE:BRK-B) owns and runs 69 operating firms and has close to $150 billion in cash for tough times.
In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. (NYSE:BRK-B) was one of them. Here is what the fund said:
“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 120
Gain in Share Price Over Past Year as of January 4: 38.7%
Apple Inc. (NASDAQ:AAPL) has continued to register impressive gains even though tech stocks undergo a period of correction. Apple Inc. (NASDAQ:AAPL) has withstood disruption and competition at the market due in part to the strong demand for iPhones and the development of an ecosystem that people world over have praised as the best in the business. There are over a billion active iPhones across the globe and over 1.6 billion active Apple Inc. (NASDAQ:AAPL) devices. This gives the firm strong competitive and monetary advantages over peers.
Apple Inc. (NASDAQ:AAPL) has also grown the services business over the past year to complement the improvement in hardware offerings. The services business has over 745 million paid subscriptions that contribute a huge chunk to the revenue and will likely grow the gross margins for the firm in the coming years.
Apple Inc. (NASDAQ:AAPL) recently crossed $3 trillion in market capitalization, cementing its status as the largest firm in the world. At the end of the third quarter of 2021, 120 hedge funds in the database of Insider Monkey held stakes worth $146 billion in Apple Inc. (NASDAQ:AAPL).
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
3. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 250
Gain in Share Price Over Past Year as of January 4: 50.5%
Microsoft Corporation (NASDAQ:MSFT) is one of the most popular stocks among hedge funds. At the end of September, 250 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT) worth $65 billion. Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT) with 25 million shares worth more than $7 billion.
SMBC Nikko analyst Steve Koenig recently initiated coverage of Microsoft Corporation (NASDAQ:MSFT) stock with an Outperform rating and a price target of $410, underlining that the firm was successfully transitioning customers to the cloud and was well positioned to take advantage of increased spending towards IT in the coming years.
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. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 88
Gain in Share Price Over Past Year as of January 4: 77.7%
Wells Fargo & Company (NYSE:WFC) had a stellar 2021 and looks set to continue on that trajectory in 2022. The firm beat market estimates on earnings per share and revenue for the third quarter by $0.17 and $520 million respectively. The earnings beat was driven by growth in consumer and commercial banking. Wells Fargo & Company (NYSE:WFC) will likely improve efficiency ratios in the coming months and increase revenues as interest rates rise.
Hedge funds are bullish on Wells Fargo & Company (NYSE:WFC). At the end of the third quarter of 2021, 88 hedge funds in the database of Insider Monkey held stakes worth $6 billion in Wells Fargo & Company (NYSE:WFC).
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Wells Fargo & Company (NYSE:WFC) was one of them. Here is what the fund said:
“Detractors to performance relative to the index include financial services holdings such as Wells Fargo. While banks in general have suffered due to the recession and experienced credit losses, Wells Fargo also suffered from operational missteps. It is our expectation, however, that our bank holdings in general will benefit from stronger economic growth as the pandemic recedes; and we believe Wells Fargo in particular, will, over time, lower their costs and successfully grow their businesses.”
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Gain in Share Price Over Past Year as of January 4: 67.0%
Alphabet Inc. (NASDAQ:GOOG) stock offers investors solid fundamentals and a rosy growth outlook for years to come. Although rising interest rates could affect the shares, the growth in different businesses, like the cloud and artificial intelligence markets, will most likely offset these concerns. Alphabet Inc. (NASDAQ:GOOG) was one of the most profitable companies in the world in 2021, boasting 30 cents of net profits per dollar in revenue.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $7.8 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“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.”
You can also take a peek at 10 Solar Penny Stocks to Buy According to Reddit and 10 Utilities Stocks with Over 3% Dividend Yield.
