D.E. Shaw Stock Portfolio: 10 Top Stock Picks

Published on November 28, 2023 at 2:52 am by Usman Kabir in Hedge Funds, News

In this article, we discuss DE Shaw and his top 10 stock picks. If you want to read about some more stocks in the Shaw portfolio, go directly to DE Shaw Stock Portfolio: 5 Top Stock Picks.

Earlier this year, LCH Investments, one of the oldest hedge funds in the world, released data showing that DE Shaw, the New York-based investment firm led by American billionaire David Elliot Shaw, was the third most successful hedge fund of all time. Since inception – DE Shaw was founded in 1988 – it had generated more than $51 billion in gains for investors. In 2022 alone, DE Shaw had earned investors around $8 billion, only beaten by the $16 billion returns of Citadel Investment Group led by Ken Griffin.

Shaw is among an elite group of investors on Wall Street who also have strong scientific credentials. Contrary to popular belief, the pursuit of the sciences is actually really beneficial in the finance world since it requires a mastery of mathematics. Shaw has an undergraduate degree from the University of California and a doctorate from Stanford University. He has also taught at Columbia University. After leaving Columbia, Shaw joined prominent investment firm Morgan Stanley as a senior executive on the technology side.

In 1988, he started his own hedge fund. It has since become one of the biggest funds in the world. At the end of the third quarter of 2023, the value of the equity portfolio of the fund alone was close to $100 billion. Some of the top stocks in the portfolio included Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). Unlike other funds, the top ten holdings of his equity portfolio account for only 11% of the total equity portfolio.

The investment philosophy of the hedge fund centers on revolves innovation and risk assessment, usually complemented by the quality of staff in capital markets around the world. The unique methods employed by the fund to manage investments include the use of quantitative and computational technology to support fundamental research. The firm also uses qualitative analysis to make private investments in technology, wind power, real estate, financial services firms, and distressed company financing. The diversity of its portfolio often shields it against market volatility, cementing rank as one of the top-performing funds year-on-year.

Our Methodology

These were picked from the investment portfolio of DE Shaw at the end of the third quarter of 2023. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2023 was used to quantify the popularity of each stock in the hedge fund universe.

David E. Shaw of D.E. Shaw

DE Shaw Stock Portfolio: Top Stock Picks

10. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 152

Alphabet Inc. (NASDAQ:GOOG) is a California-based technology firm. Regulatory filings reveal that DE Shaw owned over 3.6 million shares of Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter of 2023 worth $472 million, representing 0.49% of the portfolio.

On November 16, investment advisory Wells Fargo maintained an Equal Weight rating on Alphabet Inc. (NASDAQ:GOOG) stock and raised the price target to $129 from $126.

Among the hedge funds being tracked by Insider Monkey, Texas-based investment firm Fisher Asset Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 43 million shares worth more than $5.7 billion.

Just like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) is one of the top stocks in the portfolio of DE Shaw.

In its Q3 2023 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:

“As for other quarterly contributors, Alphabet Inc. (NASDAQ:GOOG) and Meta Platforms, Inc., (META) added to their exceptional year-to-date returns. Meta Platforms and Alphabet were the true year-to-date standouts. After steep declines in 2022, both stocks rebounded sharply due to a combination of solid fundamentals, disciplined operational execution, and improved sentiment. Despite outsized gains and attention, we think both Alphabet and Meta remain undervalued.”

9. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 111

UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified healthcare firm. Securities filings reveal that DE Shaw owned 955,343 shares of UnitedHealth Group Incorporated (NYSE:UNH) at the end of the third quarter of 2023 worth $481 million, representing 0.50% of the portfolio.

On November 20, investment advisory Jeffeires maintained a Hold rating on UnitedHealth Group Incorporated (NYSE:UNH) stock and lowered the price target to $503 from $565, noting the multiple on the firm was reduced to match 10-year relative average.

At the end of the second quarter of 2023, 111 hedge funds in the database of Insider Monkey held stakes worth $10 billion in UnitedHealth Group Incorporated (NYSE:UNH), compared to 116 in the preceding quarter worth $11 billion.

In its Q3 2023 investor letter, Madison Investments, an asset management firm, highlighted a few stocks and UnitedHealth Group Incorporated (NYSE:UNH) was one of them. Here is what the fund said:

“The top contributors in the quarter were Eli Lilly, Jacobs, Alphabet, Costco, and UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth responded well to a solid second quarter, with a better medical loss ratio driving the better-than-expected results. Additionally, UNH modestly raised guidance for the full year.

