8 Best Quality Stocks to Buy According to Hedge Funds

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 (NASDAQ:WTW) 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 (NASDAQ:NTRS), which already includes middle-office services and fund administration across multiple global regions.

Northern Trust Corporation (NASDAQ:NTRS) 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. (NYSE:RPM) 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. (NYSE:RPM) 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.

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