In this article, we will take a look at the 5 stocks hedge funds are talking about. To see more such companies, go directly to 10 Stocks Hedge Funds Are Talking About.
5. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Ranking 5th in our list of the 10 stocks hedge funds are talking about is Johnson & Johnson (NYSE:JNJ). Johnson & Johnson (NYSE:JNJ)’s management revised its full-year 2023 adjusted-diluted EPS outlook, raising it from the initial range of $10-$10.1 to $10.07-$10.13, and concurrently elevated its operating sales forecast from $83.6 billion-$84.4 billion to $84.4 billion-$84.8 billion, due to stronger sales of products from Johnson & Johnson (NYSE:JNJ)’s Innovative Medicine business segment.
According to Insider Monkey’s database of 943 hedge funds, 88 hedge fund portfolios held Johnson & Johnson (NYSE:JNJ) at the end of the second quarter, compared to 86 funds in the previous quarter. One of the most prominent hedge fund holders of Johnson & Johnson (NYSE:JNJ) is Bridgewater Associates, owning 7.48 million shares amounting to $424.3 million.
ClearBridge Large Cap Value Strategy made the following comment about Johnson & Johnson (NYSE:JNJ) in its Q3 2023 investor letter:
“The health care space provided some opportunities in the quarter, as we increased our exposure to medical device company Becton, Dickinson as well as large cap pharmaceutical company Johnson & Johnson (NYSE:JNJ). Johnson & Johnson recently spun out its consumer health care business, becoming a more focused yet broadly diversified pharmaceutical and medtech company.”
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 92
Burbank, California-based The Walt Disney Company (NYSE:DIS) is among the top 10 stocks hedge funds are talking about. The Walt Disney Company (NYSE:DIS)’s revenue increased by 5% to $21.24 billion, slightly below the consensus of $21.4 billion, primarily influenced by the robust performance of the company’s Parks unit. With an annualized cost savings target of $7.5 billion, The Walt Disney Company (NYSE:DIS) achieved an adjusted earnings per share of $0.82, a significant improvement from the year-ago figure of $0.30 and surpassing the anticipated $0.71 per share.
The Walt Disney Company (NYSE:DIS)’s CEO, Robert Iger is optimistic that the company will achieve profitability in Q4 of fiscal 2024 as he made the following remarks in their Q4 2023 earnings call:
“The fourth quarter adjusted earnings per share nearly tripled over the prior year. And all three of our businesses, Entertainment, Experiences, and Sports saw significant increases in fourth quarter operating income compared to Q4 of fiscal 2022. The thorough restructuring of our company has enabled tremendous efficiencies and we’re on track to achieve roughly $7.5 billion in cost reductions, which is approximately $2 billion more than we targeted earlier this year. Our new structure also enabled us to greatly enhance our effectiveness, particularly in streaming, where we’ve created a more unified, cohesive and highly coordinated approach to marketing, pricing and programing. This has helped us to improve operating results of our combined streaming businesses by approximately $1.4 billion from fiscal 2022 to fiscal 2023. And we remain confident that we will achieve profitability in Q4 of fiscal 2024.”
Madison Sustainable Equity Fund made the following comment about The Walt Disney Company (NYSE:DIS) in its Q3 2023 investor letter:
“During the quarter, we sold our positions in Bristol-Myers Squibb and The Walt Disney Company (NYSE:DIS). The Walt Disney Company is facing a difficult and uncertain transition in its core media business assets including the ESPN business and other linear media assets. These media assets are cash generative but face secular decline as consumers are cutting their expensive cable subscriptions and moving to alternative streaming options. This has resulted in a decline in operating profits for the media division. The media business has long-term fixed costs related to its sports broadcasting agreement with multiple sports leagues which will further pressure profits during this transition.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Ranking 3rd on our list of the 10 stocks hedge funds are talking about is Apple Inc. (NASDAQ:AAPL). In the third quarter of 2023, Apple Inc. (NASDAQ:AAPL) reported earnings of $1.46 per share, with a 1% year-over-year decline in revenue to $89.5 billion. The performance was supported by an all-time high in services revenue and steady iPhone sales. Additionally, iPhone-related revenue reached $43.8 billion, reflecting a 3% year-over-year increase and aligning with expectations.
Polen Focus Growth Strategy made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q3 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL) has been a meaningful detractor to relative performance in recent quarters as the company has seen moderate earnings growth but substantial P/E multiple expansion. In our view, Apple is a great business but one with more risk factors related to China than we would prefer: relatively low EPS growth, which is being heavily aided by share buybacks (slower EPS growth than every single company in our Portfolio); and a high P/E ratio for this level of growth. This combination rarely leads to excellent long-term share price performance in our experience.
Last quarter, Apple’s new iPhone introduction failed to generate much excitement, with iPhone units declining year over year. There was also news that the Chinese government was blocking its employees from using iPhones. Apple is exposed to the rising geopolitical tensions between the U.S. and China. The latter is responsible for much of the company’s incremental iPhone growth, and nearly all of Apple’s supply chain is China-based. The relatively small action by the Chinese government was a reminder to investors that Apple is not immune from geopolitics or other risks.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 152
Alphabet Inc. (NASDAQ:GOOG) showcased a substantial 11.1% increase in revenue in its third quarter earnings report. Alphabet Inc. (NASDAQ:GOOG)’s operating income surged from $17.14 billion in Q3 2022 to $21.34 billion, propelled not only by heightened revenue but also by a 300 basis points expansion in operating margin. Reporting a GAAP EPS of $1.55, Alphabet Inc. (NASDAQ:GOOG) exceeded analysts’ estimates by $0.10 and exhibited a remarkable 46.2% growth compared to the previous year.
The London Company Large Cap Strategy made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) – GOOG outperformed in Q3, reflecting better than expected Search revenue and sustainable momentum in Cloud. Search ad revenue accelerated sequentially and remains the largest contributor to topline growth. Slower expense growth helped margins as management continued to focus on long-term profitable growth. GOOG’s capital allocation priorities have been favorable as the company continues to invest in the business and return capital to shareholders via its buyback program. GOOG has a solid balance sheet, significant market share, and generates strong returns.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 300
Topping our list of the 10 stocks hedge funds are talking about is Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) delivered a 54.22% return since the beginning of the year, achieving a new record high of $376.17 on November 16, 2023. With shares surging over 11% in the past month, Microsoft Corporation (NASDAQ:MSFT) now boasts a market cap of $2.74 trillion. Investor confidence has been bolstered by the company’s recent quarterly results, indicating better-than-expected growth in its Azure cloud unit and a decrease in interest rates.
According to our analysis, Microsoft Corporation (NASDAQ:MSFT) holds the top position in our compilation of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the second quarter of 2023, Microsoft Corporation (NASDAQ:MSFT) was present in 300 hedge fund portfolios, marking an increase from 289 funds in the preceding quarter. The Bill & Melinda Gates Foundation Trust emerges as the leading hedge fund holder of Microsoft Corporation (NASDAQ:MSFT) with 39.2 million shares, valued at $12.4 billion.
Alger Spectra Fund made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2023 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. Microsoft’s CEO expects technology spending as a percent of Gross Domestic Product (GDP) to jump from about 5% now to 10% in 10 years and that Microsoft will continue to capture market share within the technology sector. The t company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the period, the company reported fiscal fourth quarter results that were slightly below expectations. This was largely because anticipations were high due to the company’s robust year-to-date share price performance, which was buoyed by enthusiasm surrounding Al. Although quarterly revenues and earnings beat consensus estimates, management pointed out that they would be ramping up capital expenditures to support Al-driven operational growth. Notably, the company witnessed significant growth in its Intelligent Cloud segment as Azure continues to expand its market share. Despite the encouraging results, demand challenges stemming from companies looking to optimize their cloud spending led to a deceleration in cloud growth when compared to the previous quarter. Acknowledging that cloud optimization may curb the company’s growth in the short term: we remain confident about the company’s prospects going forward, particularly in the realm of Al adoption. Further, CEO Satya Nadella has recently indicated that substantial revenue contributions from Al will begin to materialize around the first half of 2024.”
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