In this article, we will take a detailed look at the12Best Blue Chip Stocks To Invest In According to Hedge Funds.For a quick overview of such stocks, read our article5Best Blue Chip Stocks To Invest In According to Hedge Funds.
The US stock market's euphoria came crashing down recently when latest data showed inflation remains sticky and the soft landing scenario many had started to take as a given might not be easy to achieve. Ever since the inflation storm began, wise investors had been recommending piling into recession-proof, high-quality blue chip stocks that can weather economic volatility. While a single month's bad inflation numbers do not mean doom and gloom for the stock market, many analysts believe we are in for a long period of inflation and risks where low-quality stocks should be completely avoided. Russell Investments in its 2024 outlook report said that while recession was avoided in 2023, risks in 2024 are high because the consumer savings that protected Americans from recession last year are expected to be exhausted this year.
"Corporations and households built strong defenses against Fed tightening following the pandemic, accumulating large cash reserves and locking in low interest rates on 30-year mortgages and longer-term corporate bonds. These defenses, however, are beginning to crumble. Households will soon exhaust their excess savings, while significantly higher interest rates—which have become a constraint on new borrowing—will create refinancing issues. We think this cycle may be a case of this time is longer rather than this time is different with regards to the lagged impact of aggressive Fed tightening on the U.S. economy. Recession in 2024 might be avoided, but the risks are elevated."
In this environment it's important to see which blue chip stocks smart money investors are piling into.
Photo by Ruben Sukatendel on Unsplash
Methodology
For this article we first listed down all holdings of EA Bridgeway Blue Chip ETF (NYSEARCA:BBLU) and then gauged hedge fund sentiment for these stocks using Insider Monkey's database of 900+ hedge funds and their holdings. From these stocks we picked 12 stocks with the highest number of hedge fund investors. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
12. Eli Lilly And Co (NYSE:LLY)
Number of Hedge Fund Investors: 102
Eli Lilly And Co (NYSE:LLY)is one of the best blue chip stocks to invest in according to smart money investors. As of the end of the third quarter of 2023, 102 hedge funds had stakes in Eli Lilly And Co (NYSE:LLY), as per Insider Monkey's database of 910 hedge funds. The stock recently jumped after Eli Lilly And Co (NYSE:LLY)posted strong Q4 results, driven by upbeat sales of its new diabetes and weight loss therapies. Revenue in the fourth quarter jumped 28.1% year over year to $9.35 billion, beating estimates by $380 million.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its fourth quarter 2023 investor letter:
“Stock selection was also positive in the sub-industry owing to strong gains from therapeutics-focused pharmaceutical giantEli Lilly and Company(NYSE:LLY). Lilly’s stock continued to outperform driven by strong sales of blockbuster diabetes medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises, particularly after Novo Nordisk released its SELECT trial results showing a 20% relative risk reduction in overweight patients with cardiovascular disease and no prior history of diabetes.
Eli Lilly and Company is a global pharmaceutical company that discovers, develops, manufactures, and sells medicines in the categories of diabetes, oncology, neuroscience, and immunology, among other areas. Stock performance was strong due to strong third quarter sales of blockbuster diabetes medicine Mounjaro and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises. We continue to think Lilly is well positioned to grow revenue and earnings at attractive rates through the end of the decade and beyond.
We own Eli Lilly and Company, which we believe will remain a leader in the GLP-1 medicine class with Mounjaro, Zepbound, and the company’s deep pipeline of next generation GLP-1 medicines.”
11. UnitedHealth Group Inc (NYSE:UNH)
Number of Hedge Fund Investors: 104
UnitedHealth Group Inc (NYSE:UNH)is a major company in the health insurance sector with a market cap of over $481 billion and over a decade of consistent dividend increases. As of the end of the third quarter of 2023, 104 hedge funds in Insider Monkey's database of 910 hedge funds reported owning stakes in UnitedHealth Group Inc (NYSE:UNH).
The biggest stake in UnitedHealth Group Inc (NYSE:UNH)is owned by Rajiv Jain's GQG Partners which owns a $1.6 billion stake in UnitedHealth Group Inc (NYSE:UNH).
10. JPMorgan Chase & Co (NYSE:JPM)
Number of Hedge Fund Investors: 109
JPMorgan Chase & Co (NYSE:JPM)shares have gained about 21% over the past one year. Insider Monkey's database of 910 hedge funds shows that 109 hedge funds had stakes in JPMorgan Chase & Co (NYSE:JPM)as of the end of the third quarter of 2023. The most significant stake in JPMorgan Chase & Co (NYSE:JPM)is owned by Ken Fisher's Fisher Asset Management which owns a $1.3 billion stake in JPMorgan Chase & Co (NYSE:JPM).
JPMorgan Chase & Co (NYSE:JPM)has over a decade of consistent dividend increases under its belt. JPMorgan Chase & Co (NYSE:JPM)recently unveiled a multibillion-dollar expansion plan according to which it will open 500 branches, renovate about 1,700 locations and hire 3,500 staffers over the next three years.