We updated the sustainable scorecard for UnitedHealth Group. The company continues to have Above Average Corporate Governance with a clear policy on separating the roles of the Chair of the Board and the CEO. We also rate the company Above Average on Social factors due to its clear cybersecurity, privacy, and data governance policies. The company continues to diversify its top management positions, where 40% of top management positions are held by women, up from 37% in 2020. We reduced our Environment rating to Average from Above Average as the company has significantly expanded its footprint in the last few years by acquiring local providers. The company is at the beginning of its journey to source renewable electricity for 100% of its operations by 2030.”

8. Uber Technologies, Inc. (NYSE:UBER)

Number of Hedge Fund Holders: 144

Uber Technologies, Inc.(NYSE:UBER) develops and operates proprietary technology applications worldwide. 13F filings show that DE Shaw owned over 11 million shares of Uber Technologies, Inc.(NYSE:UBER) at the end of September 2023 worth $510 million, representing 0.53% of the portfolio.

On November 8, investment advisory Needham maintained a Buy rating on Uber Technologies, Inc.(NYSE:UBER) stock and raised the price target to $63 from $60, noting the third quarter earnings of the firm showed bookings acceleration and a lot of runway for continued growth.

At the end of the second quarter of 2023, 144 hedge funds in the database of Insider Monkey held stakes worth $7.6 billion in Uber Technologies, Inc.(NYSE:UBER), the same as in the preceding quarter worth $5.6 billion.

In its Q3 2023 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Uber Technologies, Inc. (NYSE:UBER) was one of them. Here is what the fund said:

“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).

UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”

7. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 79

Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company. Latest filings show that the hedge fund overseen by DE Shaw owned 2.8 million shares of Tesla, Inc. (NASDAQ:TSLA) at the end of the third quarter of 2023 worth $709 million, representing 0.74% of the portfolio.

On November 20, investment advisory Bernstein maintained an Underperform rating on Tesla, Inc. (NASDAQ:TSLA) stock with a price target of $150, noting that electric vehicle growth appeared to be slowing down.

At the end of the second quarter of 2023, 79 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 82 in the previous quarter worth $6.4 billion.

Here is what Baron Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q2 2023 investor letter:

“Many factors contributed to the strong performance of our largest Disruptive Growth position, Tesla, Inc. (NASDAQ:TSLA), in the period. Investors’ concerns regarding Tesla in 2022 continue to dissipate, and the company’s business has continued to grow materially, although at below peak margins. Tesla’s deliveries in China are recovering. The company’s newest factory in Texas has ramped production and should contribute to improved domestic sales and margins. U.S. government policies have lowered the cost to own Tesla vehicles, while also reducing the company’s battery production expenses.

We continue to believe that Tesla is only scratching the surface of its potential. We regard announced partnerships between Tesla and its competitors in the quarter as important. In early June, Tesla agreed to provide Ford Motors access to Tesla’s electric vehicle (EV) charging technology and network. Other traditional and pure EV manufacturers, including General Motors, Rivian, and Volvo, quickly followed suit. We expect additional charging partnerships to ensue. In our view, these relationships validate Tesla’s charging technology and infrastructure as superior to other standards. Consolidation around a single technology should accelerate charging infrastructure deployment, diminish the risk of Tesla’s technology becoming obsolete, and lessen a key concern of hesitant EV purchasers. EV adoption is at a tipping point. And Tesla, with its approximately 60% domestic market share of EVs, should be the most important beneficiary of this shift…” (Click here to read the full text)

6. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 225

Meta Platforms, Inc. (NASDAQ:META) is a tech firm that owns and runs social media platforms. Latest data shows that DE Shaw owned 2.7 million shares of Meta Platforms, Inc. (NASDAQ:META) at the end of September 2023 worth $811 million, representing 0.84% of the portfolio of the fund.

On November 1, Loop Capital analyst Rob Sanderson maintained a Buy rating on Meta Platforms, Inc. (NASDAQ:META) stock with a price target of $375, noting the advisory was encouraged by the product momentum around the tech firm.

At the end of the second quarter of 2023, 225 hedge funds in the database of Insider Monkey held stakes worth $30 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 220 in the preceding quarter worth $25 billion.

Along with Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META) is one of the top stocks in the portfolio of DE Shaw.

In its Q3 2023 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:

“As for other quarterly contributors, Alphabet, Inc., (GOOG) and Meta Platforms, Inc. (NASDAQ:META) added to their exceptional year-to-date returns. Meta Platforms and Alphabet were the true year-to-date standouts. After steep declines in 2022, both stocks rebounded sharply due to a combination of solid fundamentals, disciplined operational execution, and improved sentiment. Despite outsized gains and attention, we think both Alphabet and Meta remain undervalued.”

Click to continue reading and see D.E. Shaw Stock Portfolio: 5 Top Stock Picks.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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Published on May 2, 2024 at by Insider Monkey Staff

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