The Hedge Fund Largest Position
Despite the turmoil in the stock market, hedge fund investors have seen the market rise in recent years. Hedge funds are investing in companies that can be expected to perform well in the future. These stocks include Retail HOLDRs (RTH) and Netflix (NFLX).
Despite being a major player in the credit rating industry, Moody’s (NYSE:MCO) has not been the most popular stock among the hedge fund set. The latest numbers from Hedge Fund Research show that only 55 hedge funds were bullish on the stock, down 7% from the previous quarter. As the name suggests, Moody’s is best known for its credit ratings, although it is also a major supplier of credit portfolio management solutions, valuation models and risk scoring software.
There are actually two credit rating segments of the company, the credit rating wing and the credit analysis wing. The latter provides credit analysis and valuation models while the former provides credit processing and credit rating software. The company also ranks high on the list of largest companies in the world and is not averse to making some kind of deal, be it a sale, a debt reduction or a merger or acquisition. Despite having a hefty debt load, Moody’s has managed to keep a lid on its expenses, resulting in the company being one of the few companies to pay the price for the rising interest rate. It is also one of the few companies to provide dividends to its shareholders.
The company’s financial performance is also impressive, with the smallest disclosed losses accounting for less than 1% of total revenue in the first quarter. The aforementioned financial performance has not only been a boon to shareholders but has been a boon to the credit rating industry as a whole. The credit rating industry has not only had to contend with rising interest rates but also with increased competition from other lenders. Fortunately, the credit rating industry is not alone in this endeavor as evidenced by a spate of IPOs showcasing companies in the credit risk assessment, credit portfolio management solutions and credit analysis segments.
Despite the hype surrounding Netflix, the company’s stock has fallen a full 27% over the last three months. Netflix also saw its largest quarterly outflow in over a decade. The company lost 200,000 subscribers in the first quarter.
The company also rolled out a basic ad-supported subscription plan to boost its subscriber growth. Its management believes the changes will take a year or two to fully implement. Netflix also said it will crack down on password sharing. There are a lot of reasons to invest in the streaming giant. Its moat is the best in the industry and its management team has more experience than most companies in the space. In the long term, it’s likely to continue to expand into the video game market.
There are a number of ETFs that hold the stock. You can find out which ones by clicking the ticker symbol above. The most popular ones include Citigroup Inc. (NYSE:C) and Unilever N.V. (NYSE:UN) while the least popular ones include Moderna (NYSE:MU) and Abbott Laboratories (NYSE:ABT).
In addition to being a big brand, Netflix has a competitive moat. The company has a plethora of content and is constantly refreshing its offerings. A recent price hike in the U.S. boosted subscription prices to fund more content. It also has a global improvement in bandwidth. Its moat is also one of the best in the US tech industry. The company also has a strong return on equity (ROE) of 35%. Its stock has a solid Neutral score on TipRanks’ Smart Score system. The company is also one of the most popular stocks in the U.S., with an average amount invested in the stock at over $11090 million.
Berkshire Hathaway (BRK.B)
During the second quarter of 2021, Berkshire Hathaway sold 9% of its holdings. The company sold 5.5 million shares, while reducing its holdings by about 20 percent. During the quarter, Berkshire decreased its positions in General Motors, U.S. Bancorp, and Royalty Pharma.
Berkshire’s public market equity portfolio rose to $363 billion in the first quarter of 2022. The company’s position in Occidental Petroleum (OXY) increased by nearly ten percent. Berkshire also boosted its position in Ally Financial (ALLY) by nearly a third. Berkshire’s investment in Formula One Group increased by almost a quarter in the first quarter of 2022. Warren Buffett purchased 5.6 million shares of the stock in 2022, likely handling the position himself.
Berkshire has a stake in DaVita, which is a company that provides health insurance and pension administration. Its operations span nine countries. The company serves more than 3,000 dialysis centers in the U.S.
Berkshire also holds a stake in Ally Financial, which has been in business for more than a century. Ally has two primary businesses, Ally Bank and Ally Invest. Berkshire has a stake of nearly two percent in Charter Communications, which provides telephone service to businesses and individuals. The company’s position increased by nearly three percent in the first quarter of 2021.
Berkshire Hathaway has a stake in General Motors (GM) of less than one percent. The stock is considered an iconic American brand. Berkshire’s position in General Motors decreased by 15 percent in the second quarter.
Berkshire also boosted its position in Occidental Petroleum by almost ten percent in the second quarter. Its position in Ally Financial increased by nearly a third in the first quarter of 2022.
Among hedge fund holdings, Microsoft (MSFT) ranks as the largest. Having replaced Amazon (AMZN) in the Top 10, the company is now the most held long position in the hedge fund market. The company commands market capitalization of over $2.3 trillion. Its products include Windows, Xbox, and Office.
The valuation of Microsoft is difficult to assess, largely due to insider transactions, dividends, and warnings. Microsoft is included in three benchmark indexes: the S&P 500, the NASDAQ Composite, and the Dow Jones Industrial Average. Several other index funds own Microsoft shares, including the Vanguard Total Stock Market Index Fund Admiral Shares and the SPDR S&P 500 ETF Trust. The latter’s share of the Microsoft share count stands at about 28%.
The top five hedge fund holdings include Microsoft, IBM (IBM), Alphabet (GOOG, +1.06%), Netflix (NFLX), and Uber (UBER). Among the top five, Uber and Netflix are new to the list. The two have a combined share of the cloud market of 21%. The Zacks Investment Research prediction for MSFT is $330, which represents 36.5% upside from the most recent closing price.
Microsoft is included in the Fidelity 500 Index Fund, which has a five-year annualized return of 17.1%. Its expense ratio is.015%. The fund has $387.1 billion in assets under management and holds 79.7 million shares of Microsoft.
The fund’s managers invest in public companies, with a focus on late stage venture investing. In the meantime, the fund has also invested in Databricks, Klarna, and Databricks. Its long-term growth strategy seeks to provide uncorrelated risk-adjusted returns for investors.
In addition to its growth and value strategies, the fund uses an algorithmic approach to investing. This involves developing and utilizing sophisticated computer models to identify and invest in a wide variety of companies. Its portfolio includes over $1.5 trillion in long equity positions.
Retail HOLDRs (RTH)
Amongst the dozens of exchange traded funds (ETFs) to choose from, the Retail HOLDRs (RTH) fund stands out as the quintessential hedge fund with a capital F.
The fund is managed by Van Eck Associates Corporation and boasts an impressive roster of managers. The fund is also a great place to stash your 401k, pension or IRA funds. The fund boasts a low fee, a competitive portfolio and a surprisingly low turnover rate. With a little bit of research, you can have an ETF in your portfolio in no time at all. The best part is, you don’t have to deal with the usual dreaded commissions.
The fund boasts 18 stocks in its portfolio, spanning the gamut from the mundane to the exotic. The fund’s most notable performers include Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Amazon (NASDAQ:AMZN), and Starbucks (NASDAQ:SBUX). The biggest and best performers include Amazon (Amazon), Target (NYSE:TGT), and Starbucks (NYSE:SBUX). Wal-Mart (NYSE:WMT) represents the lion’s share of the fund’s assets and is a reliable dividend generator. Target (NYSE:TGT) has been a staple of the fund’s lineup for years and is also the fund’s largest single holding.
Aside from the fund’s large-cap stocks, the fund has an extensive small-cap portfolio that includes some of the most coveted companies in the country. The best part of this fund is that it is a low-cost fund that you can own on your lunch break. This is a nice change of pace from the traditional high-fee fund that many large cap retail and corporate equity investors find themselves stuck with.