Madison Sustainable Equity Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its fourth quarter 2023 investor letter:
“We updated the sustainable scorecard forJPMorgan Chase & Co.(NYSE:JPM). JP Morgan continues to have an Average rating across Governance, Social and Environmental factors. JP Morgan is using its business to improve climate change. JP Morgan has targeted $2.5 trillion in financing between 2021 and 2030 to advance long-term solutions to address climate change and sustainable development. The Board has oversight of corporate responsibility and ESG matters, but ESG and Sustainability are addressed across the firm. JPM does listen to shareholders. After a 31% For Vote on executive compensation in 2022, the Board will not be granting any special awards to Jamie Dimon or Daniel Pinto and if awarded to other Named Executive Officers, there will be a direct performance condition associated with the award. The Compensation Committee limited the cash percentage of Dimon and Pinto’s compensation.”
9. Berkshire Hathaway Inc Class B (NYSE:BRK.B)
Number of Hedge Fund Investors: 116
Warren Buffett's conglomerate Berkshire is one of the safest high-quality blue chip stocks one can buy in this market environment. Many call this stock equivalent of an ETF because of the company's diversification.
8. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 134
Apple Inc (NASDAQ:AAPL) is undoubtedly one of the best blue chip stocks to buy and hold according to hedge funds. Apple Inc's (NASDAQ:AAPL) products gain a lot of traction due to Apple Inc's (NASDAQ:AAPL) innovation and brand name attraction. Apple Inc (NASDAQ:AAPL) is currently making waves with Apple Vision Pro, which the company calls spatial computer. Analysts are surprised to see the strong demand and attention the headset is getting all over the world.
After Vision Pro, Apple Inc (NASDAQ:AAPL)is eyeing to launch a new kind of iPhone. The Information recently reported that Apple Inc (NASDAQ:AAPL)is working onfoldable iPhones in various sizes.
Bireme Capital stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:
“We also shortedApple Inc.(NASDAQ:AAPL) in Q3. At our average price of around $190 per share, Apple traded at 30x peak earnings and a $2.8 trillion market cap. While Apple is indeed a magnificent company, this valuation is simply too rich for a business with a substantial cyclical component. The company is projected to grow revenue at a mere 4% rate between 2022 and 2026. We think the total return on Apple stock will be lower than the market, and especially our long positions, over the next few years.”
7. Mastercard Inc (NYSE:MA)
Number of Hedge Fund Investors: 140
Mastercard Inc (NYSE:MA) ranks seventh in our list of the best blue chip stocks to buy according to smart money investors. Mastercard Inc (NYSE:MA) has a dividend yield of about 0.57% as of February 8 while the company has upped its payouts consistently for over a decade now.
A total of 140 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Mastercard Inc (NYSE:MA). The biggest stake in Mastercard Inc (NYSE:MA)is owned by Charles Akre's Akre Capital Management which owns a $2.3 billion stake in Mastercard Inc (NYSE:MA).
Ensemble Capital Management stated the following regarding Mastercard Incorporated (NYSE:MA) in its fourth quarter 2023 investor letter:
“Mastercard Incorporated(NYSE:MA) (7.21% weight in the Fund): Payment companies are data companies. As we discussed last quarter in our write up of Mastercard, merchants can generate significant value from analyzing payment data to better understand their customers. Mastercard has long built AI-based products to enhance payment security and provide merchants with rich data analytics. In December, they rolled out Muse, a new online shopping companion that merchants who utilize certain Mastercard services can install on their own websites.
Muse seeks to replicate the instore experience of working with a salesclerk by allowing the customer to use natural language to browse products. Online shopping already works well if you know exactly what you are looking for, but Muse is striving to help customers find things to buy even when they aren’t sure what they are looking for.
Mastercard (7.21% weight in the Fund): In late October, Mastercard reported earnings that investors interpreted as pointing to a near term slowdown in payment growth. The stock fell 5.6% on the day. By the end of the next week, the stock had recovered its losses and went on to reach a new all time high on the last day of the year. But the 7.9% gain on the quarter slightly trailed the S&P 500.”
6. Visa Inc (NYSE:V)
Number of Hedge Fund Investors: 167
Visa Inc (NYSE:V)is one of the favorite stocks of smart money managers tracked by Insider Monkey. Last month Visa Inc (NYSE:V)posted fiscal first quarter results. Adjusted EPS in the quarter came in at $2.41, beating estimates by $0.07. Revenue in the period jumped 8.9% year over year to $8.6 billion, beating estimates by $50 million.
Of the 910 hedge funds in Insider Monkey's database, 167 hedge funds had stakes in Visa Inc (NYSE:V).
In its October 2023 investor letter, Lakehouse Capital stated the following regarding Visa Inc. (NYSE:V):
“Visa Inc.(NYSE:V) reported a strong result with net revenue increasing 11% year-on-year to $8.6 billion and non-GAAP earnings per share increasing by 21% to $2.33. As has been the case for many years now, the scalable nature of the business allows for revenue growth to outpace its costs, which places the company in a good position to navigate through this inflationary period. The network continues to grow, with credentials and merchant locations up 7% and 17%, respectively. Cross-border travel-related spend also maintained its robust growth, increasing 26% year-on-year while Visa Direct reported 7.5 billion transactions, up 19% yearon-year, progressing on penetrating categories such as cross-border remittances. Altogether, we’re pleased with how the business is tracking and remain positive on Visa’s outlook.”
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Disclosure.None.12Best Blue Chip Stocks To Invest In According to Hedge Fundswas initially published on Insider Monkey.
