These are the hottest buys from institutional investors. One time each quarter, the average American investor gets a chance to peek over the shoulder of some of the wealthiest and most successful investors on Wall…
These are the hottest buys from institutional investors.
One time each quarter, the average American investor gets a chance to peek over the shoulder of some of the wealthiest and most successful investors on Wall Street and see exactly which stocks they have been buying and selling. The U.S. Securities and Exchange Commission requires all institutional investors to file form 13F within 45 days of the end of each quarter, publicly disclosing all their holdings. There are hundreds of filings each quarter, but WhaleWisdom recently compiled information from 150 top filers and ranked the hottest stocks institutional investors have been buying.
Danaher is one of the largest and most diversified life sciences companies in the world, producing a range of analytical instruments. A total of 18 out of the 150 funds WhaleWisdom sampled hold shares of DHR stock, and five of those 18 investors have it as one of their top five largest holdings. More than one in 10 hedge funds owns DHR stock. Eight of the 150 top funds were buying shares of Danaher in the fourth quarter, while eight were selling shares. DHR stock has a weighted WhaleWisdom 13F score of 5.24 in the fourth quarter.
The S&P 500 index dropped by 14 percent in the fourth quarter, but 13F season provided some upbeat news for U.S. stock investors. The second-highest scoring 13F investment this quarter was the SPDR S&P 500 ETF. The SPY ETF was a holding for 17 out of the 150 funds sampled, and was a top 10 holding in one of them. The most promising sign was that 11 funds raised their SPY stakes in the quarter, while only four lowered them. In other words, the smart money saw the market sell-off as a buying opportunity.
Medtronic is a medical device company that specializes in cardiac and vascular treatment and diabetes care. A total of 19 of the sampled funds reported owning MDT stock in the fourth quarter, including four investors who had the stock as a top 10 holding. Thirteen of the sampled funds were adding to their MDT stake in the quarter, while only six were selling. Since the beginning of October, MDT shares are down 6.6 percent overall, so investors who want to follow in fund managers’ footsteps can likely get the stock at a discount to what Wall Street insiders paid.
RingCentral is a somewhat under-the-radar cloud services company that offers cloud-based alternatives to businesses that have pricey on-premise communications systems. Retail investors may be mostly focused on cloud giants Amazon.com (AMZN) and Microsoft Corp. (MSFT), but 16 of the sampled institutional funds held RNG stock in the fourth quarter. Among the holders, 12 filers added to their position in the quarter, while only three were selling shares. Six sampled filers had RNG stock among their 10 largest holdings. That investment is paying off big in 2019 with the stock already up 25 percent this year.
Like RingCentral, Zendesk is a little-known play on cloud services, focusing on cloud-based customer support software used to manage customer communications, such as email and online chat interactions. Seventeen of the sampled 13F filers owned ZEN stock in the fourth quarter, including five filers who had it in their top 10. There were more filers selling (12) than buying (10) the stock last quarter, which negatively impacted the stock’s overall WhaleWisdom score. However, any time 6.1 percent of all hedge funds hold shares of a stock, investors know the company is worth a second look.
The cloud services theme continues with Workday, a software-as-a-service human capital management and financial services provider. A total of 19 sampled funds held WDAY stock in the fourth quarter, with seven funds making at a top 10 holding. Eleven filers were buying WDAY stock in the quarter, and only five were selling. WDAY has been one of the big winners since the beginning of the fourth quarter. The technology sector is down 7.9 percent overall since Oct. 1, but WDAY stock is up 28 percent in that time, including a 17 percent gain this year.
Many institutional investors, including Warren Buffett, were buying financial sector stocks in the fourth quarter, but CME Group was the most popular financial stock of all. CME owns several regulated exchanges, including the NYMEX, CBOT and COMEX, and it accounts for more than 90 percent of all U.S. futures trading volume. Twenty of the filers sampled held the stock in the fourth quarter, including five who had it as a top 10 holding. CME stock has struggled so far in 2019, so investors looking to buy the dip can currently get it at a discount fourth-quarter levels.
Another cloud giant, Salesforce, rounds out the top eight hottest stocks among institutional investors. Thirty-five sampled filers hold CRM stock as of the end of the fourth quarter, more than any other stock on this list. Thirteen of those filers have CRM shares among their top 10 holdings, again more than any of the other seven stocks. Among funds holding CRM stock, its average positional rank was 27th, the highest of the group. Thirteen percent of all hedge funds own CRM shares. Twenty filers were buying shares in the quarter, while just eight were selling CRM stock.
What institutional investors are buying today.
Here are eight stocks and funds that are most often purchased by institutional investors and hedge fund managers: