In this article, we will discuss the 8 Best Quality Stocks to Buy According to Hedge Funds.
On April 9, Tom Lee of Fundstrat appeared on CNBC’s ‘Closing Bell’ to suggest that the market has reached a bottom. He based this on the observation that during the previous week, stocks remained resilient even as the war intensified and oil prices rose. With the current rate of change suggesting a de-escalation in the conflict, Lee anticipates that stocks are now positioned to return to all-time highs and potentially reach his year-end target of 7,300. The discussion touched on Lee’s initial outlook for the year, which predicted a strong start followed by a potential bear market driven by a new Fed chair and monetary policy issues. Although Lee did not foresee the war, he explained that the conflict has pushed forward necessary market repositioning, as many investors have already raised cash or moved into defensive postures.
He noted that a rolling bear market has already affected ~70% of the S&P 500, hitting energy and financials last year and the Mag 7 and software sectors this year. Because the market has already fallen 8%, Lee suggested that any upcoming summer lull may not be as severe as previously expected. Regarding market leadership, Lee identified the top-performing assets since the start of the war as crypto, energy stocks, the Mag 7, software, and financials. He acknowledged that while energy stocks may cool as oil prices flatten, sectors like the Mag 7 and software currently show their highest negative correlation to oil in nearly a decade. He pointed out that the Mag 7 is now trading near a market multiple, making these stocks relatively cheap. Lee also expects more investors to buy US equities because the US has proven its resilience during the war and tends to generate more revenue during wartime. He defined the current broadening trade as more US stocks rising across the board.
Our Methodology
We sifted through the Vanguard US Quality Factor ETF holdings to find the best quality stocks and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Note: All data was sourced on April 10.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
8 Best Quality Stocks to Buy According to Hedge Funds
8. Willis Towers Watson (NASDAQ:WTW)
Number of Hedge Fund Holders: 37
Willis Towers Watson (NASDAQ:WTW) is one of the best quality stocks to buy according to hedge funds. On April 09, Willis announced the launch of Digital Infrastructure Protector. This new end-to-end lifecycle solution is designed specifically for data center owners, operators, contractors, and hyperscalers. By combining integrated insurance coverage for both the construction and operational phases with tailored risk management, the solution aims to maximize operational and financial resiliency within the increasingly complex data center risk ecosystem.
The product offers more than $3 billion in capacity through a collaboration with Zurich, allowing clients to consolidate building, operational property, marine, and cargo exposures under a single policy. The offering includes evidence-based broking, utilizing analytics and data validation to assess coverage gaps and prevent overinsurance. Additionally, it uses an eight-point digital infrastructure risk framework to provide a holistic view of systemic and emerging risks as projects evolve.
Clients using Digital Infrastructure Protector gain access to the newly formed Global Digital Infrastructure Group, a cross-functional team led by Alastair Swift. This group integrates global experts from sectors including construction, energy, climate, cyber, and supply chain to help clients stay ahead of broader trends.
Willis Towers Watson provides advisory, broking, and risk solutions. The company’s service offerings include actuarial support, broking, strategy consulting, and plan management support. It also offers administrative support for life, medical, disability, voluntary, and other benefit programs.
7. Northern Trust Corporation (NASDAQ:NTRS)
Number of Hedge Fund Holders: 39
Northern Trust Corporation (NASDAQ:NTRS) is one of the best quality stocks to buy according to hedge funds. Earlier on March 19, Northern Trust announced that First Sentier Group transitioned its US mutual funds onto Northern Trust’s Datum One Series Trust. This move expands a global partnership that began in 2006 and is designed to support First Sentier’s US mutual fund strategy through a consolidated oversight model.
Northern Trust will now provide a comprehensive suite of services for these funds, including custody, fund accounting, transfer agency, and board governance. The use of the Datum One Series Trust structure offers First Sentier an efficient and cost-effective entry point into the US market. By using this series trust, the asset manager benefits from Northern Trust’s established regulatory and legal support framework.
First Sentier Group, which manages $137.3 billion in assets as of December 31, 2025, is a global organization owned by Mitsubishi UFJ Trust and Banking Corporation. The transition of these funds represents the latest evolution in their relationship with Northern Trust Corporation, which already includes middle-office services and fund administration across multiple global regions.
Northern Trust Corporation is a financial holding company that operates through its subsidiaries, including The Northern Trust Company. It offers wealth management, asset servicing, asset management, and banking solutions to corporations, institutions, families, and individuals.
6. RPM International Inc. (NYSE:RPM)
Number of Hedge Fund Holders: 39
RPM International Inc. (NYSE:RPM) is one of the best quality stocks to buy according to hedge funds. On April 8, RPM International reported financial results for FQ3 2026, where the company achieved sales of $1.61 billion, an 8.9% increase over the previous year, driven by high-performance building solutions and acquisitions. While net income was $51.4 million, adjusted EBIT rose 48.8% to a record $116.4 million, and adjusted diluted EPS increased 62.9% to $0.57.
Performance across RPM International’s three main groups was strong, with the Construction Products Group and Performance Coatings Group both reporting record sales and significant EBIT growth. The Consumer Group also reached record sales, driven by acquisitions and pricing actions that offset softness in the DIY market. Geographically, growth was led by a 20.1% increase in Europe and expansion in emerging markets like Africa and the Middle East.
The company reaffirmed its FQ4 2026 guidance, projecting mid-single-digit sales growth and low- to high-single-digit adjusted EBIT growth. Additionally, RPM International Inc. announced the completion of its acquisition of Kalzip GmbH on March 31, a move expected to further strengthen the Construction Products Group’s portfolio in metal-based roofing and facades.
RPM International Inc. operates through subsidiaries focused on coatings, sealants, building materials, and related services. The company reports its business across three segments: Construction Products Group, Performance Coatings Group, and Consumer.
5. State Street Corporation (NYSE:STT)
Number of Hedge Fund Holders: 42
State Street Corporation (NYSE:STT) is one of the best quality stocks to buy according to hedge funds. On April 9, State Street Corporation announced the expansion of its nearly 40-year partnership with Thornburg Investment Management to support Thornburg’s new ETF share classes. State Street will provide end-to-end servicing, including custody, accounting, ETF basket creation, transfer agency, and create-and-redeem order management.
This mandate represents only the second active ETF share-class servicing arrangement in the US, positioning State Street as a leading enabler for asset managers seeking flexible ways to deliver active investment strategies. Thornburg, which is a global investment firm managing ~$57 billion in assets as of March 31, first partnered with State Street for its initial suite of active ETFs in January 2025. The transition to ETF share classes is a strategic move to meet increasing investor demand for diversified access to high-conviction equity and fixed-income strategies.
Donna Milrod, State Street’s chief product officer, highlighted that the firm’s operational scale allows clients to focus on investment outcomes while maintaining a seamless experience across different fund structures. This expansion solidifies State Street Corporation’s (NYSE:STT) status as the top global provider of ETF services, driving innovation for active managers in the US market.
State Street Corporation provides financial products and services to institutional investors, including custody, accounting, and fund administration services for traditional and alternative assets, as well as trading, securities finance, and investment analytics solutions.
4. Illumina Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders: 46
Illumina Inc. (NASDAQ:ILMN) is one of the best quality stocks to buy according to hedge funds. On March 18, Illumina and Labcorp (NYSE:LH) announced an expanded collaboration aimed at increasing global access to precision oncology through next-generation sequencing/NGS solutions. The partnership focuses on several key areas, including the development of new in vitro diagnostic/IVD tests for whole-genome sequencing and comprehensive genomic profiling/CGP.
A central part of the agreement involves the co-commercialization of Labcorp’s FDA-authorized liquid biopsy assay, PGDx elio plasma focus Dx, alongside Illumina Inc.’s (NASDAQ:ILMN) FDA-approved TruSight Oncology Comprehensive. This joint offering is intended to provide healthcare providers with distributed tools for both tissue and liquid biopsy testing, facilitating the identification of patients eligible for targeted treatments and clinical trials.
Furthermore, the collaboration provides pharmaceutical companies with specialized opportunities for developing companion diagnostics for both types of biopsies. The two companies also plan to continue generating clinical evidence to support broader payer coverage and the adoption of CGP. They recently published a joint study in Frontiers of Oncology involving over 7,600 lung cancer samples, which showed that CGP could detect actionable variants in 72% of patient tumors.
Illumina Inc. is a life sciences company that develops and produces tools and systems for genomic research. It provides a variety of tools and services, such as sequencing platforms and microarrays, that allow clinicians to evaluate genetic data and make discoveries.
Labcorp Holdings Inc. is a diagnostics & research company that operates through two segments: Diagnostics Laboratories and Biopharma Laboratory Services. The company provides comprehensive clinical and specialty diagnostic testing, digital pathology solutions, and AI-enabled healthcare tools.
3. Williams-Sonoma Inc. (NYSE:WSM)
Number of Hedge Fund Holders: 47
Williams-Sonoma Inc. (NYSE:WSM) is one of the best quality stocks to buy according to hedge funds. On April 06, Williams-Sonoma announced a new gourmet food collaboration with Oakville Grocery, a 145-year-old Napa Valley institution. This partnership brings together two prominent Northern California brands to launch a collection of pantry staples and artisanal foods inspired by the regional flavors of the Napa and Sonoma Valleys.
The assortment includes items such as olive oils, tapenades, braising sauces, and condiments featuring local ingredients like cabernet, olives, and rosemary. The ‘Oakville Grocery for Williams Sonoma’ collection is designed to reflect the seasonal bounty and craftsmanship of wine country, aiming to facilitate effortless entertaining for customers nationwide.
The complete collection is currently available at all Williams-Sonoma retail locations and through their website, with a curated selection also offered at the Oakville Grocery store in California. To commemorate the launch, Williams-Sonoma Inc. stores will host tasting events on April 17 and 18. This initiative aligns with Williams-Sonoma’s history of bringing people together around food while expanding Oakville Grocery’s reach as a premier destination for culinary enthusiasts.
Williams-Sonoma Inc. operates as an omnichannel retailer focused on home products, with a portfolio built around distinct merchandising strategies.
2. Gilead Sciences Inc. (NASDAQ:GILD)
Number of Hedge Fund Holders: 71
Gilead Sciences Inc. (NASDAQ:GILD) is one of the best quality stocks to buy according to hedge funds. On April 9, Tempus AI (NASDAQ:TEM) announced an expanded, multi-year collaboration with Gilead Sciences to accelerate Gilead’s oncology research and development pipeline. The agreement builds on previous work where Gilead utilized Tempus’ de-identified multimodal data for trial design, biomarker strategies, and health outcomes analysis.
Under this new enterprise-wide mandate, Gilead gains broader access to Tempus’ AI-driven Lens platform and dedicated analytical services across multiple cancer indications. The partnership aims to use Tempus’ vast library of real-world data to uncover biological insights that can improve clinical decision-making.
By integrating Gilead’s scientific expertise with advanced data insights, the companies seek to increase the probability of success for new cancer therapies. Patrick Loerch, SVP of Clinical Data Science at Gilead Sciences Inc., emphasized that the collaboration focuses on putting patients at the center of innovation through data-informed research. The collaboration underscores the growing role of AI and real-world evidence in modern drug development and precision medicine.
Gilead Sciences Inc. is a drug manufacturer that develops medicines for unmet medical needs. The company provides treatments for HIV-1, chronic hepatitis C, primary biliary cholangitis, chronic hepatitis B, and serious invasive fungal infections. It also offers T-cell and CAR T-cell therapies for adult patients, intravenous injections, and treatments for COVID-19.
Tempus AI Inc. is a healthcare technology company that uses artificial intelligence to advance precision medicine.
1. Qualcomm Inc. (NASDAQ:QCOM)
Number of Hedge Fund Holders: 78
Qualcomm Inc. (NASDAQ:QCOM) is one of the best quality stocks to buy according to hedge funds. On April 10, Reuters reported that Qualcomm and Snap Inc.’s (NYSE:SNAP) smart glasses unit, Specs, announced a multi-year deal to use Qualcomm chips for upcoming devices. The smart glasses, which are launching later this year, will use the Snapdragon XR processor platform. While the financial details were not disclosed, this deal builds on a years-long relationship where Qualcomm chips have powered previous generations of Snap’s developer-focused Spectacles.
The deal marks the first major move for the Specs unit since it was established by Snap in January. Snap formed a separate unit to provide more independence to the team and to compete with Meta’s Ray-Ban AI smart glasses. The parent company has stated that this separate unit also opens up room for external investment in the development of its smart glasses.
This announcement follows recent pressure from activist investor Irenic Capital Management, which disclosed a 2.5% interest in Snap’s Class A shares. Last week, the firm pushed Snap to cut costs and either spin off or shutter the Specs unit. Despite this pressure, the new agreement ensures Qualcomm will provide the processors for Snap’s upcoming AI-powered gadgets.
Qualcomm Inc. develops and commercializes core technologies and products for mobile devices and other wireless products. It operates in three segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives.
Snap Inc. operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, which is a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight.
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